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Alfonsor
Level 2
March 28, 2024
Question

How do you calculate the realized gain or loss on the sale of crypto? Can you provide an example? What method should be used?

  • March 28, 2024
  • 1 reply
  • 4 views
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    1 reply

    MarilynG
    MarilynG
    Level 15
    March 28, 2024

    For tax purposes, crypto is either considered earned income or treated as property sales.

     

    It’s treated as a property sale (with capital gains or losses) when you:

     

    • Sell it (like you would stock)
    • Exchange it (swap one type of crypto for another)
    • Spend it (use it as payment for goods and services)
    • Convert it to US dollars (sell crypto to buy regular currency)

    If someone pays you in crypto and then you sell it for a profit, you'll pay taxes on the income and pay the capital gains tax.

     

    The gain is calculated like selling a stock; the difference between your Cost Basis and the Sales Price, and whether it was long-term or short-term. 

     

    Here's more info on How to Report Crypto as Capital Gain and How Capital Gains are Taxed.

     

    Be sure to check out our new Crypto Investor Center. 

     

    **Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"
    A
    AlfonsorAuthor
    Level 2
    March 28, 2024

    How do you calculate the cost basis? 

    R
    RobertB4444
    Level 15
    March 28, 2024

    The cost basis is what you paid for the crypto.

     

    @Alfonsor 

    **Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"
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