I have a question or two when it comes to taxes with BTC. I’ve been doing my research and am trying to assess the profitability of some ideas before diving in.
My main and likely only one is leveraging existing BTC via an exchange to day trade and get out while value appears high and get in while value appears low to slowly use my existing position to create a more substantial one.
People on here are way smarter than I and probably grasp the concept just fine but I’ll provide and example to avoid any gray area.
Ex: - Say I have 1BTC - value $50,000 (current high) so I sell/trade it to one of these exchanges. They (market buyers) give me $50,000 for it less their fees any potential market volatility. And then in the coming hours BTC drops 5%. So I buy it or trade back in for it with the same $50,000. My $50,000 will buy more and additional % of Bitcoin assuming it climbs to or above the original $50,000. Rinse wash repeat a few times with success and you now how more BTC than you began with.
My questions are in regards to taxes with the above method.
1) would I owe taxes for each “sell” transaction? I keep seeing “selling” of BTC as a taxabale event but in this instance I’m looking for clarification if this is selling or trading.
2) or is the only time a taxabale event is created is when I would “cash” out my account?
3) from my understanding if I took the fractions of earned BTC this way to invest in other coins that would be considered a taxable event at that time, not for the acquisition of the new coin, but the burning of the BTC. I would then owe again whenever I sold out of the other alt coin, correct?
Thank you in advance and please redirect me if there is a a better sub for this question.
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