Post: #1

http://cryptocurrencyfacts.com/2017/12/3...implified/

Quote: For tax purposes in the U.S., cryptocurrency is generally treated as property (a capital asset like stocks, bonds, and other investment properties). It is not treated like a currency, it is treated like real estate or gold. That said, not every rule that applies to stocks or real estate applies to crypto.
Trading cryptocurrency to fiat currency like the dollar is a taxable event.
Trading cryptocurrency to cryptocurrency is a taxable event (you have to calculate the fair market value in USD at the time of the trade; good luck with that).
Using cryptocurrency for goods and services is a taxable event, i.e. spending cryptocurrency is a “realization event” (again, you have to calculate the fair market value in USD at the time of the trade; you may also end up owing sales tax).
Buying cryptocurrency with USD is not a taxable event. You don’t realize gains until you trade, use, or sell your crypto. If you hold longer than a year you can realize long term capital gains (which are about half the rate of short term).
You owe taxes when you sell forked coins or coins you mined.
Mining and using crypto as a business has unique considerations (see guidance above).
For 2017, it isn’t clear if you can claim like-kind property exchange (which would make it so you didn’t have to realizes gains and losses on trades). After December 31, 2017 1031 exchanges are limited to real estate. Thus, unless there is clarification you’ll owe taxes on all crypto trades in 2018 forward (but might be able to claim like-kind with the help of your accountant in 2017). See: Forbe’s Loophole Allows Tax-Free Bitcoin Exchanges Into 2018 for a breakdown of what may or may not be possible.
To find out what you owe you have to tally up your gains and losses in a year and deduct this from your cost basis (good luck; most exchanges keep track of your exchanges, but not their value in USD, your accountant may use “reasonable estimates”).
If you don’t know the exact fair market value at the time of a trade or use of cryptocurrency, use your best reasonable estimates.
Moving the same coin between two wallets or exchanges shouldn’t be a taxable event, but you do have to account for it. Exchanges might treat these as taxable events by default, so make sure to not go off their records alone.
FIFO rules should be optional. You should be able to choose between FIFO and LIFO.
The wash rule likely doesn’t apply to crypto. Section 1091 wash sale rules only mention securities, not intangible property.
There are loopholes in the new tax bill that let high frequency traders use a passthrough to benefit (essentially you would create an LLC for your trading). You have to be trading a good amount (in terms of volume and USD values) for this to work. See a professional for advice if you think this applies to you.
You must make a good faith effort to claim your crypto and pay your taxes no matter which route you take.
Trying to hide your assets is tax evasion, a federal offensive.
Making a good faith effort, but getting it wrong, results in a fee.
If you think you maybe might owe taxes from past years, file an amended return and get right with the IRS before they come looking for you.
When you file, be consistent. You can’t do FIFO over here, like-kind over there, wash rule here but not there, etc.

There is more.

Founds this an interesting read. How are you guys figuring out your taxes for your coins. The one that concerns me the most is how to figure out taxes when you convert one coin to another.

Post: #2

Yeah fuck that shit. Buy in cash on LocalBitcoins. Stay away from any exchanges. Don't buy crypto to make dollars. Buy crypto to prepare for when most of the world accepts crypto.

Have a way to make dollars, and a way to make crypto.

Again, stay away from exchanges that require your identification and are registered with FinCen. Stay away from coinbase, gemini, kraken.

Pay the Extra 5 - 10% and buy your BTC with Cash on localBitcoins

Post: #3

I dread dealing with this shit this year. All the exchanging of coins is going to be tough to figure out.

Post: #4

(01-06-2018 09:49 PM)Jaydublin Wrote:  I dread dealing with this shit this year. All the exchanging of coins is going to be tough to figure out.

Not that hard to do.

Download a csv of your order history and upload into https://cointracking.info

It will compute everything for you.

Post: #5

Is anyone here a CPA, or can refer a CPA who's familiar with crypto? I'm curious about any possible strategies to minimize (not evade) taxes in the US on larger gains. Asking for a friend. Please PM me if you can provide a referral.

Post: #6

My plan is to just stick with paying taxes on crypto->USD transactions.

Technically we should be paying taxes on each crypto-to-crypto (C2C) transaction, but the IRS hasn't come out with clear rules on how this should be done and it's all a bit murky in my opinion.

The IRS already has a lot on their plate and assuming you pay income tax when converting to fiat, I don't see them going after online crypto traders and exchanges to collect every C2C transaction, calculate the USD price of each coin at the time of the transaction, and build a full report on taxes owed.

Also, like Glethal said, if you're doing most of your trading on exchanges that don't require identity verification, I don't think the IRS can get at this information anyway.

So, my final stance is that I'll be a good citizen and pay taxes when I realize my coins as USD, but I'm not going to be a perfect citizen and pay taxes on every transaction. It also goes without saying that the more money you are dealing with, the more the IRS will be interested in you, and the more you should work on being a perfect citizen.

Sidenote #1: This topic was discussed on reddit recently: https://www.reddit.com/r/CryptoCurrency/...t_serious/

Sidenote #2: I made a lot of money playing online poker between 2006-2012, and the tax situation with poker draws some serious parallels to the tax situation with crypto right now. With poker, I paid taxes on the amount of money I cashed out, even though I was technically supposed to pay taxes on the prizes I won for every tournament I profited from (and also given the ability to deduct losses). The IRS was completely incompetent in collecting taxes from online poker, which is ultimately why they had it banned in the US under the guise of "funding terrorism". I was probably a top 1% poker citizen just because I paid taxes period.

BTW - The "funding terrorism" argument is something I'm sure the IRS will try to pull with crypto, so it will be interesting to see how that plays out. That's a discussion for another time though.

Post: #7

“There are loopholes in the new tax bill that let high frequency traders use a passthrough to benefit (essentially you would create an LLC for your trading). You have to be trading a good amount (in terms of volume and USD values) for this to work. See a professional for advice if you think this applies to you.”

Interested in learning more about this part.

Post: #8

In Australia they want you to pay tax on the profits of every transaction you made regardless of whether you sold out into fiat or not. It basically forces you to sell your crypto into fiat to pay your tax obligation rather than just rolling it forward into more crypto investments.

The prevailing sentiment on this is that Aussies are not happy with it and are being vocal about becoming tax residents overseas and avoid tax

Post: #9

I always pay taxes as I think it's fantastic that the government spends that money on importing the third world and looking after them. But right now I don't have enough money in crypto or overall to be paying taxes on it.

However for you guys with lots of money, what would happen if you cashed out through localbitcoins or someone else's bank account? Would there be anyway to prove you didn't just invest all your Bitcoin into Pepecoin and lost it all?

Post: #10

(01-11-2018 12:19 PM)RedPillUK Wrote:  I always pay taxes as I think it's fantastic that the government spends that money on importing the third world and looking after them. But right now I don't have enough money in crypto or overall to be paying taxes on it.

However for you guys with lots of money, what would happen if you cashed out through localbitcoins or someone else's bank account? Would there be anyway to prove you didn't just invest all your Bitcoin into Pepecoin and lost it all?

To be honest, I really don't think any government is capable of tracking this whether you use local monero, localbtc, or other means. I was doing my taxes preemptively last night and it seems easy enough to falsify that data to look like I didn't make much considerating overseas exchanges do not report to Australian IRS (called ATO). The accountants are clueless and rely on you tell the entire truth, they literally told me this, they are at your mercy. I was considering becoming a tax resident in Malaysia or Singapore to legally avoid tax but I'm not 100% sure this is legal. I'm sure people can get away with it and many will.

The only way you come up on their radar is when you make crazy purchases that are not congruent with your stated income. Let's say you make 90k/year but in a short period of time you now have a 1m house and range rover purchased without use of loans. The computer that processes your fiat transactions will red flag this and send it to the tax authorities which would investigate and eventually alert the federal police.

Disclaimer:
Im doing my taxes with cointracking.info. I will probably end up paying 25-45% in tax this year. I just don't want the hassle of moving abroad for 6 months, doing visa runs and looking behind my shoulder forever. Plus if I hold a coin for 12 months without trading I get 50% CGT discount. That being said my mind goes back and forth about it because it's something you can get away with despite what soy boys might tell you.

Post: #11

Rule of thump is an Australian has to move to another tax jurisdiction for two years to be considered a non-tax resident, and not have a spouse and/or children remain in Australian whom you support. The first tax year has to contain a minimum of 183 days abroad.

You can realise capital gains in the first tax year.

Always differing scenarios, worth to pay an account his $330 to avoid tax on big gain.

Post: #12

(01-12-2018 01:48 AM)[email protected] Wrote:  

(01-11-2018 12:19 PM)RedPillUK Wrote:  I always pay taxes as I think it's fantastic that the government spends that money on importing the third world and looking after them. But right now I don't have enough money in crypto or overall to be paying taxes on it.

However for you guys with lots of money, what would happen if you cashed out through localbitcoins or someone else's bank account? Would there be anyway to prove you didn't just invest all your Bitcoin into Pepecoin and lost it all?

To be honest, I really don't think any government is capable of tracking this whether you use local monero, localbtc, or other means. I was doing my taxes preemptively last night and it seems easy enough to falsify that data to look like I didn't make much considerating overseas exchanges do not report to Australian IRS (called ATO). The accountants are clueless and rely on you tell the entire truth, they literally told me this, they are at your mercy. I was considering becoming a tax resident in Malaysia or Singapore to legally avoid tax but I'm not 100% sure this is legal. I'm sure people can get away with it and many will.

The only way you come up on their radar is when you make crazy purchases that are not congruent with your stated income. Let's say you make 90k/year but in a short period of time you now have a 1m house and range rover purchased without use of loans. The computer that processes your fiat transactions will red flag this and send it to the tax authorities which would investigate and eventually alert the federal police.

Disclaimer:
Im doing my taxes with cointracking.info. I will probably end up paying 25-45% in tax this year. I just don't want the hassle of moving abroad for 6 months, doing visa runs and looking behind my shoulder forever. Plus if I hold a coin for 12 months without trading I get 50% CGT discount. That being said my mind goes back and forth about it because it's something you can get away with despite what soy boys might tell you.

Buy them in Cryptocurrency. As it's intended use.

Post: #13

The same way you divide by 0.

Post: #14

Ethan, that's a good idea but other than Japan, there is usually sales tax on bitcoin and it is difficult to find someone selling their house or car for it. I think in America you can buy Lambo's with enough BTC but you pay GST on it. Japan has no GST for bitcoin, they have like 250k stores that accept it but I have yet to find anyone there selling their house for cryptocurrencies. Would be interested.

Post: #15

(01-13-2018 10:39 AM)[email protected] Wrote:  Ethan, that's a good idea but other than Japan, there is usually sales tax on bitcoin and it is difficult to find someone selling their house or car for it. I think in America you can buy Lambo's with enough BTC but you pay GST on it. Japan has no GST for bitcoin, they have like 250k stores that accept it but I have yet to find anyone there selling their house for cryptocurrencies. Would be interested.

http://www.telegraph.co.uk/news/2017/12/...s-sell-uk/

http://www.dailymail.co.uk/news/article-...tcoin.html

https://www.thesun.co.uk/money/5152673/f...n-bitcoin/

https://www.standard.co.uk/news/london/1...57556.html

http://www.go-homes.co.uk

Go Homes is the housing development company that sold a property in the UK for bitcoin. If they done it once I'm sure they would do it again. There may well be other developers around who would be willing to us Cryptocurrency. I know this info is very UK specific. There is an online realtor that advertising properties around the world that are for sale in cryptocurrency.

http://bitcoin-realestate.com

They currently list 14 properties in Aus that are for sale in bitcoin. Mainly mansions. It is entirely possibly.

Then theres the Lamb/McLaren dealer in Newport Beach Cali you mentioned in your post.

Plenty of options. Only need to research.

Post: #16

(01-06-2018 09:20 PM)GLethal85 Wrote:  Again, stay away from exchanges that require your identification and are registered with FinCen. Stay away from coinbase, gemini, kraken.

Where I live I can invest up to the equivalent 1000 Euros in bitcoins using an exchange without ID. But I have to pay a fee of 4%. I cannot figure out what happens if do it multiple times in a row within a short time frame. But using the exchange, I need to use either my debit/credit card or a regular bank account transaction to buy the coins. Once I do that, I am pretty sure that the tax authorities will know everything about me anyway.

Post: #17

I have a couple questions for those of you that are planning on paying taxes on every crypto-to-crypto transaction. C2C taxes seem so relentlessly oppressive so I'm hoping I'm just understanding things incorrectly.

For this post I'm going to assume that this tax rate is 30%.

Scenario 1: I Purchase 10 ETH for the price of 1 BTC. I pay 30% tax (0.3 BTC / 3 ETH) on this transaction, leaving me with 7 ETH. This means that in order for this trade to be a good one, I need ETH to at least outperform BTC by 30% just to breakeven. Is this correct? If so it seems futile to even speculate on alt coins anymore since you'll need a nice bull run on the alt vs. BTC to even reach breakeven.

Scenario 2: There are two coins, coin A and coin B, both valued the same at $100. I make 4 trades while the value remains at $100 - A for B, B for A, A for B, and B for A - putting me right back where I started. Am I expected to pay taxes on every transaction? If so, that would be a 120% tax rate and I'd be 20% in the hole despite not profiting any money.


After some more thought, I'm hoping you only have to pay taxes on C2C transactions if you made a profit on the coin you are selling. For example in Scenario 1 if I bought that BTC at $5k and sold it for ETH at $10k, I pay taxes on the $5k. But if it was $4k at the same I sold it for ETH, I pay nothing. If this is true, let's say I sell BTC for ETH, pay taxes on that transaction, and then sell the ETH for USD before the value of ETH changes. Do I pay no taxes on the ETH->USD conversion because I already paid taxes on the gain when converting from BTC to ETH?


Thanks for any advice. I'm out of my element here.

Post: #18

Could just buy a cash business and launder the proceeds, that's something lm thinking about if l managed to turn my measly investment into riches

Post: #19

(01-18-2018 01:21 PM)Steve McQueen Wrote:  Could just buy a cash business and launder the proceeds, that's something lm thinking about if l managed to turn my measly investment into riches

How would you go to fiat?

Post: #20

(01-18-2018 10:31 AM)redonion Wrote:  <snip>
Thanks for any advice. I'm out of my element here.

To make it easy if you realize a gain, whether from trading, arbitrage, selling etc then you owe the applicable (short/long) capital gains taxes on that transaction.

So if you are day trading and chasing 100 satoshi swings, you will need to convert those 100 satoshi "profits" for each trade to USD and pay the tax since you realized them. This is where a lot of confusion lies wrt to "like kind exchange", I dont read that you can do that while taking profits in this way. I posted in the day trading thread with the IRS link here. Nevermind that you have to declare each individual like kind exchange on your return. No big deal if its for a house, but hundreds or thousands of crypto trades? I think a lot of people are in for a shock.

If you buy then sell for a profit you owe the tax.

If you buy/sell but dont realize a gain, there is nothing to tax. So if you convert USD - ETH to immediately buy VEN for example then there is no (or an extremely minimal) gain/loss realized.

A lot of the apps will take your trading history file and compute that data for you. Thats all by the book anyway. Each of us has to make his own decision on how to pay the tax. If you pay it when you convert back to fiat I think you will be ahead of 95% everyone else.

Post: #21

(01-18-2018 01:42 PM)jamaicabound Wrote:  

(01-18-2018 01:21 PM)Steve McQueen Wrote:  Could just buy a cash business and launder the proceeds, that's something lm thinking about if l managed to turn my measly investment into riches

How would you go to fiat?

Localbitcoins

Post: #22

@redonion:

It's more like this, they tax you on c2c transactions when you dispose one crypto for another. In your first example all that matters is the price of BTC when you bought and sold it for ETH. You bought BTC for 5k but sold/disposed it when it hit 10k. You made 5k profit, they want to tax you on that and this is actually what gets recorded.

In the second scenario you probably pay little to no tax since you disposed/sold coin A for the same price you bought it. That's $0 profit, you didn't make any money. You also disposed coin B for the same price you bought in for. Zero tax.

Here's another scenario. You bought ETH at the high at $1400. Crash happened and being a desperate for fiat you had to sell your ETH at $1000. You lost $400. That -$400 will also be recorded as a transaction to offset your previous profits in crypto.

Post: #23

(01-19-2018 01:22 PM)[email protected] Wrote:  @redonion:

It's more like this, they tax you on c2c transactions when you dispose one crypto for another. In your first example all that matters is the price of BTC when you bought and sold it for ETH. You bought BTC for 5k but sold/disposed it when it hit 10k. You made 5k profit, they want to tax you on that and this is actually what gets recorded.

In the second scenario you probably pay little to no tax since you disposed/sold coin A for the same price you bought it. That's $0 profit, you didn't make any money. You also disposed coin B for the same price you bought in for. Zero tax.

Here's another scenario. You bought ETH at the high at $1400. Crash happened and being a desperate for fiat you had to sell your ETH at $1000. You lost $400. That -$400 will also be recorded as a transaction to offset your previous profits in crypto.

This is the conclusion I arrived at yesterday. Thanks a bunch to you and Adonis for clarifying this for me.

C2C taxes aren't that bad after all, then. Especially since you can deduct losses. I was terrified that I would have to pay a tax on every amount purchased (like a sales tax), which would suck.

Post: #24

You can also deduct the fees paid as a tax offset.

Post: #25

Nah fuck all that.

Take this anon advice from 4chan instead:

Open HSBC account
Convert everything I want to cash out into ETH
Go to etheroll.com
Drag slider all the way to 99% win chance
Bet 1 ETH at a time at 99% chance of winning
Sell ETH for fiat
Don't have to pay any taxes on gambling profits
HSBC won't report multiple deposits of a few grand anyway because they are a crook bank

Credit goes to anon who told me this method about a week ago