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Recap HomeIRS Virtual CurrenciesUK Tax GuideSA Tax Guide
  • Cryptocurrency Tax Guide for US Individuals
    • Virtual Currency & Cryptocurrency
    • Who are Recap?
  • CRYPTOCURRENCY TAX
    • Do I Need to Pay Tax on my Crypto?
    • Which Taxes Apply?
      • Capital Gains Tax (CGT)
      • Income Tax
      • Non-Taxable Transactions
    • How Much Tax Will I Pay?
    • Capital Gains Tax
      • Calculating the Capital Gains and Losses
      • Cost Basis Methods
      • Disposal proceeds
        • Non Taxable Events
        • Taxable Events
        • Donating cryptocurrency to a charitable organization
        • Gifting cryptocurrency to another person
    • Income Tax
      • Receiving cryptocurrency from mining
      • Receiving cryptocurrency rewards
      • Forks
      • Airdrops
      • Tax on Tokenswaps and Mainnetswaps
    • Deductibles and Reducing Capital Gains
  • TRANSACTION TYPES
    • 💷Selling Crypto for Fiat
    • 🛍️Purchases using Crypto
    • 🔄Exchanging one crypto for a different crypto
    • 🎗️Donations to Qualified Charities
    • 🎁Gifts
    • 🎈Airdrops
    • 🤝Staking
    • 💸Transfers
    • 🍴Forks
    • ⛏️Mining
    • 👛Employment income
    • 🚨Lost & Stolen Crypto
    • 💧Liquidity Pools
    • 🔮Cryptoasset derivatives (CFDs, Futures and Margin Trading)
    • 💼Crypto Loans
    • 💎Lending Rewards
    • 🪞Reflections Rewards
    • 👥Referral Income
    • 💳Cashback
    • 🎨NFTs (Non Fungible Tokens)
    • 🎮Play-to-earn gaming NFTs
  • Record Keeping
  • Reporting Income and Gains to the IRS and Paying the Tax
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  • Purchases in Recap

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  1. TRANSACTION TYPES

Purchases using Crypto

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Last updated 3 years ago

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In certain events, you can spend cryptocurrencies to make purchases. When you spend crypto, it is treated as if you sold the crypto for fair market value.

As such, these events (among others) can generate a capital gain or loss:

  • Paying fees on trades, withdrawals and deposits of crypto

  • Buying a pizza

  • Paying for accountancy services

*Note that this is not an exhaustive list, yet the key to remember is that if you are providing cryptocurrency for goods and services to another person, it is a taxable event.

Example: Sam bought 1 LTC for $10 and bought a hardware wallet for 1 LTC when the price was worth $100. By disposing of the 1 LTC, she experienced a capital gain of $90 (calculated as the sales price of $100 less the cost basis of $10).

Disposals proceeds

“If you exchange virtual currency held as a capital asset for other property, including for goods or for another virtual currency, you will recognize a capital gain or loss.”

Any use of cryptocurrency to pay for goods and services is a taxable event. This could be for a crypto related service or for a “real world” transaction like using crypto to pay for a coffee.

If you use virtual currency to purchase property, including goods as part of an ‘arm’s length transaction’, the gain or loss is the difference between the fair market value of the property and your adjusted basis in the cryptocurrency exchanged.

  1. Simply connect your exchange accounts or wallets through our automated integrations or enter your data manually via the user interface or CSV file.

  2. Recap treats the purchase of goods/services with crypto as if you have sold crypto for USD at market value. All USD valuations of the assets are determined by Recap's own market valuation engine using both foreign and cryptocurrency exchange rates.

  3. See the tax impact of every purchase (example below) in the tax tab or download a PDF tax report.

The on using crypto to pay for goods and services is:

When you pay for goods and services using cryptocurrency, the that you are effectively exchanging that capital asset for property or service. As such, you must recognize a capital gain or loss, because in exchanging the cryptocurrency, you are disposing the cryptocurrency that you own. A rule of thumb to remember is that the cost of the services you receive is your proceeds, and you would subtract that from the original cost basis of the cryptocurrency you spent. The difference between these amounts would be your capital gain or loss.

Purchases in

has been designed to work out the capital gains impact of purchasing goods and services using crypto.

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An example purchase in Recap