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The IRS considers Bitcoin an asset. Every time you buy/sell goods with Bitcoin or just plain buy/sell Bitcoin, you have to report that as if you were buying/sel
by sobani 7y ago
The IRS considers Bitcoin an asset. Every time you buy/sell goods with Bitcoin or just plain buy/sell Bitcoin, you have to report that as if you were buying/selling any other asset, like stocks. So most Bitcoin transactions will be subject to capital gains tax.
https://www.investopedia.com/articles/investing/040515/are-there-taxes-bitcoins.asp https://www.investopedia.com/articles/investing/040515/are-t...
- ibeckermayer 7y agoPlease correct me if I’m wrong — does this fact not imply that any attempt to actually use cryptocurrency as a currency to buy and sell goods (I.e. how we currently commonly use USD) is completely impossible, since the capital gains taxes will cause everything to cost substantially more?
- sobani 7y agoThe tax is only on the gains of the worth of the spend Bitcoin. If you buy a Bitcoin and immediately spend it on something, there will be no gain, so $0,00 taxes. If you bought a Bitcoin when it was $5000 and you spend 0.2 Bitcoin today (now they're ~$10000 a piece) you would need to report $1000 of capital gains. You could argue that would make your 0.2 Bitcoin / $2000 purchase cost more, because you have to add the tax. On the other hand, if you sell those Bitcoin later, you would have to pay those capital gains tax anyway. The story does become a bit more complex when you factor in long-term vs short-term capital gains tax.