Topic: Do I pay taxes when I sell an alt coin for bitcoin? - page 9. (Read 19340 times)

It really depends per country.

In my country cryptocurrencies fall under property taxes (which is about 1.2% of our property) , so we need to declare that cryptocurrency is part of our property and we also need to declare if their value is above
or below a certain value (we have tax-free property till 25.000 Euro). If we converted the cryptocurrency to EURO, then that value in FIAT will also fall under property taxes.
Our property value is calculated over a set date, which is 1st of january from the previous year.

selfnote : do not convert cryptocurrency to FIAT on the 1st of january .. ever.

Yes, technically, you are supposed to record the value at the time of sale.  How much did you buy the Lisk for, How much did you sell it for.  The difference is your profit/loss. 

Same for the Bitcoin.  How much did you buy it for, how much did you sell it for.  Again, that is your profit/loss.  It doesn't matter if the bitcoin gains or loses value before or after the time of sale.  It only matters how much you made at the sale.

Well the thing is this.  If you dont pay any capital gains until you convert it to fiat, that is very easy.  Because you could trade for a very long time and make profit but dont need to pay anything until you cash out.  That makes it very simple to understand.


The issue is if you are suppose to count it every transaction, you have to convert the btc to usd amount at the point of sale?  But how is that a 1k gain then if that 1k worth of btc could be 750 later on etc?  So if someone made say 50k worth or profit doing many trades... let say all those btc profit add up 50k total on that day of the trade... if that 50k worth of btc is only 45000 now, then how can you even put 50k?  Unless you turn it into fiat, it seem very complicated.  If this trading was all in fiat, well thats simple.  You add total profit and have a USD balance on the exchange.  But everything is done with btc which makes everything not make sense.

Well say you are trading btc for lisk.  Let say you bought 5k worth of lisk with your 5k btc.  You then sold the lisk for 1k worth of profit.  The profit is 1k worth of btc at that moment.  You keep the btc in your wallet.  You do not cash it out in fiat.


Is there a tax or not?  I read online that accountants seem to say yes that counts since you made profit.  Others say there isn't unless you convert it into btc.  


So what is the answer here?  The other thing is ... so the profit would be the btc amount made at that time?  So you made 1k profit worth of btc at the price of sale.  However, that 1k profit in btc could be 800 or 1100 later on etc.  So it gets recorded at that point of sale?  This doesn't make sense because if you only made that 1k profit, then when you report it on taxes, say that 1k profit worth of btc that day is now only worth 850... then how are you even recording 1000 when that btc price is now 850?  

First off, I'm not an accountant or Tax advisor ... secondly, I'm assuming this a question of US law.

That said, here is my understanding.  If you have profits off the sale, you may owe income tax in the form of capital gains.  It doesn't matter if you cash out to USD or not.  You can keep good records of this and pay that capital gains tax every year you have profits.

But, there is a thing called "like kind exchange" where if you sell something, and buy something very similar, you don't owe taxes for that year.  If you sell a stock (any stock), and but other stock (any stock), or if you sell an investment property and buy another property, those may qualify as like kind exchanges.  I assume selling cryptos would follow the same rules.

However, you do you need to keep track now of your original buy, your exchange, then your sell.  You can theoretically string multiple buys and sells together into an perpetual chain of like kind exchanges.  But, you need to keep track of everything, because you'll eventually owe capital gains taxes on the entire chain.  And there are many IRS rules on how to handle a like kind change that people should talk to qualified accountants and tax advisors about.  You can get in trouble with the IRS if you handle the process improperly.

Exchanges just charge trading and transaction fees but if you make profit by trading a coin, then you have to pay taxes to cash out it. You can also buy some properties, cars, jewelry with bitcoin directly if you don't want to withdraw usd.

Okay so far i havent gotten an answer yet still on this.  So btc to lisk.  Then lisk increase in profit and you trade back to btc.  What happens here since you never converted to usd?

agree if depends from each place we belong as for us we don't pay any taxes because bitcoin is not yet been truly recognize from where I lived
but in some instances I think when using bitcoin to purchase or to pay some bills taxes has been provided by the local exchange.

It all depends on where you live. In some countries you might have to, in others you don't. Some countries have different laws regarding cryptocurrencies, e.g. mining them, requires you to pay tax whereas trading them and making profit, doesn't require you to pay any.

It depends on the law of your country and if you don't pay the taxes if there is a law. You could be in a huge problem and probably fined.

yes in every transaction using altcoin or bitcoin transfer it into another wallet or cashout your bitcoin to convert in your local money i think taxes including at the transactoin fees, just correct me if iam wrong the idea about bitcoin taxes pay to government.

I don't think there is a need  to pay tax for selling an altcoin into bitcoin. As we have freedom and it is decentralized but as far as I know were talking on selling alt to btc it does not require to pay taxes.

It depends on the tax code in your country. If you are unsecure about it google it for yourself.

Can someone confirm if this is true?  So when you trade btc for altcoins like lisk for example.  You make profit and then sell those lisk back to btc.  If u do not convert the btc into fiat... and use that btc to buy other coins and trade over and over again but never convert it to fiat, is there any tax liability?  The thing that is confusing is how do you even calculate this profit since this profit would be in terms of btc?  And the btc price is constantly changing?  So your 1k profit right now... could be 900 one day or 1300 later on etc.  So if you keep it as btc, there is no tax liability until you cash out?

if you are us citizen you need to pày a tax any alt or bitcoin you have, but if you in indonesia, as long as you are got caught you have many btc or altcoin you did not need to payany tax, is that nice ? thats why i love my country

When you do make cashouts it does have tax depending on the exchange as far as i know when we are talking about USD but talking about switching from altcoin to convert it to Bitcoin then theres no tax on it and its just a simple tax which is being charged by exchanges which isnt really big at all to be worried off. Heres in my wallet local provider i can exchange and cashout bitcoins without being taxed.

This.
Just switching currencies does not make you tax liable, just cashing out.

You just have to trade it on an exchange site and they might charge you a small fee, besides which the only other fees would be transaction fees while converting BTC to USD. In fact you should actually be paying taxes to your government which I don't exactly know how it reaches them.

you don't need to pay taxes when you sell for altcoin or for bitcoin, only when USD or other fiat money are involved you need to pay taxes, but it's better to see your country laws, because there could be some exception

I think you will pay the trading fees, not the taxes since the fees will be paid to the exchanges, while taxes is paid to the government. Different exchanges may have different fee ratio, you'd better to check that before trading altcoins.