Tax implications for crypto

Discussion of all things crypto and blockchain.
silverpv
Gold Supporter
Posts: 1423
Joined: Fri Jul 24, 2015
Location: Los Angeles

Re: Tax implications for crypto

Postby silverpv » Wed Apr 04, 2018

Chaboo wrote:
Long John wrote:
silverpv wrote:Wanted to share this with you guys .... https://cointracker.io

Cointracker has a very useful FAQ on crypto taxes. https://www.cointracker.io/faq#section-tax

This part covers the most basic question most people have: What is taxable? (The one in bold corrects what I had thought I understood, that any transfer between wallets is a taxable event.)

Generally speaking, these are considered taxable events:
•Selling cryptocurrency for fiat currency (i.e. USD, EUR, JPY, etc.)
•Trading cryptocurrency for other cryptocurrency
•Using cryptocurrency to buy a good or service
•Receiving cryptocurrency as a result of a fork or from mining

On the other hand, the following are generally not considered taxable events:
•Buying cryptocurrency with fiat currency
•Donating cryptocurrency to a tax-exempt organization
•Gifting cryptocurrency to anyone (if the gift is sufficiently large it may trigger a gift tax)
Transferring cryptocurrency from one wallet that you own to another wallet that you own



I finally started looking at this closely and found that cointracker counted each time I sent to my wallet as a sale instead of a transfer. I went back and manually changed them as a transfer. My gains were cut in half as a result. :shock: I figured it'd add up, but ...HALF..... That's huge and well worth the few minutes to take a look at.


Very good point.. Thanks for the note. Too late for me, I didn't transfer much but I'm sure it did cost me some. I'll look for next year.

User avatar
SilverDoge
Constitutional Supporter
Posts: 4724
Joined: Mon Apr 21, 2014
Location: Kansas

Re: Tax implications for crypto

Postby SilverDoge » Thu Apr 05, 2018

Taken from this article: https://www.coindesk.com/crazy-cruel-us-tax-crypto-currency/

The U.S. Commodity Futures Trading Commission is eyeing virtual currency as a commodity. The SEC is beginning to treat certain tokens as a security. The U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) has stated that certain activities involving convertible virtual currency constitute money transmission. The IRS treats convertible virtual currency as property.

Commodity? Security? Currency? Property?

Four different, inconsistent categories for the same thing.
Image

silverpv
Gold Supporter
Posts: 1423
Joined: Fri Jul 24, 2015
Location: Los Angeles

Re: Tax implications for crypto

Postby silverpv » Thu Apr 05, 2018

SilverDoge wrote:Taken from this article: https://www.coindesk.com/crazy-cruel-us-tax-crypto-currency/

The U.S. Commodity Futures Trading Commission is eyeing virtual currency as a commodity. The SEC is beginning to treat certain tokens as a security. The U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) has stated that certain activities involving convertible virtual currency constitute money transmission. The IRS treats convertible virtual currency as property.

Commodity? Security? Currency? Property?

Four different, inconsistent categories for the same thing.


All depends on who's getting paid.. Everyone wants their cut.

User avatar
texmex66
Posts: 638
Joined: Tue Feb 02, 2016

Re: Tax implications for crypto

Postby texmex66 » Thu Apr 05, 2018


User avatar
tdtwedt
Gold Supporter
Posts: 6269
Joined: Sat Nov 01, 2014
Location: South Mississippi

Re: Tax implications for crypto

Postby tdtwedt » Fri Apr 06, 2018

Image
There are more ways than one to skin a cat.

Chaboo
Turtle Supporter
Posts: 357
Joined: Thu Oct 27, 2011

Re: Tax implications for crypto

Postby Chaboo » Thu Apr 12, 2018

Anyone use TurboTax and claim crypto? I'm having trouble marrying my info, what I see here and actually feeling comfortable with finishing my taxes. I'm SO close but could use a little hand HODLing. :D
New to crypto, join coinbase and we both get $10 (after you spend $100) https://www.coinbase.com/join/58d979166908ae017761881d

Get cash back from Mr Rebates for shopping online.
http://www.mrrebates.com?refid=626685

User avatar
SilverDoge
Constitutional Supporter
Posts: 4724
Joined: Mon Apr 21, 2014
Location: Kansas

Re: Tax implications for crypto

Postby SilverDoge » Tue Apr 17, 2018

Some excellent ideas at the end of this article for future crypto taxes:

https://www.coindesk.com/irs-treat-crypto-new-asset-class/
Image

User avatar
silverbender
Gold Supporter
Posts: 1000
Joined: Mon Mar 23, 2015
Location: Ohio

Re: Tax implications for crypto

Postby silverbender » Tue Apr 17, 2018

SilverDoge wrote:Some excellent ideas at the end of this article for future crypto taxes:

https://www.coindesk.com/irs-treat-crypto-new-asset-class/


Very good beginning,currently it is discouraging paying taxes unless you are in a straight forward situation.
Image

User avatar
Brick's
Supporter
Posts: 2186
Joined: Wed Dec 19, 2012
Location: 'Cuse

Re: Tax implications for crypto

Postby Brick's » Tue Apr 17, 2018

Alas, while they are good they remain ideas.
“Rationality belongs to the cool observer, but because of the stupidity of the average man, he follows not reason, but faith, and the naive faith requires necessary illusion and emotionally potent oversimplifications which are provided by the myth-maker to keep ordinary person on course.”

― Reinhold Niebuhr, Moral Man and Immoral Society: Study in Ethics and Politics

User avatar
texmex66
Posts: 638
Joined: Tue Feb 02, 2016

Re: Tax implications for crypto

Postby texmex66 » Tue Apr 24, 2018


User avatar
Brick's
Supporter
Posts: 2186
Joined: Wed Dec 19, 2012
Location: 'Cuse

Re: Tax implications for crypto

Postby Brick's » Tue Apr 24, 2018

Whooda thought AZ would potentially be the first? Ida thought NH or AK would be.
“Rationality belongs to the cool observer, but because of the stupidity of the average man, he follows not reason, but faith, and the naive faith requires necessary illusion and emotionally potent oversimplifications which are provided by the myth-maker to keep ordinary person on course.”

― Reinhold Niebuhr, Moral Man and Immoral Society: Study in Ethics and Politics

jcz1
Posts: 4933
Joined: Sat May 28, 2011
Location: USA

Re: Tax implications for crypto

Postby jcz1 » Thu Jun 07, 2018

I saw this on the SS site, seemed to be quoting a tax expert from an article somewhere but didn't mention the article itself:

Liz Russell, senior tax agent with Etax.com.au, said while cryptocurrencies were often touted as an anonymous payment system that can’t be tracked by banks or governments, the ATO’s data matching kicked in as soon as they were converted to fiat currency.
...
One exception is when you use cryptocurrency to purchase items for personal use — such as in the ‘digital currency-friendly’ Queensland tourist town of Agnes Water, where visitors can use cryptocurrency at restaurants, cafes and other stores.

“For these sorts of transactions, no CGT is payable when disposing of cryptocurrency,” Ms Russell said.


A few takeways for me. One, I wasn't aware that Australia had a similar type of income tax, since they have the GST. Also, there seems to be an implication that the ATO is tracking every fiat transaction. And last, they seem to differ in their interpretation on spending crypto on goods, which I think the IRS treats as a sale here in the states. That seems to be one way to avoid some taxes, by buying the lambo that everyone aspires to!

User avatar
Bucketeer
Bearish Supporter
Posts: 2865
Joined: Sat Aug 23, 2014
Location: Warily watching the herd.

Re: Tax implications for crypto

Postby Bucketeer » Thu Jun 07, 2018

The IRS isn't ready for crypto either. For example, consider what the cost basis would be on a hard forked coin. There is no guidance on that issue.
Gentlemen prefer Engelhard.

silverpv
Gold Supporter
Posts: 1423
Joined: Fri Jul 24, 2015
Location: Los Angeles

Re: Tax implications for crypto

Postby silverpv » Fri Jun 08, 2018

Bucketeer wrote:The IRS isn't ready for crypto either. For example, consider what the cost basis would be on a hard forked coin. There is no guidance on that issue.



Cost basis is $0. If sold for $100 you’d be taxed as a dividend. As long as the method is consistent you won’t get dinged. Similar to mining, the cost is the end day price minus electricity and equipment cost. I agree they aren’t ready, but still ready to go after people. I hearthey are a bit busy trying to figure out what to do for 2018. It’s going to be interesting..

User avatar
Bucketeer
Bearish Supporter
Posts: 2865
Joined: Sat Aug 23, 2014
Location: Warily watching the herd.

Re: Tax implications for crypto

Postby Bucketeer » Fri Jun 08, 2018

How could the cost basis be zero, and why would it be taxed as a dividend? I don't buy it. I'm not trying to start a fight, but a hard-fork "seems" like it should be treated as a "spin-off". Never having had a spin-off, I don't know how those work.

See my point - we need guidance.
Gentlemen prefer Engelhard.

User avatar
Bucketeer
Bearish Supporter
Posts: 2865
Joined: Sat Aug 23, 2014
Location: Warily watching the herd.

Re: Tax implications for crypto

Postby Bucketeer » Fri Jun 08, 2018

Actually, a spin-off should be simple. Hard Forks?

How could a Schedule D asset issue a 1099 for a dividend? The Ethereum Foundation never sent me a 1099 when it forked. BUT they never forked Ether. It was a another bunch of players.

We need guidance, and the IRS hasn't written it yet.
Gentlemen prefer Engelhard.

User avatar
Bucketeer
Bearish Supporter
Posts: 2865
Joined: Sat Aug 23, 2014
Location: Warily watching the herd.

Re: Tax implications for crypto

Postby Bucketeer » Fri Jun 08, 2018

silverpv wrote: I hear they are a bit busy trying to figure out what to do for 2018. It’s going to be interesting..


2017 will be a wash, 2018 will have regulations.
Gentlemen prefer Engelhard.

silverpv
Gold Supporter
Posts: 1423
Joined: Fri Jul 24, 2015
Location: Los Angeles

Re: Tax implications for crypto

Postby silverpv » Sat Jun 09, 2018

Bucketeer wrote:How could the cost basis be zero, and why would it be taxed as a dividend? I don't buy it. I'm not trying to start a fight, but a hard-fork "seems" like it should be treated as a "spin-off". Never having had a spin-off, I don't know how those work.

See my point - we need guidance.


If there is no guidance, as long as you document your methodology, and use it consistently is what my CPA mentioned.

Cost basis is $0 because you own the asset already. If you own bitcoin at $100 and it goes up to $200 and hard fork, your cost basis on BCH is $0 and your gain on BTC is $100 or GAS for NEO. At least that’s how I’m recording it, mainly on the sale of the dividend.

Since we are our bank we have to record the transactions. There is no 1099. Either way you do it, good luck. I just use cointracker to avoid too much headache at an obvious expense but in exchange for simplicity.

User avatar
Long John
Turtle Supporter
Posts: 3756
Joined: Sun Feb 14, 2016
Location: Northeast

Re: Tax implications for crypto

Postby Long John » Sun Jun 10, 2018

Bucketeer wrote:
silverpv wrote: I hear they are a bit busy trying to figure out what to do for 2018. It’s going to be interesting..


2017 will be a wash, 2018 will have regulations.

Now you tell me. :lol: I paid a fair bit of taxes on my 2017 crypto activity. It would be just my luck if the IRS wasn't really paying attention yet.

User avatar
Bucketeer
Bearish Supporter
Posts: 2865
Joined: Sat Aug 23, 2014
Location: Warily watching the herd.

Re: Tax implications for crypto

Postby Bucketeer » Mon Jun 11, 2018

Long John wrote:
Bucketeer wrote:
silverpv wrote: I hear they are a bit busy trying to figure out what to do for 2018. It’s going to be interesting..


2017 will be a wash, 2018 will have regulations.

Now you tell me. :lol: I paid a fair bit of taxes on my 2017 crypto activity. It would be just my luck if the IRS wasn't really paying attention yet.


I paid more taxes than I deserved. Crypts are currency, not assets.

Seriously....if I move Bitcoin from my KeepKey to a softwallet in order to update the KeepKey firmware, is that really a transaction?

Where is John McAfee when you need him?

I'd hate to be a trader. Schedule D nightmares. HODL
Gentlemen prefer Engelhard.


Return to “Bitcoin/Crypto/Blockchain”

Who is online

Users browsing this forum: No registered users and 2 guests