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Like Kind Cryptocurrency, Additional authorities exist, but analyzing them is beyond the scope of this. Taxpayers with cryptocurrency could rely on some established precedent in the form of decades old irs guidance examining exchanges involving currency and precious metals. If you’ve read our guide on how cryptocurrency trades are taxed, you likely already knew the answer to this.trading one token for another token is always a taxable event, which would of course not be the case if 1031 exchanges were possible.

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Financial instruments like loans, bonds, and stock are ineligible. Some excluded trades include the following: Prior to the tax cuts and jobs act of 2017 (tcja), it was possible to argue that cryptocurrency could qualify, but there were inherent problems in the applicability of irc section 1031 to these trades, since they may have failed to meet certain requirements.

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Here’s why you ought to beginning investing in cryptocurrency today. Some of is it very good, and a lot of it is very very bad. However, some cryptocurrencies on a cryptocurrency exchange can be traded for only a limited number of other cryptocurrencies and cannot be traded for fiat currency at all. The irs’s ruling, while limited to coin exchanges involving bitcoin, ether, or litecoin, provides insight on the irs’s current thinking on the subject. You only are taxed when you convert back to cash.