How to track and report crypto transactions for tax purposes

cointelegraph.com:

As cryptocurrencies and blockchain assets continue to grow in popularity and mainstream adoption, the United States Internal Revenue Service has taken an increasing interest in their taxation. 

In the U.S., cryptocurrency is subject to crypto tax and is classified as transactions instead of property or assets. Needless to say, failure to accurately track and report these transactions can result in penalties and fines.

Here is a comprehensive crypto tax guide for tracking and reporting crypto transactions for tax purposes in the United States.

In the U.S., if you invest in crypto assets, such as nonfungible tokens (NFTs), and transact further for gains, you must be ready for crypto taxation.

Note that buying crypto alone — or its rise or fall in value while it is in your portfolio — isn’t taxable. Taxes are due when you sell, invest or dispose of the asset in any way for gains.

Cryptocurrency is subject to taxation in two ways: capital gains tax and income tax.

This applies to profits earned from the sale of an asset that was purchased at a lower price. Any gains realized from selling or trading a digital asset for a higher price than purchased are subject to capital gains tax.

If crypto assets were held for less than a year, it is considered a short-term gain. If it was held for more than a year, it is regarded as a long-term gain.

Capital gains events include selling cryptocurrency for fiat currency and sending cryptocurrency (over $15,000) as a gift.

Additionally, purchasing goods and services with cryptocurrency is also considered a capital gains taxable event. Trading or swapping one digital asset for another is also considered a capital gains event. This includes purchasing NFTs with cryptocurrency.

As such, it is crucial