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If you had 100$ of Bitcoin and it 'goes up' 1%... reflected in you having 'more dollars' in your cashapp account...
And you spend those dollars from cashapp, there's still 'gains' correct?
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No, bitcoin going up (or down) does not change the balance of your USD account on CashApp.
You have a USD balance, and a BTC balance. Just like with most any other exchange.
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Then you're not spending Bitcoin then... you're spending Dollars. So what's the point?
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If I have an LN Invoice to pay, I'ld rather pay with my USD balance if I could -- not a taxable event, no cost basis tracking. That's the point.
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This whole thing is ridiculous.
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But when you pay an LN invoice, and choose to have it come from your USD balance, you have no exposure to BTC/USD exchange rate fluctuation, and thus no gains. You are simply instructing Cash App to settle in bitcoin after taking that amount from your USD wallet.
Now if you were to buy BTC first, and then at a later time pay an LN invoice (or withdraw), then yes -- that can be a taxable event.
Not tax advice, but Cash App doesn't treat paying for an LN invoice with USD as a taxable event either. Neither does Strike.