Cryptocurrency taxation – How is cryptocurrency taxed? First of all, what is cryptocurrency?
A cryptocurrency is a digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of this security feature. https://www.investopedia.com/terms/c/cryptocurrency.asp
Bitcoin, Litecoin and Ether are poplular crypto currencies. https://www.cnbc.com/cryptocurrency/
Cryptocurrency taxation is similar to the taxation of other investment gains and losses. If capital gains tax applies to a taxpayer’s cryptocurrency transactions, the gain or loss is calculated as the difference between the taxpayer’s basis in the cryptocurrency and the net proceeds received in the sale of the cryptocurrency.
I am a Chicago CPA and tax lawyer. Among other things, I prepare federal income tax returns which may include capital gains and losses from sales of stocks, bonds, real estate and cryptocurrency. To report cryptocurrency gains or losses, the taxpayer needs to provide the basis, net proceeds, acquisition date and sales date.