And if you want to get in on the ground floor, the easiest option for the average person is to buy coins or tokens in an ICO. It can also be viewed as a sell (you are selling.5 BTC and receiving 20 ETH in return) or a BUY (you are buying 20 ETH with a total cost.5 BTC). Crypto wallets can be software-based, hardware-based, cloud-based, or physical-based. In simplified terms, like-kind treatment did not trigger a tax event when exchanging crypto for other crypto; a tax event would only be triggered when selling crypto for fiat. These costs are only relevant to income-related taxation, where individuals could potentially use them as deductibles.
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Picture: Shutterstock Disclosure: At the time of writing the author holds ADA, ICX, iota, powr and XLM. Watch out for scams, in December 2017, the chairman of the US Securities and Exchange Commission (SEC) issued a statement about the lack of investor protection for those buying cryptocurrencies: A number of concerns have been raised regarding the cryptocurrency and ICO markets, including that. A simple example: You buy 1 BTC for 6,000 USD and then later sell that 1 BTC for 10,000.
Taxable Events, a taxable event refers to any type of crypto-currency transaction that results in a capital gain (or profit). These apps have even made it into official, legitimate app stores like Google Play, so it pays to do your research before downloading anything to your phone. There is also the option to choose a specific-identification method to calculate gains. Compare Cryptocurrency Exchange Credit card Cryptocurrency Debit card Bank transfer (sepa) swift USD, EUR, RUB, GBP BTC, BTG, BCH, LTC, dash, ETH, XRP, ZEC, XLM, gusd Disclaimer: Highly volatile investment product. Please note, as of 2018, calculating crypto-currency trades using like-kind treatment is no longer allowed in the United States. Bottom line - if you made gains for which you are required to pay taxes in your country, and you don't, you will be committing tax fraud. Mining Assessing the cost basis of mined coins is fairly straightforward. Learn more, send money to your friends and family in more than 150 countries. Tax Rates: Short Long-Term Gains.