Well when you buy Bitcoin, you buy an amount of sats for an amount of dollars.

If you sell those sats for more dollars in the future, the difference between the USD you spent to buy the sats and the USD you received from selling it is your profit, and the government steals a portion of that.

If you're constantly moving Bitcoin around between wallets, it can be hard to track which Bitcoin you're selling, so I just put every transaction I've ever done on any exchange ever and match sold sats to an equivalent amount of bought sats and calculate my profits and save the leftover cost bases for next year.