Cryptocurrency Traders Risk IRS Trouble With Like-Kind Exchanges

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Robert A. Green

Many cryptocurrency investors are inappropriately deferring capital gains taxes when they exchange one cryptocurrency for another. An example of this practice: exchanging Bitcoin for Ethereum through a cryptocurrency exchange and using IRC Section 1031 “like-kind” exchanges. But if you were to sell Bitcoin for U.S. dollars and buy Ethereum with U.S. dollars, you would have to report a capital gain or loss. Something is amiss!

Read my blog post on Forbes at http://www.forbes.com/sites/greatsp...rs-risk-irs-trouble-with-like-kind-exchanges/
 
sure thing,,,just like selling say selling out of Ford Common stock and Buying General Motors,,, you owe capital gains. Just because they are both Auto stocks does not count as like asset.
 
Jdesey said:
sure thing,,,just like selling say selling out of Ford Common stock and Buying General Motors,,, you owe capital gains. Just because they are both Auto stocks does not count as like asset.
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That fault sits squarely on the IRS when they decided to categorize crypto as an asset and not currency last year (thankfully for those of us who use the like-kind rule).

Also, stocks are not "fungible" so in your example of course you're going to pay capital gains when you sell.
 
Robert A. Green said:
Many cryptocurrency investors are inappropriately deferring capital gains taxes when they exchange one cryptocurrency for another. An example of this practice: exchanging Bitcoin for Ethereum through a cryptocurrency exchange and using IRC Section 1031 “like-kind” exchanges. But if you were to sell Bitcoin for U.S. dollars and buy Ethereum with U.S. dollars, you would have to report a capital gain or loss. Something is amiss!

Read my blog post on Forbes at http://www.forbes.com/sites/greatsp...rs-risk-irs-trouble-with-like-kind-exchanges/
More...

The govt wants to tax cryptocurrencies? It should make it easier for people to profit with it, not harder. That's what amiss in my opinion. There seems to be only one exchange licensed in the US with very limited functionality.
 
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