U.S based Bitcoin investors, in order to pay off capital gain tax, are selling off their cryptocurrencies. Bitcoin’s first-time investors face huge capital gain taxes from the gains realised in 2017. Reports have revealed that they are quickly selling off before filing their April taxes.
Back in 2014, we recall that the IRS described cryptos as property not currency. In a quote, ARK Invest’s CEO said that: “Those who have never paid taxes before are shocked. Many people gained a lot from cryptocurrency last year but currently, do not have enough cryptocurrency to pay taxes for their last year’s gains.”
Bitcoin (BTC) Price Today – BTC / USD
Vincenzo Villamena (OnlineTaxman.com founder) said that people have seen how stuck they are with large bills. Its either they want to sell off or pay the cryptocurrency.
In what ways do people avoid paying large taxes by selling off their cryptocurrencies?
If a person buys and sells Bitcoin within the same year, that individual will face short-term capital gains tax, and depending on the tax bracket, can get to a high 39%.
Mining of Bitcoin and Airdrops are also taxed. Moreover, they are usually taxed as ordinary income. Therefore, the rate will depend on the tax bracket of the individual. However, when an individual holds on to Bitcoin for over a year before selling, then it will just be liable for what the IRS calls long-term capital gains. The tax rate for this kind is much lower, which can be from around 15%-23.8%.
This same time, Google announced the ban of all crypto-related ads leading the prices of Bitcoin to an all month low. Within six hours, this volatile crypto fell by $500. This is not surprising because generally, cryptocurrencies experience troughs in values & spikes.
Other possible factors contributing to the sharp market decline is the division of the community, which is coming from the Bitcoin Cash civil war. This has polarized the crypto industry, and falling hash rate of Bitcoin, which is happening because miners are shutting off their rigs.