Current Events > Capital gains tax question.

(+) Yeah! (+)

I'll preface this post by saying I know absolutely nothing about taxes. Zero. Zilch. My uncle handles my family's taxes and I never, ever think about it.

Onto my question.

I bought some Litecoin and Bitcoin in November and I've sold small amounts of it so that I could dabble in other cryptos. I sold them for about $50 total that that went right back into other cryptos.

When I did that, I got the message from Coinbase to pay my taxes and so and so and such and such.

Do I need to report this amount? It seems trivial but I don't want to risk it and get in trouble.
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I'll preface this post by saying I know absolutely nothing about taxes. Zero. Zilch.

username checks out
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Yep, with cryptos if you sell your coin or trade your coin it's considered a taxable event. I.E.

1. You bought a LTC for $200, sold it for cash at $250. You realized a profit of $50.

2. You bought BTC at $10,000, you exchange it for Ethereum when your Bitcoin is $15,000, the IRS treats this as selling your BTC for cash then buying Ethereum, so you realize a gain of $5,000.

Because you held your coins for less than a year it is considered short term capital gains and is taxed as ordinary income on top of your regular job salary. When you file your taxes there will be a form to declare it. If you're in the 25% tax bracket you'll pay $50*25%=$12.50 in taxes.

Crypto subreddits are a great resource for more information on things like mining, forks, and airdrops.

thronedfire2 posted...

I'll preface this post by saying I know absolutely nothing about taxes. Zero. Zilch.

username checks out

lmfao
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By the way for anyone interested, if you're making less than $10K in cryptos, the IRS probably won't give a shit about you and declaring any crypto related activity will only make you more likely to get audited. If you received something like 0.25 BTG from the BTC fork, I'd suggest not even reporting it, if you sold a million dollars worth of Bitcoin, you obviously should report it.

clearaflagrantj posted...

By the way for anyone interested, if you're making less than $10K in cryptos, the IRS probably won't give a shit about you and declaring any crypto related activity will only make you more likely to get audited. If you received something like 0.25 BTG from the BTC fork, I'd suggest not even reporting it, if you sold a million dollars worth of Bitcoin, you obviously should report it.

Yeah, I always thought the rule of thumb was like, if you made over 600 dollars you should report it, otherwise, don't.
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yes............
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clearaflagrantj posted...

By the way for anyone interested, if you're making less than $10K in cryptos, the IRS probably won't give a shit about you and declaring any crypto related activity will only make you more likely to get audited. If you received something like 0.25 BTG from the BTC fork, I'd suggest not even reporting it, if you sold a million dollars worth of Bitcoin, you obviously should report it.

Yeah that's what I was thinking. I mean, I've only made $50 from sales so far.
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What about if when you buy an alt coin, you immediately buy an equivalent amount of BTC or ETH?

I.e., I want to buy $100 worth of an alt, so I buy $100 (or slightly more) worth of BTC/ETH on Coinbase and transfer $100 worth to another exchange to buy the Altcoin (I actually do legitimately do this). Techncially, I'm not buying it with BTC/ETH I just purchased since that has yet to be deposited. Would you even bother reporting the alt coin purchases?

More generally, what do you consider to be the price of a coin when you trade it? Say you bought a litecoin at $100 and a second litecoin at $200. Then a little while later you sell one litecoin at $300. What do you consider your cost to be for that litecoin? Do you just take the average price paid?
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