Own Crypto? Want to take advantage of the #dip to offset the taxes on your gains?
Nov. 11, 2022
The crypto market is down 46% from its all-time high in May, but shrewd investors are celebrating the dip in prices.
Because the IRS classifies digital currencies like bitcoin as property, losses on crypto holdings are treated much differently than losses on stocks and mutual funds, according to Onramp Invest CEO Tyrone Ross. With crypto tokens, wash sale rules don’t apply, meaning that you can sell your bitcoin and buy it right back, whereas with a stock, you would have to wait 30 days to buy it back.
This nuance in the tax code is absolutely huge for crypto holders in the U.S.
For one, it paves the way for tax-loss harvesting.
“One thing savvy investors do is sell at a loss and buy back bitcoin at a lower price,” explained Shehan Chandrasekera, a CPA and head of tax strategy at crypto tax software company CoinTracker.io. “You want to look as poor as possible.” Read More