Cryptocurrency is an investment property and you owe taxes when you sell, trade, or use it. With that said, the character of a gain or loss generally depends on whether the virtual currency is a capital asset in the hands of the taxpayer.
That is the gist of cryptocurrency and taxes in Los Angeles U.S., below we explain some details and clarify the implications of the above.
1. for tax purposes, cryptocurrency is treated as property and not as a currency. This means that it is considered a capital asset, similar to stocks, bonds, or real estate. However, not all the same rules that apply to these other assets apply to crypto.
2. if you trade cryptocurrency for fiat currency, such as the U.S. dollar, you must pay taxes on the transaction.
3. if you trade cryptocurrency for another type of cryptocurrency, this is also a taxable event. You must calculate the fair market value of the trade in Los Angeles USD at the time of the transaction.
4. you must also pay taxes on forked coins or coins that you have mined and sold.
5. if you are mining or using cryptocurrency for business purposes, there are additional considerations that you should be aware of.
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