Would like to open up a discussion on the taxation of the sale or exchange of crypto currency...

As a USA citizen...crypto currency is considered "property" like a plot of land or stock market investment therefore is subject to a capital gain tax if sold at a profit.

That assumes you aren't considered a "trader' as a profession or a miner which could be subject to regular income tax rates.

Now, when I sell a coin on Coinbase into real dollar currency....not the tether stuff which I believe is just a somewhat made up vehicle to store value that simulates the price of a dollar....I have no trouble understanding that converting my coin into real American dollars is a sale subject to the capital gain tax...

I've also come to realize the need for some kind of tracking program to help me to determine my coin costs to offset against the sale price and the length of time I held coins...the length comes into play if held more than one year for a more favorable tax rate...

So conversion to dollars...no problem...but where it becomes unclear...is when a coin is exchanged directly for another coin...like most investors...that would be the majority of their transactions...generally...most exchanges don't easily allow for dollar to coin or coin to dollar transactions...either not available at all...or unable to get approval...

Therefore...most of my purchases use a bitcoin transaction to move into the exchange and then "sell" that coin to "buy" a different crypto coin...at times...due to the expansion of other coin pairings...one might exchange Ethereum for another coin...

Vice versa...if I "sell" that crypto coin at some point...it is forced into bitcoin or another paired coin...not dollars....

So the question becomes...are those "sales"...exchanges...considered taxable sales for tax reporting purposes and subject to taxation?

My research so far suggests it may be or may not be...as happens so often with tax law...you don't always have a direct example to point to...generally an "exchange" of property would be taxed by comparing the original cost of the sold item to the fair market value of the item being received...if the fair market value of what you are getting is higher than cost of item you are giving up...you pay a tax on that difference...

However...there is a concept of like kind exchange which some feel could come into play...the concept is if you exchange a property for a similar property....you can defer to the future the tax on the difference in value (the taxable gain) . Given that one has no choice on most exchanges but to swap "coin for coin"...or make that choice voluntarily....and most of us from a common sense stand point would think of crypto coins of all types as a "like kind" item...perhaps this might be an available tax strategy.

I also have trouble with the concept that if the currency I want to "buy" has its value fully determined by the one I am exchanging...(i.e.  coins pegged to bitcoin)...that I am actually able to peg the new coins fair market value in terms of real dollars which in the end...is the measure for purposes of determining a gain.

As well...the regulations do provide types of property that are specifically excluded from use of this method...ironically...stocks, bonds, debt instruments are excluded...however...at the moment there is no mention of crypto currencies obviously since they are so new...

Unfortunately....having good arguments for something isn't always enough in tax law...take the idea of like kind items...the regulations get into all kinds of examples of what a like kind property may or may not be...I was astounded to read that a gold coin swapped for a silver coin isn't considered like kind...so...would an ether coin be like kind with a bitcoin? 

I don't have an exact answer to that. But as you can see you can't always assume your common sense will match up with the way the government looks at things for tax purposes...

Which is why I want to open up this discussion to see what other's think...especially those having a deeper understanding of tax laws and may shed some additional light on this matter...Perhaps we can be the force to dictate what the tax regulations should look like concerning the taxation of crypto transactions....

Finally...please don't post how you aren't going to let the government know what you do...how can they find out...its none of their business...etc...that isn't the type of input I'm looking for...While I understand taxation frustration...for those of us who will be dealing with it...these laws as they are interpreted or passed by the government...will have dramatic impact on your tax return filing.

DISCLAIMER...THIS IS NOT TO BE USED AS TAX ADVICE TO BE RELIED UPON WHEN FILING YOUR TAX RETURN...YOU ARE RESPONSIBLE FOR DOING YOUR OWN RESEARCH ON THIS ISSUE AND COME TO YOUR OWN CONCLUSIONS ON HOW YOU PROCEED...THE TAX LAWS ARE MUCH MORE COMPLICATED THAN LAID OUT HERE...THIS NARRATIVE IS FOR DISCUSSION PURPOSES ONLY...IT MAY BE WISE TO UTILIZE THE SERVICES OF A TAX PROFESSIONAL FOR YOUR OWN TAX PREPARATION.