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You need to keep detailed records of all crypto coming into your possession.
That value on that date is your basis.
if you exchange from one form to another, that is a capital transaction that is reportable to IRS on your tax return.
Oh yes I do. I’m asking something in specific about income made from self employment. I provide free lance services for projects and get paid in ether. So that counts as income and income tax. Let’s take an example. I get $400 in eth (let’s say it’s .2 eth worth $400) for making a website for a project. Now when I go to sell it, say on coinbase, for fiat, there should be a cost basis of $400. Let’s say I immediately transfer that to coinbase and cash out for fiat. Is that now capital gains tax? If so, why and how?
If your cost basis is $400 and you cash out for $400 your capital gain is zero.
You still have to report the SELL transaction of crypto.
meanwhile your self-employed income is $400 (from crypto).
Since crypto is not stable, having a gain/loss of exactly zero is unlikely.
every single time you sell crypto, the transaction must be reported and is subject to capital gains tax.
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