Re: [US IRS] Crypto-to-crypto swaps create tax events... what?
I can't make sense of the IRS requirements.
If I trade BTC for ALT and ALT only has value in BTC (ie. a net zero transaction), what do I owe tax on?
If I trade BTC for ALT and ALT only has value in BTC (ie. a net zero transaction), what do I owe tax on?
BTC always has an equivalent USD value so these aren't "net zero" transactions.
when you buy altcoins with BTC, the IRS considers it to be 2 transactions:
1. sell BTC for the equivalent amount of USD
2. buy altcoins with that USD
you are expected to calculate the USD value of BTC at the time of the altcoin trade to determine the cost basis of your altcoin position.
And if I trade that ALT back to BTC I owe tax AGAIN on the same thing I already paid tax for. 
nope. when you bought the altcoin, you were selling BTC. that's what you paid tax on already. when you sell the altcoin, it's a different taxable transaction entirely.
oversimplified example:
-let's say you bought 1 BTC for 10000 USD. then you sold that 1 BTC for 100 GGC when BTC was worth 15000 USD. you owe tax on the 5000 USD gain.
-your 100 GGC has a cost basis of 15000 USD (150 USD each). let's say you sell them for 2 BTC when BTC is worth 20000 USD. you now owe tax on a 25000 USD gain.