IRS Notice 2014-21 for use by taxpayers and their preparers that addresses transactions in virtual currency, also known as a digital currency.
This means that The IRS classifies cryptocurrency as property, and cryptocurrency transactions are taxable by law just like transactions related to any other property. Taxes are due when you sell, trade, or dispose of cryptocurrency in any way and recognize a gain.
The difference between the purchase price and the sale price represents the gain or loss. Calculating the gains or losses on crypto is a straightforward process.
determining the cost basis, which is the purchase price initially paid for the crypto and the value at the time you Sold or Traded it.
then calculate the difference between the purchase price and the value at the time of Sale/Trade of the crypto to determine the gains or losses.
If you sold your assets for more than you paid, you have a capital gain.
If you sold your assets for less than you paid, you have a capital loss.
For more information please refer to Tax Topic:
This information is for informational purposes only and not for the purpose of providing financial, legal, investment, accounting, or tax advice. You should contact your CPA or other qualified tax professional to obtain advice regarding your particular issue or problem.