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How are crypto currencies taxed?
As with any investment, careful note should be taken of the purchase price and date, these kinds of record become invaluable in judging your earnings over the short and long term. They are also indispensable because should you decide to cash out in certain countries, the regulatory tax bodies will want notifying. No matter where you are, take note of your trades and keep up to date with your trade laws.
In the UK:
HMRC announced in 2014 that VAT was due for cryptocurrencies. It needn’t be reported at the time of purchase, but careful note should be taken and kept of date purchased, as well as of price in sterling paid. As a tax payer in receipt of Cryptocurrencies as payment for goods or services, you should follow the same procedure and keep careful note of your sells/buys.
These rules don’t apply to monies received from mining operations, such as cloud mining or your own hardware, and neither does it apply to exchanges of cryptocurrencies for non fiat currencies such as Sterling and Euro, USD, and so on.
In the USA:
Cryptocurrencies are treated as a capital asset, such as a property. As such gains made from the cryptocurrency must be declared upon the currency being sold. There is no need to report the cryptocurrency purchase however.
Upon selling, capital gains must be reported as per usual, however if the asset is transferred for another asset, i.e. Bitcoin -> Monero there is no need to report anything.