Tax Strategy for XRP: Lawyer Urges Caution Before Dipping for Altcoins
- Jeremy Hogan advises crypto holders to be cautious of crypto tax as they optimize for profit in the bull run.
- He pointed out the tax advantages of not liquidating XRP held for over a year.
- Per the lawyer, long-term capital gains incur a lower 15% tax rate than the higher 30% rate for short-term gains.
Prominent legal expert Jeremy Hogan, Partner at ‘Hogan & Hogan’ has offered counsel to crypto holders, urging caution in the disposition of their XRP assets. In a recent post on X, Hogan shared guidance with crypto investors looking to maximize their tax efficiency amid the anticipated crypto bull market. The lawyer’s counsel targeted crypto enthusiasts based in the United States.
He advised considering the tax obligation on their crypto investment from the angle of the duration of the token holdings. Hogan pointed out that maintaining a token for over a year could result in a more advantageous tax scenario. He noted that long-term capital gains, applicable to tokens held for more than a year, incur a tax rate of 15%.
Conversely, a 30% rate is applied to short-term gains from tokens held for less than a year. In this context, Hogan drew attention to a practice among some investors who opt to sell their XRP to explore alternative tokens to subsequently reinvest in XRP after realizing profits.
This strategic maneuver occurs against the backdrop of XRP’s prolonged lackluster price performance. In particular, XRP has not generated meaningful gains for investors over the past months. For instance, CoinMarketCap data shows that XRP has been up only 3.64% since December 2, 2023.
Meanwhile, Cardano and Solana have delivered substantial returns, growing 61% and 85%, respectively, through the same period.
The lawyer acknowledged that temporarily divesting from XRP to explore other assets could be financially rewarding. However, he underscored a potential downside, noting that such traders forfeit their long-term tax status on XRP. In other words, they expose themselves to two short-term tax rates.
Concluding his X post, the lawyer wrote, “I’dRatherPayLess.” The phrase suggests that investors prioritize retaining their long-term tax benefits over succumbing to short-term market fluctuations.
Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
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