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I bought 1 bitcoin and sold part of it to make cash from time to time. How will tax on this income be calculated?
How bitcoin tax is calculated?
Answers
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I’ll start this off by saying I’m not a tax professional, so take this advice as you will...
At the time you purchase your bitcoin, your purchase price becomes your cost basis. This means if you bought 1 bitcoin for $10,000 then this is the price you will compare your capital gain/losses to.
For example let’s say you buy 1 bitcoin at $10,000. A week later the price of 1 bitcoin is $12,000. You decide to sell half your bitcoin due to the price hike and you receive $6,000 for the sale. Your tax liability would be $1,000 in capital gains (sale price of half a bitcoin is $6,000 minus original price of half a bitcoin is $5,000). I believe the in the US the tax on short term capital gains is whatever income tax bracket you fall into, so you would pay a X% capital gain tax on the $1000 profit you made from selling half your bitcoin.
Again I’m not a tax professional, but this is my understanding of how it all works based on lots of research.
@NateEldredge is right, my mistake. The answer has been updated to reflect his added information – Jcmoney1010 – 2018-01-19T04:22:09.517
In Australia it is very similar but it varies for each country or region. – Willtech – 2018-01-25T08:04:41.020
sorry, can't resist: in case there are taxes to be paid, with the current plunging of prices, it will reduce your load :-) Maybe you want to add another tag like "tax"... – pebwindkraft – 2018-01-17T19:58:57.900
thank you:) what do you mean reduce load? – Bitscary – 2018-01-17T20:43:52.070
You would have to pay less... I searched the forum for tax, but couldn’t make up my mind. Complicated matter! – pebwindkraft – 2018-01-17T22:23:22.437
2How can we know the tax laws in your country, when you haven't even told us what country you are in? You may also want to browse the [tag:taxes] tag since we have a lot of other questions on this topic. – Nate Eldredge – 2018-01-19T03:58:08.830