The Tax Consequences of Crypto ICO Investments
Investing in Initial Coin Offerings (ICOs) can be an exciting but complex endeavor, especially from a tax perspective. Here's a more detailed explanation of the tax consequences associated with ICO investments:
1. Understanding ICOs and Taxable Events
An ICO is akin to an initial public offering (IPO) but in the digital currency space. Companies issue tokens or coins to raise funds for their projects, and investors buy these tokens with other cryptocurrencies like Bitcoin or Ethereum. The key taxable events associated with ICOs include:
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