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For 2017, this is considered a Section 1031 like-kind exchange. An exchange of this type is not a taxable event. You should be able to claim this exchange since your cryptocurrency was exchanged directly for other cryptocurrency. For 2017, this provision is allowed for property, (and the IRS has ruled that cryptocurrency is property and not currency). These exchanges are reported on Form 8824. Please see this FAQ to access the form: https://ttlc.intuit.com/replies/5122176
To be fair, there is some debate as to whether or not crypto for crypto exchanges actually qualify, but the general consensus is that they do when they are executed, documented, and reported correctly. Based on your "facts and circumstances" you would only need to prove that the exchange was a direct exchange and not a crypto to cash to crypto conversion. The sale of crypto to cash would be a taxable event, even if the gain or loss were minimal.
Regardless, this provision is no longer available going forward. With the passage of the year-end tax reform, the Federal Government only allows real property (land, buildings, and so forth) to be considered for like-kind exchange treatment. If in the future you exchange one form of crypto for another, it will be considered a sale of the first crypto (for the U.S. equivalent in dollars at the moment of the sale). If the crypto was held for one year or less, than the gain is taxed at your marginal tax rate (ordinary income), whereas if held for more than one year (one year plus one day), you receive the more favorable capital gains treatment. Then, the new crypto would be "purchased" at the US dollar equivalent. The purchase price (plus fees) would be the new basis for the new cryptocurrency.
For a detailed consideration of this subject, please click on the following link: Bitcoin: New Tax Law Eliminates Loophole | Fortune
This seems confusing. Quoting from the IRS:
Q37. Will I have to recognize income, gain, or loss if I own multiple digital wallets, accounts, or addresses capable of holding virtual currency and transfer my virtual currency from one to another?
A37. No. If you transfer virtual currency from a wallet, address, or account belonging to you, to another wallet, address, or account that also belongs to you, then the transfer is a non-taxable event, even if you receive an information return from an exchange or platform as a result of the transfer.
This makes it sound like transferring from one crypto you own to another crypto you own is a non-taxable event. The original question did not deal with a "sale" (which would be taxable); rather the question was about a exchange from one crypto to another crypto (no sale, rather a "transfer").
This topic sounds pretty murky.
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