Can any tax expert helps with my question here:
1. I have some Bitcoin I mined a few years back. Recently I transferred them to Coinbase from a hardware wallet. If I sell, will it be considered short term or long term? How do IRS or Coinbase know I have hold them for a very long time?
2. If I buy some more BTC and later try to sell, how do I choose to sell the BTC I’ve been holding for a long time so I don’t get short term capital tax? When selling a part of all the BTC I have, seems there’s no way of specifying which “batch” of BTC I’m selling.
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comments
#1 if it truly is a long term investment then it sounds like long term capital gains. Do you have enough documentation to prove that it wasn’t a short term trade? It really is only an issue if you get audited.
#2 my accountant basically told me I have to use tracking software. There are a few that connect with major exchanges. There are a few of these and I believe they will let you set LIFO or FIFO rules (and others).