<p>You trade a bunch of stuff, you wind up with more dollars than you started with, you have a taxable profit.</p>

CC BY-SA 3.0
2014-07-06T13:47:28.850Z
Don't you have to tax each trade based upon the price at the time and whether it's a short term or long term gain/loss?
lurf jurv
CC BY-SA 3.0
2014-07-06T23:20:32.533Z
@lurfjurv That's going to depend on your jurisdiction, but often no. That would be a [like-kind exchange](http://en.wikipedia.org/wiki/Like-kind_exchange).
David Schwartz
CC BY-SA 3.0
2014-07-05T19:11:15.800Z
2014-07-05T19:11:15.800Z
David Schwartz
<p>Say Kraken and Bitstamp both issue colored coins for USD, called KrakenDollars and BitStampDollars. Then I find an colored coins exchange where I can trade between the two, and deposit some KrakenDollars. In the eyes of the IRS, these are still dollars I think. Then I start trading between KrakenDollars and BitStampDollars, and make a respectable profit. Then I put my KrakenDollars back into Kraken, and withdraw to my bank account. How on earth should that be taxed? I was just trading between dollars and dollars...</p>

<trading><taxes><colored-coins>
How to tax trading in colored coins representing fiat?
lurf jurv
# How to tax trading in colored coins representing fiat?

(Asked by: username_0 on 2014-07-04)

Say Kraken and Bitstamp both issue colored coins for USD, called KrakenDollars and BitStampDollars. Then I find an colored coins exchange where I can trade between the two, and deposit some KrakenDollars. In the eyes of the IRS, these are still dollars I think. Then I start trading between KrakenDollars and BitStampDollars, and make a respectable profit. Then I put my KrakenDollars back into Kraken, and withdraw to my bank account. How on earth should that be taxed? I was just trading between dollars and dollars...

**Tags:** trading, taxes, colored-coins


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## 1 answers

### Answer by username_1 on 2014-07-05. Score: 1

You trade a bunch of stuff, you wind up with more dollars than you started with, you have a taxable profit.

> **Comments:**
> **username_0**: Don't you have to tax each trade based upon the price at the time and whether it's a short term or long term gain/loss?  
> **username_1**: @lurfjurv That's going to depend on your jurisdiction, but often no. That would be a [like-kind exchange](http://en.wikipedia.org/wiki/Like-kind_exchange).  

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