Example: if I buy 1btc at 1k and then another btc at 2k and then wheb btc hits 5k I decide to sell 1 of the BTC's do I get taxed on the 4k realised gains between 1k and 5k OR the 3k realised gains between 2k and 5k OR something completely different (an average between the two perhaps?
I know you wouldn't get taxed on such a small amount, I am just using this as an example.
FIFO you faggot
In your example the IRS would assume the greatest spread and work down to the least spread, then on to losses, which you can take the greatest loss first as well ...that is your 4k spread is first no matter the time frame
when you sell its the first ones you got that get sold and taxed. so your paying taxes on the first bitcoin you bought.
Seriously go ask a professional. Biz has no fucking clue
Haha, didn't know that
This is going to be agonizing x10000
to keep track of what with all the shitcoin trades across the many exchanges some of which don't exist anymore..
FIFO is only one way to do it. You can also explicitly match acquisitions to the most desirable sale, to for example preserve your long term holds while trading the same currency. You can't mix the two methods though, and FIFO is generally easiest if you havn't held anything for more than a year anyway.
most CPAs will tell you it works based on FIFO so the first btc goes out.
It sucks but in the long run it doesn't matter if you want to cash out of crypto totally at some point when it moons
>11539695
it's better to keep track of your shit and use bigger/more reputable exchanges if you can so you can prove how you got to XX bitcoins when your bags moon
It’s incredible how we’re not taught how to file taxes in school. Yet when we enter the work force we’re expected to figure this all out like we’re chopping wood. How cucked do you have to be as an American to be armed to the teeth with weapons and STILL PERMIT THE IRS TO TAX FUCK YOU ALL. What a faggot ass country, anyway just go see a professional if you’re gonna cuck out
I have a master's degree in tax. There is no capital gains tax. Long-term capital gains are simply taxed at favorable rates.
Bottom line, the IRS cares most about total minus total. They do prefer trade by trade accountability but if you can break it down to monthly or quarterly profit/loss, you can get away with it with minimal shit
Fuck this country.
>most CPAs will tell you it works based on FIFO so the first btc goes out.
All you need to do to escape this is have multiple wallets.
I'm two exam sections away from applying for my CPA license (REG and BEC).
bro you have no idea how many tens of thousand or hundreds of thousands of crypto people are in the SAME exact position. We weren't keeping track of our trades, many of the exchanges we were trading on don't even exist anymore so there is no way of getting previous trade data. if we did nothing meaningful with the money inbetween trades it makes no sense to pay tax on a huge profit you made in december that you more than lost in january but can't write off that much of a loss for the year before because it makes no sense. I will do my best to pay taxes on the money that gets sent to my bank account to actually be spent on stuff but i already know its completely impossible to make sense of my tens of thousands of trades over the last 5 years to go back and figure out the pnl along the way. It's easy to keep track of your pnl if you just write down your trades as you make them,which is what i've started doing but 5 years of mindlessy trading shitcoins not keeping track fuck that there is absolutely no way and the IRS probably knows that. They did not make this totally clear until the tax bill in December 2017 i believe so really they should not expect much. many people say it was obvious beforehand but as a total idiot 18 year old when i first got into crypto i had no idea how capital gains tax work or what it even was.
I don't think that's gonna fly with the tax agency. People would create separate wallets on for each coin they want to trade without triggering tax obligations on previous purchases
only niggers pay taxes on btc
If I buy a BTC at 1k and put it into a wallet and then buy a BTC at 3k and put it into another wallet. If I sell the BTC in the second wallet how can they try to tax me on the first one?
Oh shit
But if you write down your trades then won't the government require proof of those trades too? Like you can't just say you have it written down that you bought BTC at 1k let's say and sold at 4k
Not looking forward to this tax season.
Because the government chooses the favorable outcome for the government.
>get taxed
Just order a bunch of cold hard cash on the DarkWeb using your btc.. delivered anonymously through the USPS
Bump
If you're in the UK, lookup the bed&breakfast share matching rules to determine the cost.
Then basically your gain or loss is simply the "proceeds - allowable cost".
so what happens in this situation:
>buy 1btc for £4000
>invest the btfc in alts
>now alts are worth 10btc
>sell alts to get 10 btc
> want to sell the 10btc for £
The only time cgt applies is at the last step, when I sell the btc back into £?
it's a grey area at the moment, the best you can do is use exchanges that keep the trading history and/or keep stuff mostly in your own wallets so you can prove you owned them at the time when they were still cheap, only sending to exchanges to trade and then back to the wallet
If yu already lost your history for good then contact a tax attorney and have him figure it out with the IRS what do they want to do in such case, if they tell you it's illegal money impossible to cash out then simply sell it for cash and never pay taxes because it's impossible anyway.
It depends on your jurisdiction, faggot. Why wouldn't you mention where you live?
Lol
I'm Indian and India has practically banned crypto
Living in Australia rn and if I declare it as foreign income I'd be clean hahahaha
I even contacted the official tax department and they said my foreign income won't be taxed in aus
If in the UK you can get away without paying any tax if you have a decent advisor who can argue crypto is entirely speculation/gambling.
Which it is.