For starters, if you didn’t know cryptocurrency is taxable, please read this.
Since it’s not officially issued by any country, the IRS doesn’t view cryptocurrencies (Bitcoin, Litecoin, etc.) as a currency. Instead, it’s seen as an asset, making the sale and exchange of cryptocurrency a taxable event.
That also means cryptocurrency can be subject to capital gains tax when used to make a purchase. The capital gains tax varies from zero percent to over 25 percent, based on a few variables like your taxable income and the types of items being bought/sold. If you want to see a more complete breakdown, this page on the IRS website talks about capital gains and losses.
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