Trading Bitcoin for Gold Can Trigger a U.S. Taxable Gain or Loss

A U.S. investor who trades Bitcoin (BTC) for gold can realize a capital gain or loss on the Bitcoin because the exchange counts as a disposal even if no cash changes hands. The result is generally calculated by subtracting the Bitcoin’s adjusted basis from the U.S.-dollar fair market value of the gold received. Applicable transaction costs can reduce the amount realized. A gain is not guaranteed: the exchange can also produce a loss. For an investor, Bitcoin held for one year or less produces a short-term gain or loss.