How To Avoid Paying Capital Gains Taxes On Your Bitcoin

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How To Avoid Paying Capital Gains Taxes On Your Bitcoin

One question corporations and the super rich know the answer to is how to avoid paying capital gains taxes.

As the Bitcoin price soars higher and most investors realise gains in their investment, the one thing most don’t like to think about is the tax man.

Of course the tax man wants some of your newly earned wealth. Why wouldn’t he? After all, capital gains on any investment is a necessity unless it’s in a tax free investing account like a 401K, Roth IRA, or an ISA in the UK.

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But Bitcoin is a new asset and there aren’t many tax free investing options just yet, so how can one go about avoiding paying tax on your Bitcoin gains?

Invest In Bitcoin Companies And Avoid Capital Gains Tax

You might not be able to hold Bitcoin in a 401K, IRA, or an ISA but you can buy stocks. And there are some stocks that allow investors to gain exposure to Bitcoin and avoid paying capital gains tax.

If your broker has access to the US, UK or Canadian markets, then it’s easy to get exposure to Bitcoin. If your broker doesn’t have access to those markets, get a new one.

MicroStrategy (MSTR) is a Nasdaq-listed company with almost half of its $5.357 billion market cap dependant on the value of Bitcoin.

The business analytics firm was a relatively unknown company this time last year, but with about $500 million on its cash balance sheet, its CEO Michael Saylor decided to invest $475 million of it into Bitcoin.

MicroStrategy has since issued corporate notes, raising $650 million, all of which was invested in Bitcoin. To date the company has invested $1.125 billion in Bitcoin, which is now worth more than $2.53 billion.

Since announcing it was adopting a Bitcoin Standard in August 2020, the $MSTR price has shot up from $123 to today’s price of $578.

Many people might think they missed the boat with this one, but investment bank Morgan Stanley recently announced it had bought a large stake in the company.

Invest In Bitcoin Mining Companies

Investing in Bitcoin mining companies is another way to get exposure to Bitcoin and get around the burden of paying tax, as long as it’s through a tax free investing account.

The Bitcoin mining industry is only just getting going, but there are several publicly traded companies that are growing exponentially and investing billions in mining equipment.

Marathon Patent Group (MARA), Argo Blockchain (ARB.L), and Hut 8 Mining Corp. (HUTMF) are three of the biggest mining firms and are listed on Nasdaq, London, and Toronto respectively.

Like everything related to Bitcoin the value of each stock has shot up in recent months, but if we are right about Bitcoin, then the mining industry is in its youth and will grow exponentially.

All companies are making huge investments in acquiring the latest mining equipment, as they try to pull the Bitcoin hash rate away from China.

It is a highly competitive market, but one that I believe is going to grow a lot over the next decade.

And as long as you have a tax free investing account, you can get around paying capital gains on each of these stocks if they are to appreciate in value.

Investing In Bitcoin Doesn’t Have To Mean Large Tax Bills

Investing in Bitcoin has meant huge gains for some, but no matter how little your matured gains are, the tax man will demand his cut.

Unless you play it savvy. Some will say its unethical to try and avoid paying taxes on your capital gains, but corporations and the rich know exactly how it’s done and do it, every year.

Do your best to avoid paying taxes in a legal manner of course. You can do this by either taking out a Bitcoin-backed loan, or invest in a Bitcoin company in your 401K, IRA or ISA.


Please be advised that the contents of these posts are not to be construed as investment advice. While some of our contributors may be price analysts, their opinions and analyses are personal views and are shared with the intention of promoting discourse and understanding.

Always conduct your own research and consult with a professional financial advisor before making any investment decisions. The Bitcoin market can be volatile, and past performance is not indicative of future results. Invest at your own risk.

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