Dear All,
I'm fairly new to cryptocurrency
I have few questions.
1, Is it legal for US citizens to invest and trade(exchange) Bitcoins or another type of Cryptocurrency by using coinbase.com or other Platform?
- When you exchange Cryptocurrency for Cryptocurrency. Cash is not involved. But still, your initial investment is by Cash. Are there any IRS forms one has to fill?
3, Is it legally possible to convert Bitcoin/Cryptocurrency to Cash in the US?
Thanking you all in advance.
Not currently illegal in the USA. But it is subject to capital gains tax and if you get paid for services in bitcoin, you are also subject to income tax. Hire a tax accountant to sort it out.
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Thank you for your kind reply! Basically, we have to pay capital gain tax on unrealized profits? If we are legally able to convert Bitcoin to cash. That is diffrent situation. Maybe, I will try to Buy and hold for long term as an Investment .
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If you just hold then there's no tax consequences. But when you cash out it's 15% according to my tax accountant. For instance if I buy $100 btc and cash it out at $200 then I have to pay 15% of the 100 dollars in profit which would be $15.
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Thank you! Well noted.
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You should be aware that the IRS doesn't really understand that bitcoin address change doesn't necessarily mean transaction. For instance, before the segwit fork, I took all my coins off Coinbase and sent them to my hardware wallet. But the IRS is attempting to audit Coinbase users and they may make the assumption that you owe them money if you send them offline to your hardware wallet because they can't know if you own the other address or not. This will be an ongoing issue as regulators get educated on the subject. Currently they're making stupid mistakes because they don't understand the technology.
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Thank you for sharing this information. It will take time .Wish trading platforms are designed in a way IRS can get Bitcoin directly when People make capital gains. That will be win win situation for Both Investor and for the IRS.
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