I am kind of confused on the Crypto Currency tax requirements, It is coming across as a double taxation when you pay tax for both mining and selling.

IRS states mined is self employed income but when sold it is property asset and thus capital gains, but it was already taxed as income. I understand if it is paying for interest earned or the difference of gains versus when it was mined but how do you not pay tax on the same amount twice?

posted

No. Suppose you mine 1 unit on June 1 at a market price that day of $5000. That’s taxable income.

Then, if you cash it out on July 1 for $6000, you only pay tax on the gain, the difference between your basis ($5000) and the selling price ($6000), or $1000. Only your gain is taxable , not the entire sales price.

Thank you Opus. I was thinking only the gains would be the taxed on sale amount but the way the IRS website words it fails to include the details and it didn't seem right that they would tax an income as assets upon sales. This makes me feel much better!