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by Triv888 1990 days ago
> Why do we need tether?

You only get taxed on gains when you transfer coins to "real" currencies like USD... so you can use Tethers instead and buy Bitcoins back after a drop

1 comments

Not true. Converting from BTC to ETH is a taxable event, for example.
So if I trade fifty $100 cars for a $5,000 car, my income need to be taxed also? How does that work?

What if I transfer from a Bitcoin wallet to another Bitcoin wallet?

For the first question, it depends if you bought the fifty cars for $100 each, or if your basis is less than that. Cost basis is key here. And no to the second question.

The IRS has designed crypto as a property, so you are subject to paying capital gains (or claiming capital losses) whenever you sell, convert, pay or earn. Converting one crypto to another (or to USD) is a taxable event, while transferring BTC in one wallet to another wallet is not (since you keep the same property). Further details at https://www.coinbase.com/bitcoin-taxes#paytaxes.

If you sell a car for more than you bought it for, you do owe taxes on that. https://www.carvana.com/research/2020/03/what-to-know-about-....

> while transferring BTC in one wallet to another wallet is not (since you keep the same property).

It is not since it is a different private key...

It's considered the same as an in-kind transfer for stocks from one broker to another.

Again, the understanding of "property" is evolving in this environment, and there are areas of regulatory uncertainty (such as synthetic assets from staking collateral in money markets). However, transferring from one wallet to another is pretty safe territory.

That's an implementation detail in service to controlling value on the ledger. Moving it around does not change that it represents ownership of a quantifiable amount of BTC, unless you sell it or trade it.