Hello,
So, I have questions about the tax obligations relating to an account where I'm being paid daily compounding interest on cryptocurrency. It's a service where I'm holding cryptocurrency and being paid that daily compounding interest, sometimes paid out daily, sometimes paid out monthly, quarterly or yearly (depending on terms in the account in exchange for better interest rates).
Let's say I buy $100 of some cryptocurrency which bears 12% interest annually, but it pays out that interest in kind (in other words, in the cryptocurrency).
The first question is, is interest earned taxable income?
The second is whether it's taxable as to its worth on the day it's paid out?
The third is, is it treated as a capital gain in which no tax is due and owing until I trade the cryptocurrency and "realize" the capital gain?
Fourthly, if the interest is taxable as to its worth on the day it's paid out, is it treated as a capital gain if I sell it for a higher worth than when it was paid out?
So, I have questions about the tax obligations relating to an account where I'm being paid daily compounding interest on cryptocurrency. It's a service where I'm holding cryptocurrency and being paid that daily compounding interest, sometimes paid out daily, sometimes paid out monthly, quarterly or yearly (depending on terms in the account in exchange for better interest rates).
Let's say I buy $100 of some cryptocurrency which bears 12% interest annually, but it pays out that interest in kind (in other words, in the cryptocurrency).
The first question is, is interest earned taxable income?
The second is whether it's taxable as to its worth on the day it's paid out?
The third is, is it treated as a capital gain in which no tax is due and owing until I trade the cryptocurrency and "realize" the capital gain?
Fourthly, if the interest is taxable as to its worth on the day it's paid out, is it treated as a capital gain if I sell it for a higher worth than when it was paid out?
