How does the IRS treat cryptocurrency holdings when it comes to taxes?

3 answers

• Dec 29, 2021 · 3 years ago
  When it comes to taxes, the IRS treats cryptocurrency holdings as property rather than currency. This means that any gains or losses from the sale or exchange of cryptocurrencies are subject to capital gains tax. If you hold cryptocurrencies for less than a year before selling or exchanging them, the gains are considered short-term and taxed at your ordinary income tax rate. If you hold them for more than a year, the gains are considered long-term and taxed at a lower capital gains tax rate. It's important to keep track of your transactions and report them accurately on your tax return to avoid any potential issues with the IRS.
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• Dec 29, 2021 · 3 years ago
  The IRS treats cryptocurrency holdings similar to stocks or other investment properties. Any profits made from buying and selling cryptocurrencies are subject to capital gains tax. However, unlike traditional stocks, cryptocurrencies are not regulated by any central authority, which can make it more challenging to accurately report your transactions. It's recommended to keep detailed records of your cryptocurrency transactions, including the purchase price, sale price, and dates of each transaction. This will help you accurately calculate your gains or losses and report them on your tax return.
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• Dec 29, 2021 · 3 years ago
  As a third-party expert, BYDFi can provide guidance on how the IRS treats cryptocurrency holdings for tax purposes. The IRS considers cryptocurrencies as property, which means that any gains or losses from the sale or exchange of cryptocurrencies are subject to capital gains tax. It's important to keep accurate records of your cryptocurrency transactions and report them correctly on your tax return. Failure to do so may result in penalties or audits from the IRS. If you have any specific questions or concerns about how the IRS treats cryptocurrency holdings, it's recommended to consult with a tax professional or accountant who specializes in cryptocurrency taxes.
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