If I continually purchased crypto-currency, and never sold it away (only exchanged it to other currencies and not USD), do I have to report it to the IRS?

[rickyg581]

I purchased crypto-currency bi-weekly throughout half of the year of 2017, and never sold a single crypto currency back into my bank account. I only exchanged it to other crypto-currencies if I recieved a decent gain from the current crypto currency. Am I still liable to report it to the IRS even if all I did was buy crypto-currency?

[Zbucklyo · Accepted solution]

If you exchanged one crypto currency into another, that is equivalent to a sale and purchase.  The sales need to be reported to the IRS.

[ochoaben1]

Does this apply to non U.S citizens residing in the U.S ?  Refugees, Illegal Aliens, Permanent- Residents.

[silvino_orozco]

Why not apply Like Kind Exchange to these transactions?  Also, how do you come up with a cost basis for alt coins if we need to reference BTC or ETH value to calculate the basis when exchange values vary AND not every exchange has a direct BTC/ETH to USD (only Tether)?

[Zbucklyo]

Crypto currency is not eligible for a like-kind exchange.

[maglib]

Cryptocurrency is considered property by the IRS and every move within the tax year is a recordable transaction. Cryptocurrency held for investment has a gain/loss. Cryptocurrency for personal property is only gains, no losses (so for purchases of goods and services, there is only gains, no losses as they are personal).

To reports gains/losses allowed (NOT FOR MINERS, miners  report as self employed on schedule C and the cryptoccy for them is as if they produced and sold inventory, they have expenses of producing, then they have income for the receipt of the cryptoccy at spot rate on production, then they sell that inventory unless they held for investment purposes LT) . Non-miners  go to "Personal", "Investment Income",  "Stocks, Mutual Funds, Bonds, Other", and record each transaction with the date you sold the coins, for how much, when you acquired them, and for what.  Choose Other as the category.  You can't take a loss on personal items (if you used cryptoccy to purchase goods and services) which you report those under Other/personal items/other. Cryptocurrency for investment purposes is recorded as Everything Else. Make sure only personal use cryptocurrency is recorded in the personal Items section.

You can report transactions in summary for the year as investments LT vs ST and Personal LT vs. ST for 4 categories of reporting.     

https://www.irs.gov/pub/irs-pdf/p544.pdf and  https://www.irs.gov/pub/irs-pdf/i8949.pdf  are the IRS rules for property and reporting.  Personal property net losses are not deductible but investment property is....  follow the IRS guidelines for property.

IRS guidance on cryptocurrency as property:

https://www.irs.gov/newsroom/irs-virtual-currency-guidance 

https://www.irs.gov/pub/irs-drop/n-14-21.pdf 

I hope this was helpful?

[vsoltren]

So I Swap out 2 Crypto Currency's ETH for SNX The exchange send me a email after I contacted them and send me a csv file which I can't even read what can I do ?

I was able to lookup some number from my Cold wallet which help but what if IRS require more information we both out of luck. I only started playing with Crypto currencies 41/2 months ago. I"m So frustrated. 

[fanfare]

It gets worse.

Each purchase of a number of coins is a lot. you must track and report the lot's date acquired and date sold.

This determines your holding period for that lot.

proceeds of sale - cost of purchase = gain or loss.

You must figure a record keeping system for proper tracking, because the coin exchanges, unlike brokers, are not required to do this for you.

[vsoltren]

Thank you for responding I have been keeping track of what I buy but haven’t sold anything yet but will be sure to keep good track of it  Swapping what is hard to Calculate. Because it like a trade won't see benefits until I sell the swap and probably have to report that too.