If i buy $100 of bitcoin, and sell them the next day, does the tax apply to the profit amount ($100), or the sale of the entire amount ($200). Ex. %40 tax of $40, or $80?

[Opus 17]

Cryptocurrency is treated as personal property, like comic books or household furniture, and the rules have always been the same.

You have a cost basis in property, which is what you paid you buy it.  If a gift, your basis is what the giver paid.  If inherited, your basis is the fair market value on the date of the previous owner's death.

When you sell personal property for more than your basis, you have a capital gain.  The gain is the difference between the selling price and the basis. So in your example, if you buy at $100  and sell at $200, you have a taxable gain of $100.

If you held the property less than 1 year, it is a short term capital gain and if you held it longer than 1 year, it is a long term capital gain, which is taxed differently.

However, unlike stocks and bonds, you can't deduct a capital loss if you sell personal property for less than your basis.  You just have to eat the loss.

(It may be the case that some people who are professional full time crytocurrency investors can deduct their losses, but that would require filing a schedule C, and you would need to see an experienced professional accountant.)

[ColeenD3]

In general, you are only taxed on the profit your made.

However there are circumstances that would tax you upon reciept, such as:

• If you were paid in Bitcoin or other digital currencies, you should report your earnings as income.
• Possibly under a Hardfork receipt