Exchanging Cryptocurrencies Tax Issues
Investors, News, Popular, Trending August 28, 2018 Comments Off on Exchanging Cryptocurrencies Tax Issues 54Exchanging cryptocurrencies
A common transaction in cryptocurrency investing is exchanging one cryptocurrency for another cryptocurrency. This is especially true because investors frequently dabble in cryptocurrencies that cannot be directly purchased using fiat currency and can be acquired only by exchanging major cryptocurrencies such as BTC or ETH for them. From a basis calculation standpoint, exchanges of cryptocurrencies are important because one capital asset is being disposed to acquire another. This type of transaction not only triggers a taxable event from the disposition, but it also requires the basis to be calculated on the newly acquired cryptocurrency. This is challenging because at no point in the process has any cash been exchanged. Thus, exchange calculations will have to be made to determine the basis in the newly acquired cryptocurrency.
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