So we are getting closer, but still not there yet with all the facts needed:
- You purchase $1,000 in crypto A and the price increased to $2,000.
- You indicate that you then purchased $10,000 in crypto B (accomplished through a margin loan).
- You then state that the price dropped and the account was liquidated.
- What was the price of crypto A when it was sold?
- What was the price of crypto B when it was sold?
- It appears that you may have some margin interest expense and this expense may be deductible as long as you have investment income. This will be computed on form 4952. This will only benefit you if you itemize your deductions, but will be "lost" " if you take the standard deduction.
- In conclusion, you have 3 separate transactions that will need to be addressed.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
