All Things Tax

All Things Tax

Like the title says, from the filing process and tax questions to tax policy and reform, you can search and share All Things Tax here. This is the place to find answers to all your general questions that don't fall under the other categories. And just a reminder: questions about software or online filing should be posted in DIY Products.

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Trusted Pioneer
Posts: 5
Registered: ‎02-13-2018

How to show crypto conversion done for a friend on a tax return

Hi,

 

My friend sent few  Ripple coins(X) and I bought Ether coins (Y) using ripple coins(X) and sent him Ether coins(Y).

 

I did not benefit or did not realize any capital gain in above case.

 

Do I need to show these transactions on a tax return, if so how??   

Moderator
Posts: 74
Registered: ‎09-16-2014

Re: How to show crypto conversion done for a friend on a tax return

Hi Hummat!

 

Welcome to the Community. Whether you have anything to report really depends on whether you just a middleman here or whether you were exchanging your crypto coins for other crypto coins.

 

In Notice 2014-21, the IRS stated that virtual currency is treated as personal property. This means that the sale or exchange of virtual currency is considered a capital transaction. Taxpayers have gain or loss equal to the difference between your basis in the virtual currency and the amount of cash or FMV of property received. When one type of virtual currency is traded for another type of virtual currency, this constitutes a taxable transaction.

 

But in the instance described here, it appears that you are acting as a middle man for your friend's transactions? Is that right?

 

If that is the case, your friend will recognize gain or loss based on the difference between the basis of the coins traded and the FMV of the coins received.

 

Thanks, hope this clears this up for you!

-Lynn

 

 

Trusted Pioneer
Posts: 5
Registered: ‎02-13-2018

Re: How to show crypto conversion done for a friend on a tax return

Thank you.

 

Yes, I was just a middleman in this conversion. So, is it OK if I don't show this conversation transaction  on 8949 form?