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midnsingh
Level 1

Capital gain/loss on Bitcoin that was bought, transfered, and converted to another cryptocurrency on the same day?

On the same calendar day of 18 Dec 2017 I bought Bitcoin, transferred it to a different exchange and then converted it to a different cryptocurrency (TRX).

I have the original cost basis (in USD) when I bought the bitcoin, and I have the datetime stamp for when I converted the Bitcoin to TRX. I know the price of TRX in bitcoin at the time of the conversion, unfortunately, I'm unable to find intraday trading prices of bitcoin from three years ago to determine if there was a gain or loss.

The price of Bitcoin at the end of the day was lower than it was at the start of the day, and from what I can tell trying to do the math from the data I have, I probably incurred a very minute loss.

How should I determine what the price of Bitcoin was at the time of conversion?

*I understand that this will require an amended return for 2017.

Thanks 🙂
1 Best answer

Accepted Solutions
JohnB5677
Expert Alumni

Capital gain/loss on Bitcoin that was bought, transfered, and converted to another cryptocurrency on the same day?

Either of the two methods you mentioned above will work, but you will have to be consistent.  Choose one of them and use that one uniquely.

 

This tool may help you.

 

US-Dollar to Bitcoin Conversion | USD to BTC Exchange Rate Calculator | Markets Insider (businessins...

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

5 Replies
Cynthiad66
Employee Tax Expert

Capital gain/loss on Bitcoin that was bought, transfered, and converted to another cryptocurrency on the same day?

The only way to determine the exact basis at the time of purchase to have documented how much your spent.  Otherwise, you will have to do a very close approximate.  

 

Calculating the initial basis in a cryptocurrency investment is straightforward. When U.S. dollars (USD) are used to purchase a major cryptocurrency such as bitcoin (BTC) or ethereum (ETH), the basis in that investment will be the amount of the fiat currency used to purchase it, which is no different from establishing a basis for numerous other capital assets. However, cryptocurrency investing can quickly become a nightmare for basis calculation from there.

Cynthiad66
Employee Tax Expert

Capital gain/loss on Bitcoin that was bought, transfered, and converted to another cryptocurrency on the same day?

The only way to determine the exact basis at the time of purchase to have documented how much your spent.  Otherwise, you will have to do a very close approximate.  

 

Calculating the initial basis in a cryptocurrency investment is straightforward. When U.S. dollars (USD) are used to purchase a major cryptocurrency such as bitcoin (BTC) or ethereum (ETH), the basis in that investment will be the amount of the fiat currency used to purchase it, which is no different from establishing a basis for numerous other capital assets. However, cryptocurrency investing can quickly become a nightmare for basis calculation from there.

 

Here is how to amend:

Amend your 2017 return if you need to change or correct something after you already filed it.

Keep in mind: You have 3 years from the date you filed your 2017 return (or 2 years after you paid the tax due, whichever is later) to file an amended return.

midnsingh
Level 1

Capital gain/loss on Bitcoin that was bought, transfered, and converted to another cryptocurrency on the same day?

@Cynthiad66, big thank you!

 

so basis calculation without use of fiat currency is what I’m struggling with at the moment.

 

the exchange was Bitcoin to SiaCoin. I know how much Bitcoin was spent in the transfer, but obviously the price of Bitcoin fluctuates every moment.

 

is there a GAAP method to estimate basis of an asset for asset exchange when you don’t know the exact value of the assets at the time of the exchange?

 

The two ways I can think of doing this are:


1. Using average daily price of Bitcoin on that day and use that as my basis, or;

2. take the price at the beginning of the day and at the end of the day, find the rate of change and figure out what the straight line price was at the time of the exchange.

 

any thoughts?

 

thanks again!

JohnB5677
Expert Alumni

Capital gain/loss on Bitcoin that was bought, transfered, and converted to another cryptocurrency on the same day?

Either of the two methods you mentioned above will work, but you will have to be consistent.  Choose one of them and use that one uniquely.

 

This tool may help you.

 

US-Dollar to Bitcoin Conversion | USD to BTC Exchange Rate Calculator | Markets Insider (businessins...

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

midnsingh
Level 1

Capital gain/loss on Bitcoin that was bought, transfered, and converted to another cryptocurrency on the same day?

Thank you @JohnB5677 

 

this is very helpful!

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