Altcoins and taxes
Hey, guys. Sorry if this seems to be a simplistic question but I can't find an explicit answer anywhere. If I buy an altcoin using bitcoin on an exchange and then sell that altcoin back to bitcoin, do I owe taxes on that transaction? Some sources online say yes because it is like I converted the altcoin to fiat (a taxable event) and then used the fiat to buy bitcoin. Other sources, specifically my friends, are under the impression that a taxable event only occurs when you take bitcoin out of your exchange or wallet and convert it back to fiat which ends up in your bank account. That, they claim, is the only taxable event because that is the only time in which capital gains are realized. I've done a lot of research but can't come to a clear conlusion on which line of thinking is correct. So, in short, do I owe taxes when I sell my altcoins back to bitcoin? Or only when I sell my bitcoin and gain fiat?
Thank you in advance for the help, I'm not trying to commit tax fraud over here. Also, I would like to know the answer for the United States, if that helps (I know these tax laws are different for different countries).
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