What are the factors to consider when calculating CGT on cryptocurrency investments?

1 answers

• Nov 27, 2021 · 3 years ago
  Calculating CGT on cryptocurrency investments can be complex, but it's important to get it right. Firstly, you'll need to determine the cost basis of your cryptocurrency, which is the original purchase price. This can be a bit tricky if you've acquired the cryptocurrency through various means, such as mining, airdrops, or exchanges. Secondly, you'll need to know the fair market value of the cryptocurrency at the time of sale. This can be determined by looking at reputable cryptocurrency exchanges or using specialized tools. The difference between the cost basis and the fair market value is the capital gain. It's also important to consider the holding period of the cryptocurrency. If you held it for less than a year, it may be subject to short-term capital gains tax rates. If you held it for more than a year, it may qualify for long-term capital gains tax rates, which are usually more favorable. Lastly, don't forget to keep detailed records of all your cryptocurrency transactions, including dates, prices, and any fees or commissions paid. This will help ensure accurate reporting and minimize any potential issues with the tax authorities.
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