I own bitcoin. I want to avoid directly selling it because I do not want to realize the capital gains and pay large % taxes. However, I suppose this question could apply to other assets like gold or stocks.
My understanding is that borrowing against bitcoin is a non taxable event. Thus, I can borrow USD against bitcoin without capital gains.
My question is, can I use these borrowed USD funds to buy new bitcoin and sell THOSE(new) bitcoin without tax concerns? Of course Im still responsible for repaying the USD loan.
There will also be interest on the loan and the loan would be overcollateralized, but these points can be ignored for tax purposes I believe.
And yes this hypothetical is not a great idea, but it helps me understand the tax treatment of "borrowed-bitcoin bought with USD acquired by lended-bitcoin".
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