A couple of different cryptocurrencies that I am in have migrated blockchains or went under some type of development where you're swapped tokens for a new set. Where the older blockchain and token is no longer in use and disbanded. I mainly stake and run a masternode, so over years I have accumulated tokens without actually buying from an exchange.
If I transfer my tokens to an exchange and sell them for fiat. How do I file taxes for these crypto assets I don't have original costs or numbers for when they were staked or mined?
Secondly, am I taxed once or twice on staking and mining? Meaning, i am taxed when I receive it and then taxed again when I sell it? If twice, that sounds off, because that could take 40-65 % of the profits away. Please clarify. Thanks!
Digital assets from staking and mining are taxable at both the time received and the time sold. The income is based on the value of the assets on the day received and should be declared on your tax return in that year.
The value of that income declared then becomes the basis of the asset when it is sold (reducing the amount of any gain by the income already declared.)
There is a wealth of additional information that you may find helpful in our Cryptocurrency Guide.
So to confirm, I have to pay tax twice on staked or mined crypto, when
it’s
received and when
it’ssold ?
example. I received 1 token, its value when staked is $1, I sell it at $10 in less than 1 year:
Staking event: $1 x 40 % = 40 cents
Sell event: $10 x 40% = $4
total taxed $4.40
actual profit $5.60 i get to keep?