Tax Question

[Mahadragon]

Let's say I buy 1 BTC at $10,000.

I sell my tv to my friend and he pays me 1 BTC for it. So now I have a grand total of 2 BTC. Let's assume I have no idea what the price of BTC was at the time I sold the tv.

Today BTC is going for $15,500. Let's say I sell both of my BTC today (held less than 1 year). How do I figure out the capital gains on this? Thanks in advance!

[Darker45]

Before anything else, don't consider this answer as an expert opinion.

For the 1 BTC that you bought at $10,000 and sold at $15,500, you will have a taxable income of $5,500. Since this is held for less than a year, this is considered small-term. Therefore, small-term capital gains tax shall be imposed. Unlike long-term capital gains tax, small-term capital gains tax rate is equal to individual income tax. Of course, less the deductions.

For the price of the 1 BTC that you received from selling your TV, you can always try to remember the date and then refer to online references for the previous prices of Bitcoin. Coinmarketcap.com, for example, can give you that.

Sources:

1. https://www.investopedia.com/articles/investing/040515/are-there-taxes-bitcoins.asp
2. https://www.investopedia.com/terms/i/incometax.asp

[ololajulo]

Before anything else, don't consider this answer as an expert opinion.

For the 1 BTC that you bought at $10,000 and sold at $15,500, you will have a taxable income of $5,500. Since this is held for less than a year, this is considered small-term. Therefore, small-term capital gains tax shall be imposed. Unlike long-term capital gains tax, small-term capital gains tax rate is equal to individual income tax. Of course, less the deductions.

For the price of the 1 BTC that you received from selling your TV, you can always try to remember the date and then refer to online references for the previous prices of Bitcoin. Coinmarketcap.com, for example, can give you that.

Sources:

1. https://www.investopedia.com/articles/investing/040515/are-there-taxes-bitcoins.asp
2. https://www.investopedia.com/terms/i/incometax.asp

Do they tax btc in wallet or the fund taken as reward in the bank?

[Lorence.xD]

Do they tax btc in wallet or the fund taken as reward in the bank?

I have the same question because here in my country, there do not seem to have a regulation regarding taxes in bitcoin. Take note that there are cash apps here that use bitcoin and other tokens, and they do not seem to tax when there is an exchange of bitcoin to fiat.

[Bttzed03]

Basic formula is Capital Gains (CG) = Selling Price - Cost but you better get yourself an accountant because the computation for the cost of sales (COS) could be tricky and your jurisdiction might affect it also.

In computing the COS for the first BTC, @Darker45 has shown you the FIFO (First In First Out) which is pretty straight forward and it's an accepted method in all countries AFAIK. Other methods like Cost Averaging and LIFO are both allowed and/or disallowed in some countries.

You can do the same process for the second BTC after finding out the date you sold and referencing it with websites like CMC as mentioned. In case you and your friend cannot remember the dates you made the transaction, finding out the cost of the TV could be a good basis (Purchase Price + handling/freight - Accumulated Depreciation). Don't take my word on this, consult an accountant in your area.

On Capital Gains Tax, just check the applicable rates in your country x CG.

[Darker45]

~snip~

Do they tax btc in wallet or the fund taken as reward in the bank?

As far as my understanding is concerned, your Bitcoin, if it stays in your wallet, won't be taxed. Bitcoin is treated as an asset or a property, albeit intangible. Tax will come in when and if Bitcoin is sold or used in exchange to goods and/or services.

However, I am speaking of Bitcoin as far as how it is being treated by the US IRS. It may actually vary how it is being treated and taxed in other countries. Different countries do not share the same regulation and tax system on Bitcoin.

[tbct_mt2]

I hope you can find what you are asking for help with the Ratimov's topic on crypto tax. [Tutorial] Crypto taxes for beginners

[Silberman]

Let's say I buy 1 BTC at $10,000.

I sell my tv to my friend and he pays me 1 BTC for it. So now I have a grand total of 2 BTC. Let's assume I have no idea what the price of BTC was at the time I sold the tv.

Today BTC is going for $15,500. Let's say I sell both of my BTC today (held less than 1 year). How do I figure out the capital gains on this? Thanks in advance!

While an interesting question at the end it depends entirely on the laws of the country in which you live, there are countries in which your earnings will be taxable as any other form of income, others have laws with a very low tax on your capital gains, other countries have laws that encourage long term holding and reduce the tax even further and others in which it is eliminated completely if you hold long enough, and there could be even some jurisdictions in which your exchange of a TV for BTC could be seen as a form of barter and this could generate no taxes at all.

[shield132]

Let's say I buy 1 BTC at $10,000.

I sell my tv to my friend and he pays me 1 BTC for it. So now I have a grand total of 2 BTC. Let's assume I have no idea what the price of BTC was at the time I sold the tv.

Today BTC is going for $15,500. Let's say I sell both of my BTC today (held less than 1 year). How do I figure out the capital gains on this? Thanks in advance!

Let's imagine again that you have 1 bitcoin and got another one from your friend but for this reason, you gave him your TV instead. What about if no one will ever know about that? I guess you are from the USA because as far as I see people from this country take such things very seriously. In the country where I live, I can sell my smartphone, TV, washing machine, a fridge without paying anything to the government. We will have a deal in real life, he gives me cash, I give him what I sell and that's all. Why to tell the government that I sold TV and hey, come here and tax me. In overall, they don't care about such things too.

[usekevin]

Let's say I buy 1 BTC at $10,000.

I sell my tv to my friend and he pays me 1 BTC for it. So now I have a grand total of 2 BTC. Let's assume I have no idea what the price of BTC was at the time I sold the tv.

Today BTC is going for $15,500. Let's say I sell both of my BTC today (held less than 1 year). How do I figure out the capital gains on this? Thanks in advance!

It's a calculation of profit.All the people in this forum was not good at mathematics.Especially I was not from good mathematics background.But I had a correct answer for your question,surely you get profit from it.Because you brought at 10,000$ and now the price had reached a new sky in price.So you will bulk some profit from investment from now.Nearly you will get 10,000$ as profit for 2 Btc.

[Oshosondy]

Let's imagine again that you have 1 bitcoin and got another one from your friend but for this reason, you gave him your TV instead. What about if no one will ever know about that? I guess you are from the USA because as far as I see people from this country take such things very seriously. In the country where I live, I can sell my smartphone, TV, washing machine, a fridge without paying anything to the government. We will have a deal in real life, he gives me cash, I give him what I sell and that's all. Why to tell the government that I sold TV and hey, come here and tax me. In overall, they don't care about such things too.

You can make use of self custody with ease in USA too or anywhere in the world to bypass the taxes. Making use of custodial services like coinbase that comes from USA are the real issue, I can come from USA and used other exchanges that are not from USA that will not include any tax, but using custodial exchanges or other custodial services should be totally discouraged. I buy TV or I sell TV is p2p while not sending the bitcoin p2p also because both of you can have bitcoin wallet without any custodial proverders.

[aesma]

You need to estimate a fair value for the TV. With documentation. To be honest your example is not great because this year a used TV never cost 1 BTC or it was a very big TV, and so in your example you "screwed" your friend. It might be difficult to explain to the taxman that someone gave you a BTC worth 7000$ for a 500$ TV.

In some cases it might be simpler to pay more in taxes by saying your mined the BTC or something like that, at least the taxman will not send you to jail for having paid too much taxes.

But of course you should really wait for more time to pass it you can avoid paying a lot of taxes that way (in my country that doesn't make any difference, it's 30% tax in all cases).

[gurjasmeetsingh]

My opinion is that clear it's depend on all countries how can they assess the tax.but l think it is a fundamental rule applied to all countries, who selling anything & get earnings. Then tax will be applied on our earnings. How much we pay tax,its all depends on various countries. I think so.

[Mahadragon]

Thanks for all your help guys. So I guess in my example (which really was just a hypothetical example) I would have to figure out the value of the tv, let's say value was $5,000 USD. And he pays me 1BTC on March 9 when the price of BTC was $5,300 USD. So I guess my 'cost' basis would be $5,300. Then when I sell the BTC later on at $15,500 my capital gains would be $10,200 ($15,500-$5,300) and I would pay taxes on that.

[farrellronald]

this is what i found :
Most trades count as short-term capital gains, which can be taxed at as high as 39% depending on income bracket. Those who hold bitcoin for more than a year and then sell it, however, are only liable for a long-term capital gains tax, which is levied at a significantly lower rate of 15% to 23.8%.J

[ReggieBush]

As far as I understand you only need to pay tax when withdrawing bitcoin to a bank account

[aesma]

Thanks for all your help guys. So I guess in my example (which really was just a hypothetical example) I would have to figure out the value of the tv, let's say value was $5,000 USD. And he pays me 1BTC on March 9 when the price of BTC was $5,300 USD. So I guess my 'cost' basis would be $5,300. Then when I sell the BTC later on at $15,500 my capital gains would be $10,200 ($15,500-$5,300) and I would pay taxes on that.

Yes doing it like that should be safe. You should have a signed paper for the sale though, with the all important date so that the price of BTC can be checked in the future.

On another forum I'm a member of it's common to print a bill between members when trading stuff, it's a way to protect the buyer.

[Silberman]

As far as I understand you only need to pay tax when withdrawing bitcoin to a bank account

There are countries that are like that but it changes from country to country and it is better that you check your local laws because in many countries if you buy bitcoin for a certain price and later you sell it for a higher price using stable coins you still have to pay a tax that is called capital gains, basically you are forced to pay a tax on the gains that you got and trying to figure out those gains can be extremely complex if you are a day trader, so as you can see it is not a trivial task to try to figure out how much taxes you need to pay to the government by your trading activities and most likely you're going to need an accountant or even a lawyer.

[Daniel91]

As far as I understand you only need to pay tax when withdrawing bitcoin to a bank account

There are countries that are like that but it changes from country to country and it is better that you check your local laws because in many countries if you buy bitcoin for a certain price and later you sell it for a higher price using stable coins you still have to pay a tax that is called capital gains, basically you are forced to pay a tax on the gains that you got and trying to figure out those gains can be extremely complex if you are a day trader, so as you can see it is not a trivial task to try to figure out how much taxes you need to pay to the government by your trading activities and most likely you're going to need an accountant or even a lawyer.

In my country we also have rule to pay tax only when we exchange crypto funds to fiat and withdraw to local bank account.
We have also one very good rule that if we keep crypto funds in the wallet at least 2 years and can prove it to authorities, we can exchange all funds to fiat and withdraw without obligation to pay taxes (capital gains).
I really like it