I bought SOL with a cost basis of 200 two years ago. It’s sitting in Solflare. If I stake it, it becomes a taxable event. I’m down 70%. So would those losses carry over $3,000 per year until gone? I haven’t made any trades this year so I don’t have any profits to deduct the loss from.
check with a tax specialist that knows about crypto laws which there arent really any right now. But I would expect it is similar to stock market taxes, so you only get taxed once you “realize” gains which means you sell for fiat. Weird enough this shouldnt require taxes if you covert to stable coin or any other crypto since its still crypto and not fiat. Once you do realize gains, I believe you can write off any losses against gains including staking returns but Im not sure. The equivalent would be dividends from stock for market income. Honestly a possible strategy to minimize taxes in usa is convert to stable coin if you want to “remove yourself from crypto volatility” and only cash out specific amounts every year as needed and try to zero out your loss vs gains so no taxes will be issued