You Could Lose Big Money on Crypto If You Don't Know These Tax Laws
In this clip from "The Future of Fintech" on Motley Fool Live, recorded on Feb. 10, Motley Fool contributors Matt Frankel, Jason Hall, and Will Healy discuss how the IRS treats cryptocurrency and what investors should know and understand when filing their taxes and reporting crypto gains and losses.
Matt Frankel: The IRS has been treating cryptocurrency the same way for several years now. As I just mentioned, they treat it as property just like if you were to buy a stock, or buy a piece of art, or buy anything else that could appreciate in value where it's treated under capital gains tax law if you sell it at a profit. It could be considered a capital loss, if you sell it at a loss. It's not just if you buy and sell cryptocurrency, which is the problem, it's if you buy cryptocurrency and then use it to pay for something later on and the value of that cryptocurrency has changed. Let's say I buy $5 worth of Bitcoin (CRYPTO: BTC) today. In three months, that $5 worth of Bitcoin is worth $10 and I use it to buy a $10 t-shirt at the mall. I have to pay tax on that $5 difference between what I paid for the Bitcoin and the value I got from my purchase. That could be a logistical nightmare if you're using it for all of your spending. Jason, you mentioned you own some Bitcoin and I think you said Ethereum (CRYPTO: ETH). Have you had to do the tax nightmare with it yet?
Source Fool.com
