I bought 1 bitcoin and sold part of it to make cash from time to time. How will tax on this income be calculated?

  • sorry, can't resist: in case there are taxes to be paid, with the current plunging of prices, it will reduce your load :-) Maybe you want to add another tag like "tax"... Commented Jan 17, 2018 at 19:58
  • thank you:) what do you mean reduce load?
    – Bitscary
    Commented Jan 17, 2018 at 20:43
  • You would have to pay less... I searched the forum for tax, but couldn’t make up my mind. Complicated matter! Commented Jan 17, 2018 at 22:23
  • 2
    How can we know the tax laws in your country, when you haven't even told us what country you are in? You may also want to browse the taxes tag since we have a lot of other questions on this topic. Commented Jan 19, 2018 at 3:58

1 Answer 1


I’ll start this off by saying I’m not a tax professional, so take this advice as you will...

At the time you purchase your bitcoin, your purchase price becomes your cost basis. This means if you bought 1 bitcoin for $10,000 then this is the price you will compare your capital gain/losses to.

For example let’s say you buy 1 bitcoin at $10,000. A week later the price of 1 bitcoin is $12,000. You decide to sell half your bitcoin due to the price hike and you receive $6,000 for the sale. Your tax liability would be $1,000 in capital gains (sale price of half a bitcoin is $6,000 minus original price of half a bitcoin is $5,000). I believe the in the US the tax on short term capital gains is whatever income tax bracket you fall into, so you would pay a X% capital gain tax on the $1000 profit you made from selling half your bitcoin.

Again I’m not a tax professional, but this is my understanding of how it all works based on lots of research.

  • @NateEldredge is right, my mistake. The answer has been updated to reflect his added information Commented Jan 19, 2018 at 4:22
  • In Australia it is very similar but it varies for each country or region.
    – Willtech
    Commented Jan 25, 2018 at 8:04

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