Tax day is April 17th, 2018 this year and we have to pay Cryptocurrency gains or deduct cryptocurrency losses by that date. For me and many others who got in at the height in Mid-December, that means we will be deducting losses. However, for those of you who got in earlier in the year, you will have to pay taxes on your gains if you happened to sell the Cryptocurrency while it was at its height in 2017. Even though the SEC treats many Cryptocurrencies as securities, the IRS treats cryptocurrency as property and thus each gain or loss from a sale has to be realized and reported. That even means that if you used Bitcoin to buy something at a store, you technically sold the bitcoin for cash and have to pay taxes on that realized gain or loss. So, you must keep track of every transaction you made and calculate the gain or loss from those transactions in order to pay your taxes. This makes it really hard to pay taxes on Cryptos, especially if you did a lot of alt coin for alt coin trading since neither of your trade pairs is USD. I think an easier way to calculate taxes would be to convert all your Crypto into USD value at the end of the year and take:
End of year value – Beginning of year value + whatever you cashed out – whatever you put in.
I think the formula above is a much better way to determine how much you made in cryptocurrency in the last year. I am not sure if you are allowed to calculate this way however and will talk to my accountant. For those of you who have lots of trades, I would advise you to talk to a professional accountant as well just to make sure you get it right. I would certainly not try to evade or escape my crypto taxes, especially if you made a lot of money with them because the IRS will find out and come after you. You must also pay taxes on mining and faucet activities as well.