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nevraledwon
New Member

Must I pay tax this year if I transfer bitcoin from Coinbase to a hardware wallet if I do NOT spend any of the money?

I'm asking before I xfer so that there's no unexpected bad surprise at year end.
6 Replies
Critter
Level 15

Must I pay tax this year if I transfer bitcoin from Coinbase to a hardware wallet if I do NOT spend any of the money?

"In 2014, the IRS issued a notice clarifying that it treats digital currencies such as Bitcoin as capital assets and are therefore subject to capital gains taxes. “The notice provides that virtual currency is treated as property for U.S. federal tax purposes,” it reads. “General tax principles that apply to property transactions apply to transactions using virtual currency.”

The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer.

Thus, not every transfer of funds is considered a sale. For the user, sending bitcoins from a Coinbase account to their Trezor hardware wallet, for example, is only a transfer and not a sale since the user is still in possession of the coins.

“You should keep your own records for best results and update the report accordingly,” Coinbase support explains. “For example, if you transfer funds offsite to a desktop wallet, and then back again, you would not count this as a sale of digital currency.”

http://bitcoinist.com/irs-tax-bitcoin-coinbase/

nevraledwon
New Member

Must I pay tax this year if I transfer bitcoin from Coinbase to a hardware wallet if I do NOT spend any of the money?

Super thank you!
bobbyboybman
New Member

Must I pay tax this year if I transfer bitcoin from Coinbase to a hardware wallet if I do NOT spend any of the money?

This sounds like wrong information.
While you do not pay taxes on the entire BTC amount transferred, when you transfer BTCfrom CoinBase to a local wallet there is a transfer fee associated with the transaction.
That fee is paid in BTC to the miners on the network.
I believe you will owe taxes on that fee as that transfer is considered a service.
As always consult a tax professional for more information
Critter
Level 15

Must I pay tax this year if I transfer bitcoin from Coinbase to a hardware wallet if I do NOT spend any of the money?

If you are the person collecting the fee then it is income to you .... if you are the person paying the fee then it is a cost of doing business.
gavinkalika
New Member

Must I pay tax this year if I transfer bitcoin from Coinbase to a hardware wallet if I do NOT spend any of the money?

What is the consensus here? Transferring to wallet ... is like selling some coin to pay for the transfer?
henryboyle89
New Member

Must I pay tax this year if I transfer bitcoin from Coinbase to a hardware wallet if I do NOT spend any of the money?

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