Imagine purchasing 100 crypto tokens at $1 each, and later the price rises to $1.50 per token. If you decide to sell 50 tokens and obtain $75 in return, are you required to pay taxes on this sale, even though the proceeds do not cover your original $100 investment?
hey everyone, so after reading the thread i think the key aspect is this: when you sell a portion of your crypto holdings your sale is considered a taxable event. even if you never recoup your full invested amount, you still have to look at the gain or loss on what you sold. in our example, buying 100 tokens at $1 each makes your cost basis $1 per token. selling 50 tokens at $1.50 each gives you $75, and since your cost on these tokens is $50, there’s a gain of $25 that is subject to tax. it might seem weird since you haven’t recovered your full $100, but the tax calculation happens on the sold tokens, not the whole investment pot. what do you all think about this approach? has anyone had experiences that differ when accounting for tokens sold in smaller snippets? i’d love to hear more about any quirks you might have found in different jurisdictions!
In my experience, the critical factor is that tax authorities consider any sale of cryptocurrency as a taxable event, irrespective of whether the overall device covers your full initial investment. When selling a portion of your holdings, the profit is calculated based on the cost basis of the tokens sold. In the example provided, even if the proceeds are less than the total purchase price, the gain on the number sold is counted as taxable income. This method is quite consistent when considering the tax implications.
hey everyone, i’ve been noodling over this too. so i kinda see that when you sell any portion, even if you don’t get back your full investmnt, its a taxable moment because you’re actually realizing a gain (or loss) on that batch. what really baffles me sometimes is exactly how different regions might mix in methods like averaging or specific identification, especially when you have multiple buys and sells at different prices. i wonder if anyone has tried using any of those alternative methods or found a neat way to keep track without a headache? i’d love to know how you all juggle this stuff and what resources or strategies have helped you out. any cool tips or software you rely on for these calculations?
imho every sale triggers tax even if you are not fully recouping. its all done on the sold batch’s profit, not the whole pot. so even if overall portfolio didnt gain, that sale could still hit you with a tax bill