Oddbean new post about login | logout Bitcoin Tax Tip of the day. Bitcoin held over a year is taxed at a lower rate in the US. Even the IRS wants you to Hold.
Did you know that the lowest rate for long-term capital gains is actually 0%? If you earn under $47k as single filer or $94k as a married couple, your gain on bitcoin held over one year might be ZERO! Tax Tip of the Day. nostr:nevent1qqs2wl7mduzgvrkn9f9ux2jr9l4gax8j2fuukeh25wrhwfr4s07u2nqpr4mhxue69uhkummnw3ezucnfw33k76twv4ezuum0vd5kzmp0qgsx3lh8hd7z4sglwgr2s9c7dw23f26a35c3gy7artuxjpmce6hqa5qrqsqqqqqpj44fv2
I'll be reaching out soon. Thnx for the reminder.
What do you do when you can’t determine or prove the cost basis of a UTXO? Take the L and use $0 or will the IRS accept an educated estimate?
Hard to say what position the IRS would take. I'm not aware of any active cases to reference. I would say it doesn't have to tie back to an individual UTXO, but ideally some record of activity either from a wallet or exchange.
Following up on yesterday's tax tip... You might have heard about tax lost harvesting. Selling bitcoin and then buying it right to recognize a loss for a given tax year. But would you ever want to harvest a tax gain? Maybe if your gains are taxed at zero percent. Let's walk through an example. You are retired/didn't have any income for the year. You have 1 bitcoin purchased over a year ago at $60k. Bitcoin goes up to 100k. You could potentially sell, buy it right back. Realize the $40k gain taxes at zero %. And your new cost based goes from $60k to $100k nostr:nevent1qqs2wl7mduzgvrkn9f9ux2jr9l4gax8j2fuukeh25wrhwfr4s07u2nqpremhxue69uhkummnw3ez6ur4vgh8wetvd3hhyer9wghxuet59upzq687u7ahc2kpraeqd2qhre4e299ttkxnz9qnm5d0s6g80r82urksqvzqqqqqqydlu5s4