Suppose I purchase 100 crypto tokens at $1 each and later their value increases to $1.50 per token. After selling 50 tokens, I end up with $75. Am I required to pay taxes on these gains even though my total profit does not surpass my initial investment of $100?
Considering each sale as a taxable event irrespective of your overall portfolio, you are liable for taxes on the gains realized from selling your tokens. The profit from selling 50 tokens at a higher price legally triggers a capital gains event. Although your total profit may seem less than your initial investment, the sale itself is what the tax authorities assess. It is advisable to maintain comprehensive records of your transactions and seek advice from a tax professional as regulations vary with jurisdiction and holding periods may influence tax obligations.