Comment
Author: Admin | 2025-04-28
Gains. The distinction between the two is simple to understand: long-term gains are gains that are realized on assets that are held for more than 1 year. Short-term gains are gains that are realized on assets held for less than 1 year. An example of each: Short-Term: You buy 1 BTC on January 1st, 2018 for $6,000 USD. You sell the 1 BTC on January 2nd, 2018 for $6,500 USD. You have realized a short-term gain of $500 USD, which is subject to your short-term capital gains tax. Long-Term: You buy 1 BTC on January 1st, 2018 for $6,000 USD. You sell the 1 BTC on April 2nd, 2019 for $8,500 USD. You have realized a long-term gain of $2,500 USD, which is subject to your long-term capital gains tax. Long-term tax rates are typically much lower than short-term tax rates. In the United States, for example, short-term tax rates are based off of an individual's income tax rate, which range between 10% and 37% (2018). Long-term tax rates in the United States are also based on an individual's income tax rate, but range between 0% and 20% (2018). Ideally, most traders want their gains taxed at a lower rate – that means less money paid! However, in the world of crypto-currency, it is not always so simple. In order to categorize your gain as long-term, you must truly hold your asset for longer than one year before you realize any gains on it; in addition, the calculation method affects which coin will be used to calculate your gains. Here's a scenario: You buy 1 BTC in 2015 for $500 USD. You also buy 1 BTC on January 1st, 2018 for $6,000 USD. You decide to sell 1 BTC on April 1st, 2018 for $10,000 USD. If using a FIFO calculation method, your gain would be calculated using the 1 BTC you purchased in 2015. This would trigger a long-term gain of $9,500. If you calculated your 1 BTC April 1st, 2018 sale using LIFO, you would calculate the gain using the 1 BTC you purchased on January 1st, 2018. This would trigger a short-term gain of $4,000 USD. Reporting Your Gains Calculating crypto-currency gains can be a nuanced process. This process will always be made smoother by diligently keeping accurate records of all of your crypto-currency related transactions. It's important to record, calculate, and report all of the taxable
Add Comment