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Author: Admin | 2025-04-27
In which your crypto-currency use could result in a capital gain: Trading Crypto Buying Crypto with Crypto Selling Crypto for Fiat (i.e., USD or CAD) Buying items or paying for services rendered with Crypto The taxation of crypto-currency contains many nuances - there are variations of the aforementioned events that could also result in a taxable event occurring (i.e., trading with coins acquired from a fork/split or buying something with crypto that you received for services rendered). Buying Crypto-Currency Simply buying a crypto-currency with fiat* does not create a taxable event. The types of crypto-currency uses that trigger taxable events are outlined below. Keep in mind, it is important to keep detailed records of when you purchased the crypto-currency and the amount that you paid to acquire it. These records will establish a cost basis for these purchased coins, which will be integral for calculating your capital gains. * The term “fiat” is used throughout this article. For those reading who are unfamiliar, the term “fiat” typically refers to a country's legal tender, such as USD or CAD. Trading Crypto-Currency & Selling Crypto-Currency for Fiat Trading crypto-currencies is generally where most of your capital gains will take place. Here is a quick example to illustrate what “trading” refers to: You buy 1 BTC for $6,000. You now own 1 BTC that you paid for with fiat. You then decide that you'd like to purchase a different crypto-currency, typically referred to as “altcoins”. You then trade .5 of your BTC for 20 ETH. The above example is a trade. It can also be viewed as a SELL (you are selling .5 BTC and receiving 20 ETH in return) or a BUY (you are buying 20 ETH with a total cost of .5 BTC). Any way you look at it, you are trading one crypto for another. Getting Paid with Crypto-Currency In most countries, earning crypto-currencies for services rendered is viewed as payment-in-kind. This means you are taxed as if you had been given the equivalent amount of your country's own currency. So, for example, say your salary was paid in part cash and part Bitcoin, and each month you received $1000 worth of Bitcoins, you are taxed like you had just received $1000. If you are paid wholly in Bitcoins, say 5 BTC, then you would use the fair value. This would be the value that would paid if your normal
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