A CPA Explains The Tax Implications Of Buying A Tesla With Bitcoin
The Wealth Gang team writes about financial information, passive income ideas, apps, programs, cash management tools and other wealth gadgets that we think you might want to use or learn more about. Sometimes, we write about products, services or items that might be associated with affiliate partnerships. In these instances, we will earn a small percentage of the revenue from sales. There is, of course, no cost to you.
Thank you for all your support! Without you, we could not keep this site running. Gang Gang!
Tesla and SpaceX founder, Elon Musk recently announced that you will now be able to buy a Tesla with Bitcoin. This is a huge step for the market leading cryptocurrency, and it’s also a huge endorsement of Bitcoin from Musk. It is one thing to believe in Bitcoin and invest some money in it, but Musk is willing to put his business where his mouth is by selling cars for Bitcoin. That’s crazy. Now the only question left is: what are the tax implications of buying a Tesla with Bitcoin?
According to TurboTax’s resident CPA and tax expert, Lisa Greene-Lewis, there’s still no way to get yourself out of paying taxes, even when you’re paying in Bitcoin.
Get a $3125 Average Federal Refund With TaxSlayer
Will you still have to pay capital gains tax if you buy a Tesla with Bitcoin?
When you exchange virtual currency held as a capital asset for a Tesla, you will recognize a capital gain or loss.
Ah, total bummer!
Your gain or loss is the difference between the fair market value (FMV) of the Tesla you received and your adjusted cost basis (the amount spent, including fees, commissions, and other acquisition costs) of the Bitcoin exchanged.
This will be reported on your schedule D and the IRS Form 1040 will ask if you “received, sold, sent, exchanged or otherwise acquired any financial interest in any digital currency.”
That’s not all. According to Lisa Greene-Lewis, there’s another kick to the face as it pertains to buying a Tesla.
Tesla’s are no longer eligible for the $7,500 federal tax credit, but you could receive a state rebate following your purchase.
First paying taxes on capital gains and now this? Sheesh! Can’t a guy catch a break?!?