What is the difference between cost basis and proceeds in the context of cryptocurrency?

1 answers

• Nov 29, 2021 · 3 years ago
  In the context of cryptocurrency, cost basis and proceeds play a significant role in determining the financial outcome of a transaction. Cost basis refers to the original value of a cryptocurrency asset when it was acquired. It includes the purchase price of the asset, any transaction fees, and any adjustments for splits or dividends. Proceeds, on the other hand, represent the amount received from selling or disposing of the cryptocurrency asset. The difference between the proceeds and the cost basis determines the capital gain or loss. These calculations are essential for tax purposes, as they help determine the taxable amount of capital gains or losses. It's important to keep track of cost basis and proceeds accurately to ensure compliance with tax regulations and to make informed investment decisions.
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