Nostr Web Client

I need help understanding how to handle all the tax complexity of “selling” Bitcoin.

Cash App is KYCd, so the IRS knows the amount of BTC income; which means that technically every UTXO that leaves my wallet needs to have Capital Gains Tax calculated on it?

Which means I’d’ have to manage purchase dates, amounts and prices for all UTXOs? And then calculate the gain or loss on them when I sell them for fiat?

Ugh.

SARGE 2y ago

Yeah, so it’s only subject to capital gains/losses reporting if you trigger a taxable event.

Taxable events for Bitcoin (as it’s currently coded) are:

1. Converting into another crypto asset

2. Selling for Fiat

3. Exchanging Bitcoin for goods/services (paying with it)

CashApp only reports what you currently hold and/or bought, sending to an external wallet you hold or keeping it in CashApp doesn’t trigger a taxable event.

Additionally, Cashapp provides you with your tax forms and comes with free filing.

TLDR - Don’t sell your Bitcoin for Fiat or use it to buy things while the funds are tagged as KYC (You shouldn’t want to sell your Bitcoin for fiat on principle anyways😉)

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