/biz/ - Business & Finance

Here is a tale of woe for the lot of you in the United States who used Coinbase or GDAX to trade again Bitcoin... I am going anonymous, for obvious reasons.
At the end of December 2017, I had nearly 1 million USD worth of BTC in my trading account. This was earned through what I thought of as hard work. Daily trading, playing the game "right", not taking too many risks... at the beginning of the year, I had started with a little less than 100k USD, so for the sake of this, let's just say all of it is short term capital gains.
Anyways, I trade very often with my bitcoins, exchanging to and from USD on the GDAX exchange. Everything was great at the end of 2017. However, I lost ~45% of my stack during January. So now, I'm down to approximately 550,000 USD.
That sounds great, considering where I started from, but let's take a moment and think about the taxes I am now responsible for.
I made over 900k short term capital gains I live in california so my state tax is ~10%. Federal tax at this level is ~38-40% So I have to pay ~48-50% of the gains in taxes. Therefore I will have to pay ~450k in taxes.
So, I started with ~100k, made ~900k, lost 450k in January, and now will have to pay 450k in taxes. Everything is gone.