Re: Questions about ICO participation as a United States citizen
Well if you really want to be avoided by being audited by the IRS you mus include your earnings from the ICO In your income tax report. It could be classified as 2 kinds you can either make it as an income or you can put it as capital gains like in real estate and stocks. It is really up to you on which it can be tax lower. Hiding your true income is really a pain in the ass, so if you don't want to be bothered by the IRS you must be truthful.
That's the thing, I am 100% for paying rightful taxes and plan on doing so. From my understanding, you only pay taxes on a taxable event (like a trade/sell) correct? If I buy and hold without selling/trading, does this need to be reported also? This is a new field to a lot and I want to do it the right way.
If you are just holding, you are fine. When you convert a crypto to real world value,however, you have experienced a "capital gain" and would be subject to the relevant taxes. This isnt just sellig a crypto for a fiat; this would include purchasing anything with crypto that has an appreciable "real world value" and that could be sold for fiat (the government, while heavy handed, is not stupid). Make sure to establish your basis (purchase price) of the crypto each time you buy more, in your records. Exchanges track this for you, but you will have a much more organized record if you do it yourself, rather that examining your trading history across multiple exchanges with a shifting bitcoin rate
