Is margin trading considered the same as if you were selling from your previous stash or is it a separate thing?
My guess is that it has to be considered a separate thing. My reasoning is this: suppose someone does the exact same trades as your friend does, but that person does NOT have an extra stash that is kept offline. In his case, it would make no sense to act as if the offline BTC were being sold (and bought back), bc he doesn't have any. So now the question becomes: does it make sense to treat the exact same trades one way for one person, and another way for another person? I would think probably not.
PS I'm no accountant, and this is not tax advice, blah blah blah.
PPS Hopefully I understood your question correctly. Correct me if I did not ...
Yes, that's exactly what I mean. But not so sure about that just for keeping most of the stash offline it would change that for any BTC sell in the exchange it would be the older one suppossed to be sold (even if it is in some cold storage you have had for years). So if you have ie 100 BTC offline and 10 BTC in a exchange, and you sell/rebuy it 10 times (or more) in a year, you have basically sold and rebought your entire stash (short term).
But... Maybe the fact that margin trading is not exactly as if you were really buying/selling BTC but just something like "betting" in one or other direction (long/short) it could be considered a separate thing from your long term stash. And if you declare that you only had that X BTC that you have on exchange so nothing older being sold..... then it will be a BIG problem to try to declare those older BTC in the future as it's basically as if they "surfaced" from nowhere.
My tax advisor almost doesn't know the specifics about cryptocurrencies and I am starting to get really worried about all this.
Thanks for your reply!
I'll amend my previous answer to say it probably depends on the precise details of how the particular exchange in question operates. I agree with what you said about going long/short. e.g. on OKCoin, buying a long or a short is not the same as buying or selling bitcoin itself. But suppose you're on a different exchange, where going short means you borrow some btc and sell it. In that case, if you want to do FIFO, I suppose you could for accounting purposes use the cost basis of x btc sitting in your stash off-exchange.
I'm not sure that there even is a right way to do it, until the IRS issues some guidance. I pity the poor IRS agent who has to audit someone's taxes who did stuff on lots of exchanges. It's gonna be a nightmare. He's gonna have to know in great detail how each exchange works. I think at this point the best anyone can do is to make your best "good faith" attempt to calculate in a way that seems reasonable.
because, we don't have many GREEN Dildo ... here.
