Virtual Currency basis

[cstinson65]

I've converted $10,000 US dollar to 10,000 USDT (stable coin) virtual currency in a service that returns 200 USDT per month but instead of converting it back to USD I roll over that 200 USDT each month back into the service and thus haven't converted anything back to USD or converted to another virtual currency.  Am I required to pay taxes on the returns that I roll over?

[Denisev1220]

In general the answer is yes. You could have received it but chose not to. 

You still received income.

[LoriC17 · Accepted solution]

Just to add, If you buy crypto, there's nothing to report until you sell. If you earned crypto through staking, a hard fork, an airdrop or via any method other than buying it, you'll  need to report it, even if you haven't sold it.

[rschule1]

Hi There:

Assuming the 200 monthly USDT is increasing your initial $10,000 USDT  by 200 USDT monthly then it is taxable at short term ordinary gain rates.  For a thought experiment, 200*12 equals a 24% rate of return, which makes me wonder if such a return is sustainable?  Btw, I'm an accountant not a financial planner, so re: viability of investment-please consult with a financial planner.