Bitcoin Forum

How to file tax if another user using coinbase, a family member lends you couple of thousand dollars converted into bitcoin from their coinbase account to yours? Will there be tax on this? I hope not. But can coinbase or anyone who knows help? There has been a severe loss nothing gained.

the loan itself is not taxable because it's not income. any gains or losses you made (eg after taking the loan) will affect your taxable income though.


i'm not sure about all tax jurisdictions, but you generally won't be taxed on capital losses. in fact, capital losses can often be used to offset your other taxable income. in the USA, investors can deduct their capital losses up to $3000 per year. so if your net capital loss from trading bitcoin was $2k, your total taxable income would be reduced by that amount.

figmentofmyass is right however things get messier if the BTC lent to you will grow in terms of market value which means if it grows in market value the gain you will be receiving is taxable under capital gains tax. The whole BTC you received is not taxable only the gain or profit you will be having if you have sold it above/greater than the original value on the date you have received it from. Other things to note at is Coinbase is compliant with some governments so if you received a considerable amount of BTC consider yourself to be one of the people being reported by Coinbase for its AML compliance.

As of right now I have been hodling few thousand worth bitcoin, I didnt cash it out. But because of price drop, I am in loss. How do I file this on tax return in US?

If you just bought and held BTC and have never sold it, no taxable event has occurred yet. Nothing is reportable on your taxes yet.

Tax liability usually doesn't come into play until you've realized a capital gain or loss by selling. As mentioned above, a loan isn't reportable as income either.

It sounds like you won't need to report anything Bitcoin-related on your 2018 tax return. I'm not a lawyer and you should probably ask a tax advisor just to be sure, though.

I think he is talking about the loan he received from his family members which I think is still the same nonetheless. If it is really just a loan then I don't think you need to report it to the IRS as I don't think loans in itself are taxable. Also in your case where your BTC loan is now below its original value when you have received it is not taxable so it's really not necessary to report it as you won't be taxed from your losses.

What I am saying is I sold it the first time and bought again after which price dropped significantly. I am still hodling from the second attempt, how do i claim this thousands of dollar loss to offset the few hundred gain?

it sounds like you only sold once in 2018. based on that: when you sold, you realized a capital loss. that capital loss is reportable on schedule D of your tax return (up to $3000 maximum deduction).

you then bought back and held BTC. even though that position is in profit, you haven't sold as of 2019, so a taxable event hasn't occurred yet. the second trade shouldn't be reported on your 2018 return.

p.s. you might want to summarize your trading activity with dates just to make sure no is giving you inaccurate advice.

I don't any tax jurisdictions for this though I could consider this as a personally sent money. It will appear as your family member sent you through coin base without any agreement of lend on because you and your family member had an agreement personally. But if you will go to some lending companies/sites, you would probably have a little charge but not a tax.

Losses in any form of tax judging from the tax jurisdiction I am very much aware of won't be as high as that of profit. For example, if one is taxed as Company and you make losses, you will only pay minimum tax after meeting certain conditions which is way lower that the established tax rate. For capital gains tax, you only pay on the gains and not losses as we have it here.

What you need to do is identify these options in your locality and enjoy it accordingly. Just make sure that you file your returns in due time because losses does not exempt one from paying penalties of late returns.