Quote from: RodeoX on March 31, 2017, 01:58:55 PM

Quote from: blacksmithtm on January 18, 2017, 01:08:54 PM

Hey

How do you calculate taxes on alt-coins bought and sold with Bitcoin? For example if i bought 10 bitcoins worth of Monero, and monero rose 10% and i decides to sell for that extra bitcoin, how does that become taxed? Furthermore if/when i decide to sell the 11 bitcoin i now have for fiat, how might that be taxed? Thank you in advance.

Of course you absolutely owe taxes on alt-coins. Don't let the fools here convince you otherwise and risk your profits.
So I'll assume your in the U.S. In that case you owe capitol gains on the profits you made. It looks like your gain was 10%. If you paid $1 for your alt (I'm using $1 to keep it simple) and your alt rose to $1.10, then you owe a percentage of that $0.10 profit.
The rate (percentage you owe) varies depending on your tax bracket. It could be 0% or sometimes as high as 15%. But 10% is normal. In this example you owe $0.01 to the government.

If you failed to pay you could be charged penalties, late fees, interest on the penny, and may face jail time; and you still owe the penny. That's not likely for a penny, but there is absolutely no question of taxation on alts or any money you make.

If you own a stock - say Apple - and it goes up 10% in a fiscal year, you do not owe taxes on that appreciation UNTIL you "realize the profit" buy selling it for fiat. Likewise, when you sell your bitcoin for fiat it is considered realizing a profit and loss and is taxable. However, selling one alt for another or for bitcoin is not "realizing profits." Those are still property assets. When you sell your alt for fiat or convert your alt to bitcoin and then sell for fiat then you are "realizing" profits and have to pay taxes.

This is called a like-kind exchange:

"A like-kind exchange under United States tax law, also known as a 1031 exchange, is a transaction or series of transactions that allows for the disposal of an asset and the acquisition of another replacement asset without generating a current tax liability from the sale of the first asset. A like-kind exchange can involve the exchange of one business for another business, one real estate investment property for another real estate investment property, livestock for qualifying livestock, and exchanges of other qualifying assets. Like-kind exchanges have been characterized as tax breaks or "tax loopholes."[1]"