Buying Altcoin with BTC, Capital Loss Every Single Time?

[jerry0]

I know that when you want to buy an altcoin, let say iota or lisk for example, you have to buy it with btc as oppose to usd or usdt as many altcoins, you cannot pair them with usd or usdt. 



So for example, let say you buy $1000 worth of btc at $1000.  So you have 1 btc.  There is also a fee for buying it so say you only get $997.50 worth of btc.  Now let say you want to buy lisk and say its $1 to make it simple.  You now spend all that btc which is like 0.9975 btc and buy lisk.  You will get around 997.5 - 0.25% fees = $995 worth of lisk so 995 lisk. 



But the issue is when you buy btc at $1000, you have to send the btc to another exchange usually to buy the altcoin.  So first you have to pay that 10 cent - 1 dollar sending fee.  Then after this, you sell btc for lisk.  Obviously by the time you make the transaction to buy lisk with btc... its almost impossible for btc to be around the exact price where you bought it which is $1000 btc price.  Now let say btc price when you do this is $998.



So here, you are


Buying btc at 1000 dollar price
Selling btc at 998 dollar price



And thus incur a capital loss right?



Thus you never put buy or sell lisk until you sell lisk correct? 




Now here is the thing.  Let say you buy btc and sell btc at same exact price which is possible.  Like during those minute span its the same price.  So in these situations, there is no gain and no loss?  Or there is always loss because of the sending fee?  What about the transaction fee?  Because say you bought btc at 1k and sold it at 1k to get lisk... well you are never going to get 1000 lisk, you will probably get 995 lisk more or less right?



So if someone buys altcoins with btc and only does this when they buy btc... meaning... the only time i buy altcoin is when i buy btc right now... then sell it immediately for altcoin, isn't this person going to incur capital losses almost everytime it seems as oppose to capital gains?

[1715252352]

1715252352

[hugeblack]

I did not understand the point you want to make, but let's summarize the following:
 
 - 1 Bitcoin = 1 Bitcoin.
 - If you are afraid of fluctuation in price do not buy BTC or at least do not think about USD value.
 - Transaction fees are very low and are often less than $ 0.1.
 - You can send one million USD using 1 dollar fees.
 - You can trade with the same value (P2P deal) and pay tx fees only.
 - BTC to Altcoin services (challegy) offers direct conversion with small fees.

in short, it is possible to exchange BTC to any altcoin using tx fees only (less than 1$?!.)

[BitHodler]

It's very difficult to figure out what you actually try to explain.

Firstly, it really depends on what country you're in to figure out what can be seen as a taxable event and what not, but generally speaking, it should be something like this:

Fiat to crypto = (mostly) not a taxable event
Crypto to crypto = taxable event
Crypto to fiat = taxable event

What matters is the fiat value of your entry point, and the fiat value of your exit point, and over that amount you either report a gain or a loss. Pretty straightforward if I may say so.

Depending on your country, there can be a certain allowance for gains and losses that you don't have to report, but to be sure you really need to contact your tax authority.

[rodel caling]

This is a mathematical solutions to resolve the problem what did you want go solve, any way op pointing the the fees in very transactions se ding and traded buy bitcoin or altcoins he loss their money because of the fees, but not actually loss their money every time he make transaction fees is normal, if they wantbto,earn he need to know how to get eaen in digital currency mathematically. Wait for the price hype before complain for sure op can get earn investing in crypto.

[Oilacris]

I actually had the hard time on understanding this one but as I had read up;

BTC to fiat pairs are few so you wont have any option to take if you do tend to purchase up bitcoin with fiat.
BTC to Alts does have corresponding fee (it isn't something new) if you do trade up and minding losses and gain then
expect it can happen anytime due to price swings.It will just vary on what you are trying to accumulate as gain - either solely
with BTC or focused on fiat value or even on alt one.

[jerry0]

Don't know why you ppl seem confused.  If you want to buy altcoin, you need to buy btc almost always to get that altcoin.  Example say you want to buy lisk, you can't just send money to coinbase or bittrex and then buy lisk with usd.  So wouldn't that mean you lose money each time almost since you have to pay the trading fees?

[Philipma1957cellphone]

I know that when you want to buy an altcoin, let say iota or lisk for example, you have to buy it with btc as oppose to usd or usdt as many altcoins, you cannot pair them with usd or usdt. 



So for example, let say you buy $1000 worth of btc at $1000.  So you have 1 btc.  There is also a fee for buying it so say you only get $997.50 worth of btc.  Now let say you want to buy lisk and say its $1 to make it simple.  You now spend all that btc which is like 0.9975 btc and buy lisk.  You will get around 997.5 - 0.25% fees = $995 worth of lisk so 995 lisk. 



But the issue is when you buy btc at $1000, you have to send the btc to another exchange usually to buy the altcoin.  So first you have to pay that 10 cent - 1 dollar sending fee.  Then after this, you sell btc for lisk.  Obviously by the time you make the transaction to buy lisk with btc... its almost impossible for btc to be around the exact price where you bought it which is $1000 btc price.  Now let say btc price when you do this is $998.



So here, you are


Buying btc at 1000 dollar price
Selling btc at 998 dollar price



And thus incur a capital loss right?



Thus you never put buy or sell lisk until you sell lisk correct? 




Now here is the thing.  Let say you buy btc and sell btc at same exact price which is possible.  Like during those minute span its the same price.  So in these situations, there is no gain and no loss?  Or there is always loss because of the sending fee?  What about the transaction fee?  Because say you bought btc at 1k and sold it at 1k to get lisk... well you are never going to get 1000 lisk, you will probably get 995 lisk more or less right?



So if someone buys altcoins with btc and only does this when they buy btc... meaning... the only time i buy altcoin is when i buy btc right now... then sell it immediately for altcoin, isn't this person going to incur capital losses almost everytime it seems as oppose to capital gains?

  close to accurate if you are in the USA . Cash to btc to alt . May make a 2 -4 dollar loss that is to be put on you schedule D due to fee of conversion.  Ie 1000 in btc was  2 dollar fee so 998 is value of the btc.  Next the exchange of btc to alt coin say a 2 dollar fee. And the value of the alt when purchased is 996.  So you would report a 4 loss due to fees if you keep holding the alt coin and the alt coin has a cost basis of 996.  Note this is all 2018 Jan 1 or later. As all crypto exchanges of coin to any thing trigger cap gain or loss.  This is all usa based.

[carter34]

Another solution I think generally despite the confusion in your post  is to hodl longer before  re-selling again when price would have appreciated, at that time the loss would be avoided.

[jrrsparkles]

Don't know why you ppl seem confused.  If you want to buy altcoin, you need to buy btc almost always to get that altcoin.  Example say you want to buy lisk, you can't just send money to coinbase or bittrex and then buy lisk with usd.  So wouldn't that mean you lose money each time almost since you have to pay the trading fees?

If you bought your altcoin for $1000 and selling it for $998 included all the expenses for this purchase then you lost $2 from you pocket.

But if you buy bitcoin for $1000 and keep it for over a month at that time you may expect 5% increase so you will make $50 but buying bitcoins against USD value will make you loss interms of btc.

[Harlot]

I doubt that the 1,000$ worth of BTC you have bought will still be valued at 1k when you are buying Lisk. The only number you must remember when you are buying altcoins with BTC is the current price of BTC when you will be buying the altcoin because it will be its current market value, this will be the part when you know whether or not you have capital gains when you are completing the transaction. Then this will also be the time when you will be deducting the necessary expenses and fees involved in the trade.

[Theb]

Your life would be easier if you treated Bitcoin as a dollar amount and whatever is left from the Bitcoin you bought is the capital gain you have (if any). But if we are talking about a loss here than it would be easier since nothing will be left in your Bitcoin and the Lisk you will buy in this scenario would be less than what you expected from the first time.

[1Referee]

People are making things way to difficult for themselves. The IRS doesn't care about the fees you pay to the exchange, so don't calculate them because it only leads to extra confusion. It's just you using $1000 worth of BTC to purchase $1000 worth of Lisk. Whenever you sell (be it at a profit or loss) you still have to use the $1000 as a base, even if you lost a few bucks in fees to the exchange.

It would be extremely helpful if governments would provide guides on how to properly declare gains or losses with how most people in crypto haven't had any prior experience with investments and taxation.

[audaciousbeing]

I know that when you want to buy an altcoin, let say iota or lisk for example, you have to buy it with btc as oppose to usd or usdt as many altcoins, you cannot pair them with usd or usdt. 



So for example, let say you buy $1000 worth of btc at $1000.  So you have 1 btc.  There is also a fee for buying it so say you only get $997.50 worth of btc.  Now let say you want to buy lisk and say its $1 to make it simple.  You now spend all that btc which is like 0.9975 btc and buy lisk.  You will get around 997.5 - 0.25% fees = $995 worth of lisk so 995 lisk. 



But the issue is when you buy btc at $1000, you have to send the btc to another exchange usually to buy the altcoin.  So first you have to pay that 10 cent - 1 dollar sending fee.  Then after this, you sell btc for lisk.  Obviously by the time you make the transaction to buy lisk with btc... its almost impossible for btc to be around the exact price where you bought it which is $1000 btc price.  Now let say btc price when you do this is $998.



So here, you are


Buying btc at 1000 dollar price
Selling btc at 998 dollar price



And thus incur a capital loss right?



Thus you never put buy or sell lisk until you sell lisk correct? 




Now here is the thing.  Let say you buy btc and sell btc at same exact price which is possible.  Like during those minute span its the same price.  So in these situations, there is no gain and no loss?  Or there is always loss because of the sending fee?  What about the transaction fee?  Because say you bought btc at 1k and sold it at 1k to get lisk... well you are never going to get 1000 lisk, you will probably get 995 lisk more or less right?



So if someone buys altcoins with btc and only does this when they buy btc... meaning... the only time i buy altcoin is when i buy btc right now... then sell it immediately for altcoin, isn't this person going to incur capital losses almost everytime it seems as oppose to capital gains?

With this illustration, what you have assumed is that that the value of the alt coin you have purchased did not increase but that is not always the case. When you purchased Lisk for 1$ and say you have 990 units of that after you might have incur several charges to the tune of $10. The moment the price of Lisk increased by say 30% you have made a gain because that means if you should sell for BTC, your revenue becomes $1287 and irrespective of the charges you might have incurred the amount has been covered. The same thing goes if you buy BTC, you buy say 0.01btc for whatever amount, when prices increases, you 0.01btc remains constant just now its has more value which amount to capital gain.

[imstillthebest]

depends on the movement of the price  .

 the price can move ( go up or down ) even at every minute or seconds but those are rare to occur because based on what i observed the price moves  a day or two and longer could be weeks .  better if you can check the price of alts first before you buy it with your btc  .  

buy that alt if the price of that alt drops  so that you wont loose a capital and you can sell it again when the price of that alt increases in order for you to earn an income    .

[veleten]

with bitcoin dominating the market more than ever ,  it is now
almost 70% dominance means that its price is growing faster than that of the all of the altcoins combined
you can't generalize though , there are some alts that are performing okeyish and a few that outperforming bitcoin
BNB comes to mind , but not many other top 100 coins , unfortunately
but on average , you will lose most of the times if you sell bitcoin and sit in altcoin

[jerry0]

Yes im from the us but not in the us at the moment.  I want to know how its treated when you buy altcoin since you dont go directly from usd to altcoin like with btc/litecoin/eth to usd etc.

[coolcoinz]

Yes im from the us but not in the us at the moment.  I want to know how its treated when you buy altcoin since you dont go directly from usd to altcoin like with btc/litecoin/eth to usd etc.

The answer to your question is already here.

People are making things way to difficult for themselves. The IRS doesn't care about the fees you pay to the exchange, so don't calculate them because it only leads to extra confusion. It's just you using $1000 worth of BTC to purchase $1000 worth of Lisk. Whenever you sell (be it at a profit or loss) you still have to use the $1000 as a base, even if you lost a few bucks in fees to the exchange.

It would be extremely helpful if governments would provide guides on how to properly declare gains or losses with how most people in crypto haven't had any prior experience with investments and taxation.

It doesn't matter whether you go through 1 coin to get your altcoin, or 2. Whether it's on the same exchange or another one that you have to send your coins to. It's money in vs money out. You pay 1000 USD, go through the whole process to buy Lisk and that process leads to 10% loss before you even get your altcoin. This means that you don't owe anything in taxes yet, you are at a loss. When you decide to withdraw you will know if you owe anything. If it happens to be 1200 USD you will have 200USD of taxable income. I hope that it's clear now.

If you are a US citizen who lives in the US but is now temporarily in another country you most likely are still under US jurisdiction and owe taxes there. If you get permanent residency in a country like Malta, you will pay taxes there and this means no crypto income tax.

[Flor1982]

Using Bitcoin as capital will surely result of losing if you buy shit Altcoins but if you choose the best Altcoins in the market like Ethereum, Ripple and etc then the chance of losing is reduced. Bitcoin and Altcoin market are both unpredictable therefore do not be a closed minded person that investing in Altcoin using Bitcoin is just a waste of money.

[magneto]

Yes im from the us but not in the us at the moment.  I want to know how its treated when you buy altcoin since you dont go directly from usd to altcoin like with btc/litecoin/eth to usd etc.

You might want to look at 1Referee's post.

To make it even more simple for you, exchange fees are NOT capital losses, because they are simply a service fee that exchanges charge and not actual depreciation of your assets. There is a clear distinction between the two.

The best thing to do is to keep track of all your records in terms of your relevant fiat, depending on the country that you are in. Don't get caught up in an alt's value relative to BTC. If you made a gain in terms of USD, and your jurisdiction is the USA, then yes, you've made a capital gain. Vice versa, even if you made a gain in terms of BTC but made a loss in USD terms.

Check with your tax agency's official site on what constitutes as a "capital gains/loss event".

[coin-investor]

I did not understand the point you want to make, but let's summarize the following:
 
 - 1 Bitcoin = 1 Bitcoin.
 - If you are afraid of fluctuation in price do not buy BTC or at least do not think about USD value.
 - Transaction fees are very low and are often less than $ 0.1.
 - You can send one million USD using 1 dollar fees.
 - You can trade with the same value (P2P deal) and pay tx fees only.
 - BTC to Altcoin services (challegy) offers direct conversion with small fees.

in short, it is possible to exchange BTC to any altcoin using tx fees only (less than 1$?!.)

Your computation is correct, when buying altcoins with Bitcoin you should not mind the transaction fee which is usually very low, you should already calculate the fee that you are going to use and you should not consider it as your loss already, if this is your thinking then you just have to settle with Bitcoin alone and do not mind all the other coins, in cryptocurrency investing its part of our trading routine to always consider the trading fee and do not consider it as a lost.