Cryptocurrencies
Using Bitcoin to Buy a Tesla? Get Ready to Hear From the IRS
- Buyers using cryptocurrency could face capital gains tax
- Musk said Tesla is now accepting the cryptocurrency as payment
This article is for subscribers only.
If you got rich buying Bitcoin a year ago, Elon Musk is inviting you to purchase one of his cars with some of the proceeds. The taxman will be watching if you do.
That’s because cashing in the digital asset for a shiny, new Tesla will count as realizing a capital gain. Say you bought into crypto a year ago, when Bitcoin was trading at about $6,500. Spending around $38,000 to buy the new Tesla Model 3 would mean cashing in a gain of $31,500 -- and that’s on the cheaper end of the spectrum for the electric vehicle. At the current rate on capital gains, that’s a $4,750 or so tax bill you’ll have to foot -- or almost as much as the amount you paid for your original Bitcoin.