In May 2017, a college student based in the US invested $5,000 in Ethereum (ETH), when the digital asset was worth around $50.
Within merely months, the price of ETH skyrocketed from $50 to $1,281 at its peak, as the cryptocurrency market achieved a valuation of $800 billion.
With a base return of 25-fold, having made over $125,000 in ETH, the individual invested in a few digital assets and initial coin offering (ICO) projects, and, by the end of December, the portfolio of the investor reached $880,000.
“I gambled in more than a few bad ICOs to start 2018, had some money in coins that absolutely plummeted with no chance of recovering, etc. Today my portfolio sits at $125k, a far cry from my $880k. My estimated tax liability for 2017 is about $400,000,” the student said.
At the crypto market’s peak, the student recorded a net profit of $875,000 with an investment of $5,000.
Tax Liability
ETH/USD
In the US, cryptocurrency investors are required to declare taxes using the tax form 1099-K and major cryptocurrency exchanges like Coinbase have tax filing systems in place to automate the process for its investors.
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