Can you please say more about liquid and cost basis? You mean the Liquid side chain and taxes? How is this helpful? Thanks.
Discussion
Yeah like the side chain, so, bear with me, but going from btc to liquid is a trade. Meaning that rather than when you buy something with bitcoin and incurring taxes on your bitcoin cost base, youâd only incur a price different from when you bought the liquid (a month or so). If the price dipped a lot from your purchase you could log a loss. If you were spending btc, you would likely only be able to log a loss if price went below the cost basis of a first in first out buy (which could be years ago). I do my taxes and based on what I know, this makes sense to me, but not heard others say this though so ânot tax advice, Iâm not an accountantâ đ«Ąđ
Thanks a lot for the explanation.
Follow up question, if I may: when you exchange Bitcoin for Liquid, e.g., using Bolt Exchange, isn't it, from a tax perspective, selling Bitcoin?
Just trying to understand.
Youâre using the network to transfer value so I think it is not a taxable event, if the value of the bitcoin didnât change, but if you can find an exchange that allows you to buy liquid btc with cash, this grey area wouldnât be an issue
Grey area not in terms of legal and not legal, but just the part that is not perfectly clear.