How to file taxes for Cryptocurrency in 2019?
I had some crypto currency that I exchanged to some tokens during the boom time (early Jan). Considering IRS even considers exchange of crypto taxable (afaik). How can I not pay substantial amount of tax for exchanging to those tokens considering I didn’t even got a dollar out of them?
I used Bitcoin.tax to calculate that. Choose the FIFO method, you might over pay Uncle Sam but that's ok. If you're mining however, the calculation is much more involved. PM me if interested.
Thanks, I’ll have to check what is the FIFO method. Have you used it to prepare taxes for tokens and ETH transactions?
Yes I've used it to generate tax reports for trades involving erc20 tokens. Import all your trades into Bitcoin.tax and follow the prompts. The UX could be better, but it gets the job done 🤷🏻♂️
You declare a capital loss of up to $3k. (Sorry, feeling a bit cynical.)
Suppose you did the following transactions: Bought BTC for $x USD at time t1. Bought ETH for the BTC you bought above at time t2. Then you owe taxes on the value of the BTC at t2, less the value of the BTC at t1. Even if they were never converted to dollars. If by the end of today you were to sell your ETH for $y, you would instead owe the taxes on $y - $x, no matter the value at time t2. But even then you would still need to declare both transactions. Edit: IRS doesn’t care what the cryptocurrency you use is. Or if it’s another fiat currency, or even commodities.
Can we leverage tax loss harvesting to minimize the tax i.e convert the token back to ETH so that the total capital gain is less considering now the prices of crypto has gone down?
Yes if you do that in the next five and a half hours