Non-Taxable Transactions
Not every transaction is taxable or reportable under the tax code.
Some of these transactions include:
Purchasing cryptocurrency with fiat currency (USD, GBP, EUR, etc.)
Transferring cryptocurrencies between wallets and exchanges you own
Sending or receiving cryptocurrency as a gift
Making donations to qualified charities in cryptocurrency
Cryptocurrency gifts
Cryptocurrency gifts may be non-taxable to both the giver and recipient, so long as you do not exceed the annual tax exclusion threshold ($15,000 per recipient per year) or lifetime gift tax exclusion. Gifts over $15,000 will need to be reported by the sender on an annual gift tax return. The cost basis of any gift should be provided to the recipient, since the recipient will inherit the original cost basis from when the sender originally acquired the cryptocurrency.
For example, if you bought 1 BTC in 2013, and then gifted it to someone in 2020, the recipient’s cost basis would be whatever you originally paid for that 1 BTC in 2013.
Donations to qualified charities
Donations to qualified charities under US tax law may count as a charitable donation and help lower your overall tax liability. These donations should be reported on your return.
Margin Trading
Because cryptocurrency is considered property by the IRS, in margin trading, borrowing funds to trade crypto is not considered a taxable event. In fact, any time you borrow or take a loan it is not taxable. However, when you close the position (sell the property), gains (or losses) will be reportable on your tax return. In summary, borrowing crypto is not taxable, but any trades you do with the borrowed crypto is taxable.
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