Today something interesting happened with regards to a trade I made between ETH and NANO. Anyone trying to do their tax returns with cryptocurrencies by the book, will understand the frustration of calculating everything back into dollars on the date the trade was made.
So basically I bought some NANO with ETH back in June when ETH was about $600, and the trading pair was 0.0068. I set a few orders as NANO continued to go lower. This week NANO has been rising slowly, and with ETH still dropping today one of my sell orders filled when NANO hit 0.008. I sold about 40% and gained roughly 0.1ETH.
Being concious of tax at the moment since my tax return is due in October, I have decided that in order to avoid the tax nightmare next year, I'm going to write down the profit/loss whenever a trade is made. And by the way, I'm not really a trader. I've made quite a number of mistakes trading crypto in the past year, so now I'm jsut going to try and trade general swings in the market.
Anyway....
The price of ETH has dropped quite a lot since June, currently sitting at around $275. So as I'm calculating how much tax I need to pay on my trade, it turned out that even though I gained ETH, I actually lost about $200.
This is something I'm still trying to get my head around, even though I guess this trade worked out in my favor. I gained 0.1ETH but lost $200..... The real problem is that if this is possible, then the oposite is also just as likely. For example someone losses some ETH on a crypto/crypto trade, but still need to pay dollars in tax!
So, this is just my opinion but shouldn't there be a strong argument if the tax department ever came knocking, to be like.... sorry guys this is simply illogical, and frankly getting a little silly.
How about we just tax crypto to fiat trades ok? Keep it simple.