Reporting Cryptocurrency as Operating Income or Capital Gain

Is the sale of cryptocurrency an asset disposition or operating income?

Reporting Cryptocurrency as Operating Income or Capital Gain. The sale can be looked at as either operating income or a capital gain or loss. This event could create a taxable transactoin depending on your cost base.

If you do the any of the following things there’s a possibility of a taxable event:

The events consist of selling or making a gift of cryptocurrency trading cryptocurrency on an exchange which would include selling or buying of cryptocurrency.

Converting cryptocurrency into government issued currency or any Fiat currency which could create a capital gain or loss.

Using cryptocurrency to buy goods and services that didn’t in in essence are an asset that could’ve had a store of value.

If someone has  cryptocurrency is part of a regular business operation then it will not be deemed as a capital gain or loss. Buying cryptocurrency with the intention of trading it down the line for a profit, may not be considered as a capital gains and could be treated as income.

Day trading Crypto with the intention of making a profit can be considered as operating income. Having a business plan will help to show that your intention is to be a business over keeping it as a store of value that will be traded at some point for a gain.

Cryptocurrency gains from the sales are generally included as in the income for the year but only half of it is taxed as capital gains. Unfortunately capital losses cannot be used to reduce income from other sources during that same year.  You can carry back the capital losses for three preceding years as long as there is no current capital gains to offset them against in the current year.

Reporting Cryptocurrency as operating Income or Capital Gain.

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