I've always been a traditional, equities investor, but recently I decided to dive into crypto--I checked my foundational understanding of crypto in this post.
I started with Coinbase, but quickly setup a Coinbase Pro account once I realized the fee difference. However, in the Pro I notice there are different markets: fiat, stablecoin, and crypto. I'm assuming these different "markets" are based on what the underlying assets is (fiat money vs stablecoin vs crypto coins) and what the coin is pegged to; is this correct? It appears that trading on the fiat market is where I need to be if I'm investing directly from USD, correct?
I erroneously purchased <$100USD worth of coins on PayPal (I know, shame on me; not my keys, not my coin). If I sell now, which will be a at a slight profit, how will I record this for tax purposes? Note, that I'd only being selling from the PayPal platform to reinvest through a more secure, key-offered platform (i.g. Coinbase)
It seems that the tax recording/submitting situation for crypto is unfortunate and aggravating at best. Here is my understanding:
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Fiat to Crypto = Nontaxable taxes
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Crypto appreciation while holding = Nontaxable event
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Crypto->Crypto Conversion = Capital Gains Taxable Event
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Crypto spent for G&S = Capital Gains Taxable Event
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Crypto as Income = Income Taxable Event
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Crypto received as a Gift = UNCLEAR?
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Crypto Exchange-to-Exchange (i.e. Coinbase to Coinbase Pro) Transfer = UNCLEAR? Assuming not taxed.
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Crypto Exchange-to-Wallet = UNCLEAR? Assuming taxed.
Correct me if I'm wrong on any of the above. Pertaining to the taxation on "gifts," I'm primarily thinking of anything earned on the Coinbase platform for doing lessons.
I intend to be a long-term investor, however, should I ever sale anything, what needs to be recorded for tax purposes? Any recommended way to access this info on Coinbase Pro? Any recommended programs for assisting with crypto tax filing?
Thanks for answers and guidance to any of my many questions and comments.
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