In US when crypto is sold for fiat you are taxed on the gains. What time frame is taken into account when calculating the gain (or loss)? Let's say that I exchange for USD 20% of my BTC holdings acquired gradually over the past 5 years. How is the gain or loss of that amount calculated?
***Disclaimer***"I am not an attorney, or financial advisor, please seek a professional in your jurisdiction regaurding financial, or legal advice."Heres my two cents, from the best of my understanding...
In the U.S
A short-term gain occurs anytime "before" an approximate year of the realization of the gain/loss.
A long-term gain occurs anytime "after" an aproximate year (365 days) of the realization of a gain/loss.
The realization of a gain/loss occurs when you decide to make a conversion of cryptocoins, either buy trading, making a purchase for goods and services, or selling. The moment you make a transaction reguarding one of these three, you incure a tax liability.
If you within the jurisdiction of the United States, you must pay taxes for state and federal.
Check your tax bracket to determine your percentage you owe when a gain/loss is realized.
I think assets such as cryptocoins are considered investment income.
Be sure to keep detailed records of any transaction history for every single transaction, including wallet to wallet. It's better to have a clean organized ledger prepared before cashing out.
Also request an appoimtment at your bank or credit union to discuss the process, and ask if they're ok with crypto investments, because you don't want to transfer a large amount of money and it gets frozen, nor do you want to draw any suspicious activity to you account on large transfers.
Speak with a professional at your financial institution before transfering anything, alert them yourself, becuase crypto is still new to some institutions, and possibly signal red flags for laundering.
If all goes well, you should be in the clear, just be honest!
