You’re probably asking yourself, “What in the heck is realization?” In regular-people-speak, it has to do with when you sell an asset.
Exchanging your virtual currency for another coin, property or services? That means realization has happened. In order to know what your gains and losses are, you need to know your realized amount. That amount is equal to your sales price vs the value of the goods or services you exchanged for it.
Confused yet? We’ve got you.
Say you bought Bitcoin at $14,290 and sold it at $17,000. After you deduct exchange fees, you get your net sales price. In this case, we calculated fees at $350, meaning your net sales is $16,650. When you take that price and subtract what you sold it at, you’ll “realize” $2,360 is subject to capital gains.
It’s that easy!