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Hi,

I started investing in Crypto this year mainly with the intention of long term holding. I know if I would hold 100% of the position long-term I would pay Capital gains on selling.

What would happen if I split one position into two - long term and short term

For example: (Made up numbers)

On Jan 1st, 2021
  • I buy 10,000 units in Bitcoin Lite. As a strategy I split it up into two positions (in my mind or paper).
  • 5000 units to hold for long term (at least a year)
  • 5000 unit for short term trading (buy/sell Bitcoin every month or so)

On April 12th, 2021
- I sell 5000 units for some profit ($ value doesn't matter)

On June 12, 2021
- I buyback 7500 units with 100% of the proceeds from the April 12th sale

So after trading the short term position every month or so, throughout, I finally decide to sell it all (long and short term position). How will the long position be treated? Capital gains or Income? Is it possible to have the same asset and treat some of it as Capital gains and some as income?

PS. I'm not even sure if buying and selling the same asset every month or other month is considered capital gains or income.


Thanks for your help!
 

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That frequency would most likely be considered capital gains. The test for income is basically "does it replace your job". If you're only doing something once a month, that's a hobby, not a full time job.

You need to track ACB as you go.
 
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