There are a few critical facts to understand:
For tax purposes, think of these new currencies as just another capital asset.
Sell at a profit after less than 12 months: short-term capital gains rates apply
Sell at a profit after holding for 12 months+: long-term capital gains rates apply
Sell for less than the price you paid: record a capital loss that may offset other gains
Keep in mind: Using digital currency to buy products or services is — for tax purposes — the same as selling it. You’ll trigger the same capital gains or losses.
Good recordkeeping and careful documentation are essential.
Most importantly, work with a tax advisor who will build these assets into your wealth and tax strategy. You want someone who will serve as a trusted guide to help you maximize your results.
Is it time to upgrade your wealth and tax strategy?
The team at TFW Advisors® would love to help.
Schedule a call today to learn more about how you can make way more money and pay way less tax.