Source
r/Bitcoin•
sscall

Taxes and Gambling

Hi all,

Had a question on tax implications when using bitcoin for gambling.

When I buy on an exchange and immediately send those coins to the gambling site, is that considered a buy and sell in regards to bitcoin and the IRS?

If so do I need to track and report all of these exchanges to the IRS come tax time?

Do I need to go back and track the exact price I purchased them at and sent to the casino and whatever fluctuation there was in price?

Sorry if this seems redundant to other posts, but I searched and didn’t find anything that pertains to this exact question.

Thanks!

Posted Aug 7, 2020, 3:00 PM UTC

29
Mark_Bear•

https://www.irs.gov/businesses/small-businesses-self-employed/virtual-currencies

3
[deleted]•

[deleted]

1
Benjamincito•

Coinbase and the irs will assume that the taxable event happens as you send you coin from coinbase to any exterior wallet. If you bought 100000 dollars of bitcoin and transferred it out a month later at a value of 110000 dollars you owe tax on that increase and coinbase will let the irs know

2
RFV1985•

If you’re just buying BTC and then transferring it to the casino, that is not yet a taxable event.

If you make gains from the casino, the gains are taxable. Gambling winnings are always taxable but you can net out your gambling winning against your gambling losses to the extent that your losses don’t exceed your gains. The IRS taxes net gambling gains for the year but they will never give you a tax credit for net gambling losses. If you have net gains, you would have to value them at what they were worth in USD when you got them.

You also have another component here which is exchanging BTC back to fiat (or any other crypto) creates a taxable event on the gain/loss of the currency exchange. That you can report as net gain/loss either way no different than forex trading.

1
Benjamincito•

Did you gamble in bitcoin and withdraw from the poker site in bitcoin?

1
sscallOP•

I’m more concerned with multiple transactions buying from the exchange and then depositing to the site. I’m only liable for whatever income I made/lost in that 2-3 minute window right? The government doesn’t think I am holding all of this bitcoin?

1
yeh-nah-yeh•

He is asking the right question. If when you deposit to the gambling site they convert it to USD then yes that is a buy and sell. If the gambling site is end-to-end crypto and it does not get converted to USD then its not a buy/sell.

https://bitedge.com/blog/end-to-end-crypto-sportsbooks-vs-government-currency-sportsbooks-that-accept-crypto/

https://bitedge.com/blog/crypto-gambling-laws-and-jurisdictions/

1
cryptohoney•

Always remember this, asking for forgiveness is easier than asking for permission

1
Benjamincito•

If that is your perspective then

As soon as the coins moved - that was your taxable event

-1
sscallOP•

And I am taxed based on any increase or decrease the coin has gained/lost in the transfer time. Not the entire purchase correct? So I’m not taxed on $300 worth of bitcoin, but rather the $.02 it increased between the time I bought it and sold it?

1
[deleted]•

[deleted]

1