Timeline for How do I avoid paying tax on a cryptocurrency gain that I have already lost?
Current License: CC BY-SA 4.0
15 events
| when toggle format | what | by | license | comment | |
|---|---|---|---|---|---|
| Jul 20, 2021 at 18:24 | comment | added | chepner | I think even a qualified statement like "wash sale does not apply if the cryptocurrency is not a stock or security", backed by the applicable IRS citation, would be better than what amounts to an unsubstantiated claim by a 3rd party. Ultimately, why do we believe Levine is correct (assuming he is)? | |
| Jul 20, 2021 at 18:14 | comment | added | Ben Miller | @chepner I'd love to see something from the IRS on this that explicitly mentions cryptocurrency. | |
| Jul 20, 2021 at 17:12 | comment | added | chepner | @DavidSchwartz I don't know the details, but that kind of argument is precisely why I don't consider a blanket statement from somebody outside the IRS an authoritative source. | |
| Jul 20, 2021 at 17:09 | comment | added | David Schwartz | @chepner The definition of "security" includes an "investment contract". Whether or not particular cryptocurrencies are or aren't investment contracts is a widely debated issue. | |
| Jul 20, 2021 at 15:05 | comment | added | chepner | This would probably be a better source for the claim that wash sales do not apply to cryptocurrencies (based on it not being a stock or security). | |
| Jul 20, 2021 at 10:43 | comment | added | Ben Miller | @GrandmasterB Thanks for the heads-up. I have edited my answer. | |
| Jul 20, 2021 at 10:41 | history | edited | Ben Miller | CC BY-SA 4.0 |
It seems the wash sale rule doesn’t apply to crypto
|
| Jul 20, 2021 at 5:55 | comment | added | GrandmasterB | My understanding is that the wash sale rule does not apply to cryptos since they aren't securities. | |
| Jul 20, 2021 at 2:01 | comment | added | Acccumulation | @왕뚜껑 Basically, you can't carry more than $3k off of Schedule D. You can claim as much loss as you had as long as you're offsetting income on Schedule D and for the same year. | |
| Jul 19, 2021 at 11:54 | vote | accept | 왕뚜껑 | ||
| Jul 19, 2021 at 11:54 | comment | added | 왕뚜껑 | Miller // Thank you so much! That makes sense now. | |
| Jul 19, 2021 at 11:50 | comment | added | Ben Miller | However, let’s say that you wait until December to sell, and in that time the value of the crypto has gone down to $2k. Your second trade would result in a loss of $48k. This would give you a net capital loss of $8k for the year. You would only be able to deduct $3k of that loss on your 2021 taxes; the other $5k would be carried over to future years to either offset new capital gains or to be deducted on your taxes. | |
| Jul 19, 2021 at 11:47 | comment | added | Ben Miller | The $3000 loss limit is only a limit on deducting net losses. You can use your entire loss to offset a gain in the same year. So if you sell today for $12k, your entire $38k loss can be used to offset your $40k gain, resulting in a net gain of $2k that you will be taxed on. | |
| Jul 19, 2021 at 11:42 | comment | added | 왕뚜껑 | Thank you. What confuses me is that I was told that I can only report up to $3,000 per year as a loss. Is it correct that I can buy other cryptocurrencies as long as it's not the same one I just sold? | |
| Jul 19, 2021 at 11:34 | history | answered | Ben Miller | CC BY-SA 4.0 |