Hi, Community and experts,
I am here seeking help as I have limited knowledge and my co-investor is not helping anymore.
My friend and I funded a broker account under my name for forex investment. We transfer money to crypto.com and convert the USD to USDT, then use the USDT to purchase the ERC-20 and put the purchased FUND into my broker account for trading.
11. Upon checking with customer service of crypto.com, USDT is taxable item, but the conversion rate is not always the same, and it is always smaller than my original USD amount. Is it considered capital loss in my case? (ex: $1030 USD purchased Tether USDT = 1017.41 USDT, $10020 USD purchase Tether USDT = 9841.30 USDT)
And, should I answer YES or NO for the question of "At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in virtual currency? I used my real money for USDT and use the SDT for forex trade. I have cashed out $200 so far (only 1$98.08 USD actually got into my bank account due the conversation rate). It is only this $198.08 considered a SELL and ca be taxed?
2. We broke the partnership up and we only have $5000 earning/profit so far, I saw a char somewhere that for single person, up to $38990 profits is tax free (0% tax), is it true? How do I report it on tax return in next year for 2022?
3. I am withdrawing my fund out and planning to put it back to my bank account, will it become an extra income to me even if it was my original fund, original after-tax money? How do I report so it will not become a problem, not been charged on the USDTS which was just been bought by my real after-tax money?
4. Since my friend purchased the USDT with her money and put to my broker account (linked with my broker-e-wallet), for me to send her part of the fund to her e-wallet, what kind of IRS rules will I face? Should I just not doing anything ? It was just the USDT purchased by her but linked to my account for co-invest, it did not went through my crypto.com account for the USD-->USDT conversion, do I need to report it?
5. By sending fund to another e-wallet from my broker account, what kind of IRS rules and forms will I be involved?
6. How to still get my money back to my real bank account without been charged for tax? It is my original fund money, not earning. And I only take $3000 of the total profit $5000. The other part I will give to my partner along with her original fund that she put into my account. How do I report on tax form? Which form to be used?
7. If I want to use Turbo tax to help me with this kind of co-investment and crypto currency related issues, which version should I buy in 2023? Can I still just use Deluxe version?
This is the very first time I touch USDT and did forex trade. It was a good learning experience, but the rules of IRS just make me very scary and headache, do not even know how to find the answer I need.
Thanks for the help. I have always used the Deluxe version as I never have investment things, and not complicate like this time....
