US brah

Cost basis: i buy eth for 68 back in may
Proceeds: i sell eth to usd at 400 on gdax at the peak
---- Taxable Event ---- Tax calculated as net profit * tax rate

>Cost basis: i keep my usd on gdax until price drops to 200 and then i buy
>Hodl
Not taxable event yet, because you sold

The fact that it never goes back to your bank account is completely irrelevant.

edit: Not taxable event yet, because you haven't sold*

How can there ever be gains at the time of the transaction when exchanging directly between two coins?

you'll have to report it, but won't have to pay any taxes until you cash out and don't reinvest it.

lol im so fucking confused. DO I owe any taxes yet overall as i hold my eth???????

Think of it like you're trading FX.

You have USD, you buy EUR.

You have EUR, you buy GBP.

GBP changes in a way that makes you 40k EUR or ~60K USD.

You sell GBP for EUR.

reeeeeeeee

The first trade from the buy at 68 and sell at 400 triggered your taxable event. At that point you owe tax on $332 per ETH you had (net profit).

Then you said you bought something else, this creates a new situation.

It does not matter if you keep your money in the exchange. When you sell, it's a taxable event. I trade stock. When I make $10k and sell the stock, but DON"T withdraw anything i STILL owe taxes on $10k.

Your newest position will be a separate taxable event once you sell.

>but won't have to pay any taxes until you cash out and don't reinvest it.
Un, no. As soon as the sell trade is executed, it's a taxable event. Doesn't matter if you cash out.

So for all tards here.
Here is how you never pay any taxes:

1. BUY crypto
2. HODL

Never sell it or make any kind of transaction with it. You buy it and then wait for it to rise in value.

So how do I cash out?

That's the trick, you don't.

You wait until you have millions in crypto, leave the country to somewhere there is no tax on crypto and cash out over there.

Tada

Here's the problem:
US citizens have to pay tax no matter where they are residing in the world
EU citizens have to pay taxes to whichever country they have resided for the past 6 months.

for

There's no problem if you never sell like said.

Never sell = never taxes

If you reside outside the US as a citizen the first 90k of income isn't taxed I remember right.

>Land of the free
>tax you to death on top of already paying fuck load in income tax, property tax, sales tax

Then what's the point if you never trade your crypto for anything ever? You're just going to let it sit as a number on your screen until you die?

You have to list every single trade, even between altcoins.

You obviously apply for residence in that country dummy. As in: YOU STOP BEING A US CITIZEN.

And become a citizen of another country. Denmark for example has no taxes.

Now you own nothing to the US.

Not true. If you exchange for a good at a gain, still taxable. When 1 BTC gets you a Lambo, there are taxes to pay.

I guess if you're willing to live there 9 years for Denmark's naturalization residency requirement before trading any of your crypto. You need a visa after 90 days btw.

>Denmark for example has no taxes.

Lol.

Uh I disagree. And I think Tax law does too.

If I buy 100 shares of stock for .0001.
Then that stock goes to $5000 per share
I now have $500,000 in equity, and $499,999.99 UNREALIZED gain. Note. It's an unrealized gain.

I've traded stock for 6 years. I have never once paid tax on an unrealized gain. You only pay tax on realized gains/losses. Meaning, you only pay tax right after proceeds can be calculated from the sale.