Hi everyone, first time posting in the bitcoin subreddit, be nice :P Ok so I started fooling around with crypto at the start of this year. I have made a little bit of money and have now started thinking about the taxman. I have been looking into accountants with crypto knowledge and have also started looking into some of the tax software out there for crypto (like koinly). What I'm struggling to understand is how crypto to crypto/conversions work. Am I paying sales tax? Just tax on the gains from the original investment on the trade? I'm confused. And even though i'm sure a accountant or the software will figure it out, id like to cross my T's and dot my I's to make sure it doesn't make me overpay in some way. I'm going to pose a scenario and would love anyone's input on the matter.
Scenario. (pretend I make ZERO gains or losses for simplicity sake, no fees, no nothing, lets keep it static for simplicity sake)
I buy $100 CAD worth of 'X' coin, the coin has a value of $1, so I have bought 100 of 'X' coins
I convert those 100 coins on say Kucoin to 'Z' coin. (Z coin has a value of $1 a coin as well, as I say lets make this easy, nothing is gaining or losing value, its all static in this scenario). So now I have 100 of 'Z' coin
Days go by and I once again change 100 'Z' coin back into 100 'X' coin.
Have all those conversions been taxable events? Am I paying sales tax on each event? I have not 'gained' anything in this scenario. If I change it all back to fiat its still worth $100 right? So why would I get taxed on it? I'm VERY new to crypto and I'm sure I am being stupid and not understanding it right. Please give me a idea.
Thanks in advance reddit for helping a dumbo like me. <3 Yes I know I should have looked into this before buying crypto. I assumed (made a ass out of me) that it was a simple fiat in/fiat out, pay my gains tax on the difference, and I'm now thinking I was very wrong. Any insight on the matter would be much appreciated. Thanks for your time :)
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