Crypto Taxes short term gain Question

[jwag01]

Scenario: Bought a sum of BTCUSD on 1/2/2021 and panic sold on 1/11/2021. Then immediately rebought same day 1/11/2021. The amount was quite large and it is showing the full buy/sell/rebuy as a huge short term capitol gains tax. Is this correct? Is there any exceptions for quick sell/rebuy? 

[rjs]

Yes, it's correct. If you had a gain on the sale, you have to pay tax on the gain. It doesn't matter what you did with the money, including immediately rebuying the same investment. There are no exceptions.

[jwag01]

I actually lost money when I sold but because the sum was large the full amount I received back is being taxed? Does that seem right? I just want to be sure.

[Snap]

Sale of crypto is considered a sale of property.  So, you should report your transaction as a short-term capital gain even if you did not get a form from your financial institution.  Be aware that there is a question on the return that asks if you have sold any virtual currency and a "Yes" answer will trigger a flag for the IRS to look for the capital gain transaction.  

There does not appear to be any exceptions to this that I know of.  There are some changes to the tax laws regarding virtual currency being discussed now.  I am not sure where Congress will end on this. Hope this helps.

[Snap]

Unless you are in the business of trading crypto currency, the loss from the sale of your crypto is offset against any other gain or sale of property including stocks and other securities.  Any excess loss is deductible against ordinary income up to $3,000. The rest is carried over to future years.

The good news is that the Wash Sale rules for virtual currency transaction do not apply in 2021. 

[rjs]

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@jwag01 wrote:

I actually lost money when I sold but because the sum was large the full amount I received back is being taxed? Does that seem right? I just want to be sure.

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No, that's not right. But it has nothing to do with how large the amount was. If you had a loss on the sale it should show as loss on your tax return, not a gain. Where in TurboTax are you seeing that the full amount that you received is being taxed? The only place you could see the taxable amount is on a TurboTax summary screen that shows "Gain/(Loss)" for the sale, or by looking at the gain or loss for the sale in column (h) on Form 8949. Some TurboTax screens show "Gross Proceeds," but that doesn't mean that the proceeds are being taxed. It just means that that's the amount you received.

[fanfare]

"buy/sell/rebuy"

you do not report BUY orders on your tax return 

Only SELL orders.