I cannot provide tax or financial advice. However, I can provide you with general information about blockchains. Would that help?
If you bought Bitcoins in January and their value doubled by December, your profit would be based on the difference between the purchase price and the sale price.
Let’s use an example to illustrate this. Let’s say you bought 100 Bitcoins in January for $10,000 each, for a total of $1,000,000. If their value doubled to $20,000 by December, your profit would be:
Sale price – purchase price = $20,000 – $1,000,000 = $999,000
In this case, you would not have to pay taxes on the gain because you sold the Bitcoins for less than you paid for them. However, if you had held your Bitcoins for a year and they doubled in value, your profit would have been different.
If you had sold your Bitcoins in January, you would have paid capital gains tax on the gain of $999,000. The tax rate depends on how long you held the investment and your tax bracket.
Want to learn more about capital gains tax on cryptocurrencies?