I received bitcoin (worth $5700) from someone. I cashed out. Is this taxable in my tax return?

[DanielV01]

It is a taxable event, yes.  Receiving the bitcoin itself was not taxable, but cryptocurrency is considered to be investment property, similar to stocks, but not exactly the same.  (The IRS does not define crypto as a security).  However, your bitcoin had one value when you received it, and another when you cashed it in.  The difference between the two values is a taxable event (a taxable event can be a loss as well) that must be reported.

To do so, please see this FAQ with the video attached that can help you to understand how to report this:  https://ttlc.intuit.com/replies/6468764

[monica.won86]

I received $5,762 worth of bitcoin. I cashed out five minutes later at $5,732. So I have to report $30 loss?

[DanielV01]

You are "supposed" to.  If it was gifted to you and you didn't hold it for investment then you are probably okay if you don't report it, but the general rule is that you would.

[monica.won86]

I read it on Investopedia (below) that gift recipient inherits the cost basis (purchase price). So I will be on the hook to pay tax on whole $5700 since I have no idea how much the gift giver purchased this bitcoin for.

<a rel="nofollow" target="_blank" href="https://www.investopedia.com/university/definitive-bitcoin-tax-guide-dont-let-irs-snow-you/definitiv...>

You are stating I calculate my capital gain/loss from the day I received the bitcoin (not gift giver’s purchase price). Is this website not true?

[monica.won86]

Hi Daniel,

I am told contradicting answer.

<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/4739385-is-this-5-762-capital-gain-or-30-loss?jump_to=comment_7385...>

[Vangmx]

Same question but I won about $200 of bitcoins from cashapp competitions and sold it the same day. What would I put when it asks for the specific date of the investment and if the description of property is not listed. It just says “see broker statement”. When I read the statement it does not explain much but about short term or long term determination which does not make sense to me. 

[DianeW777]

The winning of the Bitcoin is considered income on the day you received it. This would be reported as a miscellaneous type of income under  'Less Common Income' and the steps to enter it are shown below.  The amount of the income is the US dollar amount on the day you won the bitcoins.

Long term is property held for more than one year (one year plus one day), and short term is held for one year or less.

Step 1: Please follow the instructions below to report Other Income:

1. Click Federal Taxes -> Wages & Income and scroll down to Less Common Income
2. Go to the last selection, Miscellaneous Income and click Start
3. Go to the last option, Other reportable income and click Start
4. When it asks, "Any other reportable income?" > yes and then type in a description and the amount to report it on your tax return.
5. TurboTax Online and TurboTax CD/Download will use the same procedure

The sale of the bitcoin is reported on Schedule D as a sale of investment.  This will have a cost basis (the amount you included in income in step one above) and sale price of the same amount because you sold it on the same day. It is important to include this transaction on the tax return even though there is no gain or loss.  If you did have any expenses for the sale you can add that to the cost basis.

Step 2: Report your investment sale using the steps below.

1. In TurboTax Online you will find Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B) as a selection under Investment Income
2. In TurboTax Desktop you will enter Cryptocurrency as a Stock, Mutual Funds, Bonds, Other, under Investment Income
3. OR simply search for Cryptocurrency in the upper right