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Cryptocurrency tax liability question

Anonymous — Sun, 21 Mar 2021 05:51:20 GMT

I noticed that there could be tax implications for acquiring cryptocurrencies but are there any taxes due on simply purchasing cryptocurrency on Coinbase using USD if there were no sale transactions?

Re: Cryptocurrency tax liability question

Mike9241 — Sun, 21 Mar 2021 07:56:30 GMT

no tax consequences under current tax law since no sale.

Re: Cryptocurrency tax liability question

DanielV01 — Sun, 21 Mar 2021 19:25:35 GMT

In that sense it's like buying stock. You don't have a taxable event for buying it, but you do want to keep track of the purchase price (which the exchange should do for you). When you use or sell the coin is when the taxability comes into play. Whether it is a cash-out into fiat or if it is using crypto to purchase something or pay for a service, that's when a taxable event has occurred. If you didn't exchange, sell, or use your purchased crypto in 2020, (only purchased or held), there's nothing to report (although you still want to answer yes to the crypto question in the return). This Help Article has more detail: How is cryptocurrency like Bitcoin taxed?