Capital Gains and Losses

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I live in the US. If I'm doing many cryptocurrency to

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I live in the US...
I live in the US. If I'm doing many cryptocurrency to cryptocurrency trades throughout the day (for example, trading Bitcoin for Ethereum and then Ethereum for Ripple, etc. etc.) will I pay short term capital gains taxes on all of those trades? Or does capital gains tax only kick in when I trade a cryptocurrency for a fiat currency (for example, trading Bitcoin for USD)?In addition to the above, I want to figure out how to minimize my tax liability if I were to actively day trade cryptocurrencies many times throughout the day (ex: 100 trades of Bitcoin for Ethereum, Ethereum for Ripple, Ripple for Bitcoin, etc.
Submitted: 11 months ago.Category: Capital Gains and Losses
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9/21/2017
Tax Expert: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 11 months ago
Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional
Category: Capital Gains and Losses
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Experience: IRS Licensed Enrolled Agent, CDFA ® CFP ®, MBA
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Welcome to JustAnswer! My name is ***** ***** I will be able to assist you today.

Regardless of the asset you are trading, if you hold the asset less then a year the asset will be treated as a short term capital gain or loss.

A short-term gain is a capital gain realized by the sale or exchange of a capital asset that has been held for exactly one year or less. Short-term gains are taxed at the taxpayer's top marginal tax rate. A short-term gain can only be reduced by a short-term loss.

If you are in the business of trading then you may have certain business costs that you are able to deduct as long as the business expenses are ordinary and necessary for your business to operate. Any asset held for longer than one year will be treated as long term capital gains and subject to lower tax in most cases

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Tax Expert: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 11 months ago

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