BTC as a Property - Deepstash

BTC as a Property

Because the IRS classifies digital currencies like bitcoin as property, losses on crypto holdings are treated much differently than losses on stocks and mutual funds, according to Onramp Invest CEO Tyrone Ross. With crypto tokens, wash sale rules don’t apply, meaning that you can sell your bitcoin and buy it right back, whereas with a stock, you would have to wait 30 days to buy it back.

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MORE IDEAS FROM Tax loophole to avoid federal taxes on BTC

The more losses you can rack up, the better it is for the investor in the long run.

“You can harvest an unlimited amount of losses and carry them forward into an unlimited number of tax years”.

Because the wash sale rule doesn’t apply, investors can harvest their crypto losses more aggressively than with stocks, because there’s no baked-in waiting period.

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Quickly buying back the crypto is a key part of the equation. If timed correctly, buying the dip enables investors to catch the ride back up, if the price of the digital coin rebounds.

But be caution that thorough bookkeeping is essential.

Be warned, “Without detailed records of your transaction and cost basis, you cannot substantiate your calculations to the IRS”.

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Do I have to pay taxes when I buy or sell crypto?
  • Your taxes will depend on your location, how long you've held your crypto, the type of activity you're doing, and other factors. 
  • In general, you'll probably need to pay taxes or offset losses for selling but not when you buy.
  • As a fairly new asset, tax authorities are still developing crypto regulations. 
  • It's your responsibility to keep track of your taxable gains and losses and pay the right amount of tax, according to your country’s regulatory framework.

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Ethereum promise

Ethereum's initial success can be attributed to a few elements. Ethereum is programable, meaning apps can run on the Ethereum blockchain. This is what let to Ethereum being used in:

  • Decentralised Finance, or DeFi, meaning that apps like investments, insurance etc can be run without a central authority.
  • NFTs, tokens to prove the authenticity and ownership of an object (digital or physical)
  • The consensus in the network through proof of stake. New coins are created by putting guaranteeing your existing money. This incentives people to be good actors and decreases the money supply, increasing its price.

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Bitcoin offers its users many advantages over fiat money and the traditional banking system (see: Why Buy Bitcoin? ). But that doesn’t mean that there aren’t also parts of the legacy banking system which you might miss when you make the switch to BTC. Anybody old enough to have had a bank account prior to the 2008 financial crisis might have fond memories of something called ‘interest’ for example…

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