If your cryptocurrency portfolio is in the red but you still haven’t sold, you wouldn’t be able to deduct an unrealized loss from your 2020 tax return. But since wash-sale rules aren’t applicable to cryptocurrencies under current guidance, you can exploit this loophole by selling to lock in your losses and buying back in at the same price. This could offset any gains in other assets you’d have to pay taxes on, though it would also make your taxable gain on cryptocurrencies much larger if your portfolio grows and you decide to sell in the future.
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