Jump to content
Squofis

THE TAXMAN COMETH!!!!

Recommended Posts

Im dealing with this ATM and it's a huge pain in the a@@. I have been using Cointracking.info and it seems to work pretty good(Needs Tweeking though). I know that we have to pay Short Term Capital Gains on Realized Gains. Which means all the profits that you made with your trades is considored  A Realized Gain, and of course if you actually cashed out a Crypto that you have owned for less than 12 months for fiat. The question I have is which Methods are we allowed to use. There are a bunch, but  2 most common used is FIFO(FIrst In FIrst Out) and LIFO(Last In First Out). Even though im not finished I can you tell right away FIFO is going to screw me royally this year. Mainly because I bought most of my stack between .18-.36 and did not touch them. Since this this has jumped,  I have also bought in at $1.00- $2.56. I kept a small stack of USDT and XRP and swung Trade and right now do save money and now I wished I waited until 2018. The main reason why is because, When I sell or trade  it's taking the coins that I bought in the very begining every time I sell which is a huge freaking differance to now. LIFO seems to work out much better as far as capital gains because your coins that you bought more recently are the first to go out first. Let me tell you it's a big a#$ difference when everything totals up. However, it may cause a bigger problem in the end when I do finally cash out for USD. If I understand it correctly I can't pick and choose which group of coins I can sell for long term capital gains. I would be forced to sell my most recent ones first which would make them Short Term eventhough I will have a bunch that will be over a year old in about 5 months that have just sitting in my Nano S. Which means technically I cannot add to the stack at all if I intend to pay Long Term Capital Gains (12 Months or older). I could be completely wrong if so please guide me in the right direction. It's a freaking mess and the IRS is going to cash in big time on Crypto Trading and it absolute BS. If anyone gets any sort of confirmation from their Tax Rep in the USA please let me know. I am all ears and interested to know what you all in the US are doing, because this sh*t doesn't seem right at all. 

Here is another thing I read. Some people are saying that for 2017 tax year only we would be able to use (Like for Like) for our trades. Is there any truth to this?

Share this post


Link to post
Share on other sites

People who think the government isn't capable of chasing up unpaid taxes related to cryptocurrency trading is dead wrong.

All the government needs to do is compel the crypto exchanges in their jurisdictions to release the transaction histories on everyone's accounts. If you're a citizen, your name is gonna be right there beside the account(s) you've verified using your passport or your drivers license.

Don't know what all this foolishness is about cryptocurrencies being anonymous because in all my exchange accounts, I can easily pull up full transaction histories for everything i've ever bought and sold. The government might want to have access to that data one day, these companies won't be able to refuse, and someone is gonna sit in a cubicle and calculate what's owed.

 

Edited by Morgan

Share this post


Link to post
Share on other sites
49 minutes ago, Xrptrip said:

IRS can kiss my a** if that's true! Your wallet on your exchange is not your property nor do you hold the keys thus that money is by all rights and purpose there property not yours thus it's the exchanges responsibility to pay those taxes until you realize your gains then yes i will pay taxes, but to tax a moving value is not right and is a slap in the face to the stock market as well cause if your going to tax a moving value in crypto then it needs to apply to the stock market as well.

should be rewritten to we can tax you for unrealized gains, future money you might or might not make and we also reserve the right to tax you however the F*** we please. 

A good accountant would have told you not to use that loophole in the first place.  Trust me, if you make a **** load of money and want to cash out, you better have all your records in order.  I am currently tearing my hair out trying to figure out how to do mine because both bitcoin.tax and cointrading.info dont seem to import my bitfinex margin trades correctly.

Share this post


Link to post
Share on other sites
49 minutes ago, Xrptrip said:

IRS can kiss my a** if that's true! Your wallet on your exchange is not your property nor do you hold the keys thus that money is by all rights and purpose there property not yours thus it's the exchanges responsibility to pay those taxes until you realize your gains then yes i will pay taxes, but to tax a moving value is not right and is a slap in the face to the stock market as well cause if your going to tax a moving value in crypto then it needs to apply to the stock market as well.

should be rewritten to we can tax you for unrealized gains, future money you might or might not make and we also reserve the right to tax you however the F*** we please. 

A good accountant would have told you not to use that loophole in the first place.  Trust me, if you make a **** load of money and want to cash out, you better have all your records in order.  I am currently tearing my hair out trying to figure out how to do mine because both bitcoin.tax and cointrading.info dont seem to import my bitfinex margin trades correctly.

Share this post


Link to post
Share on other sites
17 minutes ago, Xrptrip said:

The problem is how do you tax something that's in constant fluctuation with no real escape from consistent volatility. In the stock market you sell a stock you end up back in a constant state USD. thus you entered and exited the market. With cryptos you don't ever exit tell you take profit.

So if one were to make a million dollars on xrp and decided trade to bitcoin and transfer to a hardware wallet but by mistake sent it to the wrong address I know really stupid. but how can they expect anyone to pay taxes on that when no money reached your pocket?

Luckily there are historical price records.  So you can go back in time on your timestamped trades from the exchange you traded on and the tax software you use will import the historical price for that asset.  bitcoin.tax or cointracking.info will do this for you

Share this post


Link to post
Share on other sites

I'm going to keep it simple cash in and cash out... obviously I will provide any info provided from exchanges to a tax adviser but if i'm doing well I should be able to cover taxes if your not doing well then there will be losses i can claim in that case i'm sure losses would out weigh gains. who knows i have no issues fighting the irs i've had to do it before and they dropped it so they don't scare me one bit.

Share this post


Link to post
Share on other sites
6 minutes ago, Xrptrip said:

I'm going to keep it simple cash in and cash out... obviously I will provide any info provided from exchanges to a tax adviser but if i'm doing well I should be able to cover taxes if your not doing well then there will be losses i can claim in that case i'm sure losses would out weigh gains. who knows i have no issues fighting the irs i've had to do it before and they dropped it so they don't scare me one bit.

Except you have to quote the cost basis of each of your coins and then the price you sold it at.  If you did any day trading in between and you dont report it, your % gains or losses wont match up.  Lets say I buy BTC on coinbase.  Then I bought XRP with my BTC and it goes up 1000%.  Then I sell my XRP back to BTC and then back to USD on coinbase.  If I just say I bought and sold BTC, but withdraw 1000% more than what I should have, something would be fishy and your committing tax fraud.

Edited by someguy

Share this post


Link to post
Share on other sites

You have to be extremely unlucky to get caught by the IRS. And now that Trump has basically shaved the IRS’ budget by $250 million https://www.atr.org/trump-budget-cuts-irs-funding-239-million, you probably have a better chance of winning the lottery than of getting caught for tax evasion. I say roll the dice. And even if you do get caught, IRS agents, especially if you’re  a crypto millionaire, are going to be extremely easy to bribe with a few XRP. Or perhaps I’ve just lived in Thailand for too long where bribing government officials is the daily standard. Doubt it though, humans are all fundamentally the same and if you can  improve their boring lives with a cash bonus, guarantee that 9 times out of 10 they will look the other way. It’s just human nature and IRS agents are humans afterall. The IRS mainly targets big fish for political reasons or when they’re trying to make a name for themselves. Government officials are generally lazy as hell though and pretty much incompetent. They’re  not going to come after small fish like us unless you’re just really unlucky. Every so often they come after regular folks to set an example and strike fear into the hearts of men and sheep. The IRS and government in general mainly operate on the fear principal, they simply do not have the man power to come after everyone. Especially with the new Trump budget cuts. But if you’re worried about it, simply open up a bank account in a tax free country like Singapore. Pretty easy and honestly I have no idea why more people don’t do it. Rich people do for sure though. It’s really, that I can guarantee you. No way is the IRS going to mess with you if you’re International. The bandwidth to do so simply isn’t there. They go after easy targets that allow them to shine in the limelight.

Share this post


Link to post
Share on other sites
3 minutes ago, TigeeForce said:

You have to be extremely unlucky to get caught by the IRS. And now that Trump has basically shaved the IRS’ budget by $250 million https://www.atr.org/trump-budget-cuts-irs-funding-239-million, you probably have a better chance of winning the lottery than of getting caught for tax evasion. I say roll the dice. And even if you do get caught, IRS agents, especially if you’re  a crypto millionaire, are going to be extremely easy to bribe with a few XRP. Or perhaps I’ve just lived in Thailand for too long where bribing government officials is the daily standard. Doubt it though, humans are all fundamentally the same and if you can  improve their boring lives with a cash bonus, guarantee that 9 times out of 10 they will look the other way. It’s just human nature and IRS agents are humans afterall. The IRS mainly targets big fish for political reasons or when they’re trying to make a name for themselves. Government officials are generally lazy as hell though and pretty much incompetent. They’re  not going to come after small fish like us unless you’re just really unlucky. Every so often they come after regular folks to set an example and strike fear into the hearts of men and sheep. The IRS and government in general mainly operate on the fear principal, they simply do not have the man power to come after everyone. Especially with the new Trump budget cuts. But if you’re worried about it, simply open up a bank account in a tax free country like Singapore. Pretty easy and honestly I have no idea why more people don’t do it. Rich people do for sure though. It’s really, that I can guarantee you. No way is the IRS going to mess with you if you’re International. The bandwidth to do so simply isn’t there. They go after easy targets that allow them to shine in the limelight.

If you hold money in a foreign bank account, there is something called FBAR compliance which you need to report on to the IRS.  In my opinion, I wouldnt count on the idea that the IRS wont be auditing you if you end up withdrawing a hefty sum of gains.

Edited by someguy

Share this post


Link to post
Share on other sites
3 minutes ago, someguy said:

Except you have to quote the cost basis of each of your coins and then the price you sold it at.  If you did any day trading in between and you dont report it, your % gains or losses wont match up.  Lets say I buy BTC on coinbase.  Then I bought XRP with my BTC and it goes up 1000%.  Then I sell my XRP back to BTC and then back to USD on coinbase.  If I just say I bought and sold BTC, but withdraw 1000% more than what I should have, something would be fishy and your committing tax fraud.

That's what an accountant is for they will make since of the #'s i just provide the info i get from exchanges they can have fun making the #'s match plus if you go through someone else they back the work. any issues they fight the irs if they lose they pay the fines... if your working with lots of numbers best to have the work insured anyways that way your not liable

Share this post


Link to post
Share on other sites
7 hours ago, JamesRay said:

Crypto tax is a mess. I'm in Australia and our Tax Office have provided advice that if you have multiple transactions with multiple currencies they will tax you as a business rather than an individual. This literally means double the tax.

I've purchased XRP a while back and haven't swayed. However, I know a lot of people that haven't considered the tax implications and have been making multiple transactions daily with multiple currencies.

Like @MrClamtastic said, I originally thought that only money in vs money out would matter, however, I've been corrected by others on this forum so I believe it is wherever a profit/loss is made it needs to be reported.

That doesn't sound right, the double tax bit. What they mean by taxing you as a business is that if you are trading in and out of things steadily, this would be treated as business income, not as capital gains/losses (which have slightly different tax treatment). The cryptos are therefore treated as stock and buy/sell is turnover as opposed to capital purchase/sale. Your net profit less allowable deductions than becomes ordinary taxable income added on top of your wages/salary/whatever.

If you want it to be treated as capital purchases and therefore attracting the 12mth capital gains discount, it's best to minimise your trading activity as much as possible, and keep detailed records of entry/exit dates etc. And then of course, you'll still only get the tax discount on holds for longer than 12mths. 

Of course, if you *really* want to maximise your tax flexibility you'll need something like a discretionary trust with a company as the trustee. Will cost a few grand to establish but can provide massive tax advantages.

Edited by OzAlphaWolf

Share this post


Link to post
Share on other sites
1 minute ago, Xrptrip said:

That's what an accountant is for they will make since of the #'s i just provide the info i get from exchanges they can have fun making the #'s match plus if you go through someone else they back the work. any issues they fight the irs if they lose they pay the fines... if your working with lots of numbers best to have the work insured anyways that way your not liable

i think that even if an accountant makes the mistake, the taxpayer is ultimately liable fore the penalties in the eyes of the IRS.  The accountants I've spoken to dont know how to make sense of the #'s because each exchange has so many little quirks in how it reports trade data.  Some exchanges dont even provide the full data.  Everyone says use bitcoin.tax and cointracking.info .  These sites are good, unless you margin trade on bitfinex, and then they report widely innacurate #'s

Share this post


Link to post
Share on other sites

×
×
  • Create New...