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I have exchanged cryptocurrencies, but I have not cashed in…

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I have exchanged cryptocurrencies...

I have exchanged cryptocurrencies, but I have not cashed in any currencies. Do I owe tax money on the exchanges?

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

Hello?

Accountant's Assistant: Hi. How can I help?

I have exchanged cryptocurrencies, but I have not cashed in any currencies. Do I owe tax money on the exchanges?

Accountant's Assistant: Is there anything else the Accountant should be aware of?

I bought Bitcoin and Ethereum with USD, but exchanged some of those currencies for some others

Submitted: 3 months ago.Category: Tax
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12/26/2017
Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 3 months ago
Chad EA, CFP ®
Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Tax
Satisfied Customers: 2,148
Experience: Federally licensed IRS Enrolled Agent, Certified Financial Planner (R), MBA
Verified

Welcome to JustAnswer!

My name is ***** ***** I will assist you today.

Q: I have exchanged cryptocurrencies, but I have not cashed in any currencies. Do I owe tax money on the exchanges?

A: Exchanging CC is considered a taxable event even though you didn't receive USD.

You will report these exchanges, date, amount (in USD) and gain or loss on Schedule D of your 1040

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Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 3 months ago

Here is a link to IRS Notice 2014-21 which covers virtual currency

https://www.irs.gov/pub/irs-drop/n-14-21.pdf

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Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 3 months ago

Q-1: How is virtual currency treated for federal tax purposes?

A-1: For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency.

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Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 3 months ago

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Customer reply replied 3 months ago
Do I lump all transactions into one form or must I complete a seperate form for each exchange?
Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 3 months ago

Each separate transaction must be documented in order to determine the proper gain or loss from each specific exchange

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Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 3 months ago

There has been a lot of trading in CC's and this question comes up often. Unfortunately, you have to report each separate transaction

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Customer reply replied 3 months ago
Thanks
Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 3 months ago

When you have no further questions please take a moment to accept the answer by clicking on three stars or more.

Thank you!

Have a great day

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