BTC tax question: “lmk if I’m understanding crypto tax correctly”

For theory here and understanding seeking any correction.

In general, taxations applies to capital gains whether profit or loss. Cryptocurrency is somewhat similar to a unique 401(k) without withdrawal penalties, point is to ignore the noise hold for long term stability; crypto is a financial commodity instrument created/innovated by special interest the last 20 years. I recently read that only a million people in the world hold more than one bitcoin, the rest hold less than one bitcoin — If true It’s a small group of people compared to 8 billion roaming the earth. There’s a lot more to crypto but simply put, quickest way to understand crypto.

To continue Developers of digital assets are required to provide completely accurate financial disclosures to consumers & government entities. Federal regulators have oversight of crypto taxation & processing. Securities Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) oversee all digital asset transactions, working together to validate these transactions.

Cryptocurrency is treated as property, meaning that regardless of an exchange amount, holders must pay taxes twice:

• First, when holders mine or sell crypto

• Then, selling cryptocurrency or realizing gains, crypto owners should be aware that their state tax rates are based on the address listed on their ID driver's license.

Here’s a breakdown of the tax implications for a crypto owner:

• Day One: The owner mines or sells one coin for $50,000. They owe taxes on $50,000 as ordinary income.

• Day Two: The owner sells that coin for $52,000. They owe taxes on a $2,000 capital gain.

In total, this owner has $50,000 in ordinary income and $2,000 in capital gains. They must factor in state tax rates to calculate their total tax liability.

It’s crucial to pay cryptocurrency taxes correctly; failing to do so can result in prison time of up to 5 years or fines reaching six figures for tax evasion. If you buy cryptocurrency, you won't face a taxable event until you sell, exchange it for another asset, or use it to purchase goods or services. However, receiving cryptocurrency through mining, staking, or lending is considered a taxable event, subject to ordinary income tax rates.