Scenario
-
2018
- Buy 1 ETH @ $100
-
Dec 2020
- Move to PR.
- 1 ETH is now $500
-
Jan 1 2021
- ETH is now $1,000.
- Apply for Act 60.
- Meet the residency, etc requirements for 2021
-
Feb 2023
- Act 60 Application Approved
- Sell 1 ETH @ $10,000
Tax implications
IRS-owed taxes are the gains from $100 - $1,000 = $900 Captial Gains @ 20%
Puerto Rico-owed taxes are the gains from $1,000 - $10,000 = $9,000 @ 0 %
On my 2023 Tax Return, I will pay a total of $180 to IRS.
Notes
Your bifurcation date is calculated differently for IRS and PR taxes. see the explanation in the notes section in another example