8 Ways to Avoid Taxes on Your Cryptocurrency Transactions

How to Legally Avoid Taxable Gains on Cryptocurrency

Cryptocurrency is one of the hottest topics in finance right now. After a dramatic past few months of government crackdowns, network drawdowns, and panic, data shows that many market participants have been cashing out.

When selling crypto, or any type of financial asset, capital gains are usually a top concern for investors. People usually want to pay the lowest amount of taxes as possible, which thus allows them to keep more of their profits.

What are Cryptocurrency Taxes?

The IRS treats cryptocurrency gains as a capital asset, which means crypto taxes are no different than the taxes you pay on other realized gains from the sale or exchange of securities.

When you purchase a capital asset — be it a stock, bond, house, Dogecoin, Bitcoin, or other investment — you establish a basis equal to your cost to acquire it. When you decide to sell it, you compare your sales proceeds to the basis to determine whether you have a capital loss or a capital gain. If your proceeds exceed your basis, you have a capital gain. If not, you have a capital loss.