What are the tax implications of buying and selling digital currencies according to the 2021 Schedule D instructions?

1 answers

• May 06, 2022 · 3 years ago
  According to the 2021 Schedule D instructions, buying and selling digital currencies can have tax implications. The IRS treats digital currencies as property, so any gains or losses from these transactions are subject to capital gains tax. When you buy a digital currency, you establish a cost basis, which is the amount you paid for it. When you sell the digital currency, you compare the sale price to the cost basis to determine if you have a capital gain or loss. It's important to keep accurate records of your transactions and consult with a tax professional to ensure you're reporting everything correctly.
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