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Capital gains tax

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When the time comes for you to hit that  sell button, you will need to transfer that money to some bank account.

A couple of questions here:

When you transfer sold amount to your bank account, will this freeze your account due to the amount transferred ?

Why did it freeze? if so, is it contingent to IRS (or your government tax agency) review ?

When it comes time to sell, how do you prove to your government it is not capital gains (held over a year) that way you are charged the lesser amount for tax? (from my understanding capital gains differentiates. In some places it's investing longer than 12 months, and some places it's investing longer than 5 years).

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Please talk to a tax professional. I got so much bad or incorrect information from the net. 

I decided to invest in getting the correct information and ended paying no capital gains taxes. If I had just gone about it with the information from online, I would have owed taxes this year. 

Seriously, get professional help. 

Edited by LordVetinari

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5 hours ago, dayvkaos said:

how do you prove to your government it is not capital gains

Keep records of every transaction. For XRP held at your own address, the ledger itself proves how long they were there for, since every transaction is publicly visible. Off-ledger trading at an exchange isn't publicly visible, but most exchanges let you download a CSV file.

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There was a thread just a few days ago focused around cashing out.  In that thread was some great info.  I’m not in a position right now to dig around for it but long story short when we start getting up closer to $100 I’m probably going to move the family to Puerto Rico for 7 months and take advantage of act 20 and 22.  

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long time hodler here that cashed out large amount in December.  I am totally kicking myself for not waiting another 2 weeks but i had reached a target for initial selling and i did.  I just printed off transaction logs and gave them to my accountant to show that i had been hodling these assets for longer than a year.  So, it is reported as a long term gain.  Since i sold in 2017 and not 2018, i was hit with the alternative minimum tax (Trump plan has raised level to 1 million dollars as of 2018 before liability kicks in) as well as the net investment income tax.  these of course are added to fed and state.  In addition, you lose all your deductions and credits (child and such) when you have a large income.

Needless to say, it's painful.  But, as problems go, not a bad one to have.  

 

PS...am seriously considering the Puerto Rican thing for when we reach > $10

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59 minutes ago, aavkk said:

There was a thread just a few days ago focused around cashing out.  In that thread was some great info.  I’m not in a position right now to dig around for it but long story short when we start getting up closer to $100 I’m probably going to move the family to Puerto Rico for 7 months and take advantage of act 20 and 22.  

Interesting as I’ve considered a move there too. A few questions if you don’t mind. Is 7 months residency (post sale) the minimum to avoid the cap gains? Is it enough to move the day before selling? Any concerns about moving the family there since the schools are known to be poor quality?

I’ve been to San Juan a couple times (pre hurricane though) and enjoyed it. I just wonder how feasible it is to move there with kids in the near future.

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6 hours ago, dayvkaos said:

When the time comes for you to hit that  sell button, you will need to transfer that money to some bank account.

A couple of questions here:

When you transfer sold amount to your bank account, will this freeze your account due to the amount transferred ?

Why did it freeze? if so, is it contingent to IRS (or your government tax agency) review ?

When it comes time to sell, how do you prove to your government it is not capital gains (held over a year) that way you are charged the lesser amount for tax? (from my understanding capital gains differentiates. In some places it's investing longer than 12 months, and some places it's investing longer than 5 years).

If you do not specify where you live.....  Here in Italy cryptocurrency is considered like  foreign currency, so if you  only  buy crypto,  hodl  and sell one time only ,  you don't pay any tax. But if you trade it , and sell and buy forth and back, that is trading and you pay the government tax.

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in canada, the bank won’t freeze your account as long as you give them and advance heads up that X amount is incoming.

 

Once you have it, it’s your responsibility to ensure you pay your cap gains tax.  50% of your gain is taxable at your income bracket (i think). 

 

The first part im totally sure on, source is my bank.  2nd part is from my own research but need to verify with a professional beancounter.

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6 hours ago, dayvkaos said:

 

When you transfer sold amount to your bank account, will this freeze your account due to the amount transferred ?

 

Why the bank freeze the account  ?? , there is no reason , I think the bank is a private istitution , why they have to do the job  of the government  ???  that nonsense...

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6 minutes ago, TLG said:

in canada, the bank won’t freeze your account as long as you give them and advance heads up that X amount is incoming.

 

Once you have it, it’s your responsibility to ensure you pay your cap gains tax.  50% of your gain is taxable at your income bracket (i think). 

 

The first part im totally sure on, source is my bank.  2nd part is from my own research but need to verify with a professional beancounter.

And even if it is frozen, it will have nothing to do CRA...accounts usually only get frozen by CRA in a collections scenario (or if there' a criminal/tax evasion element)...

Correct, capital gains taxed at 50% of regular rate (applicable to wages, interest, etc.) at your bracket...top bracket over $200kish depending on province...professional beancounter here ;)

Question: You have any concerns about your bank accepting a transfer from an Exchange? I'm hearing/reading all kinds things from no problem to bank won't accept transfer and will shut down your account at the mere mention of crypto...I know Quadriga are having issues dealing with banks...

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5 minutes ago, ieiaiel said:

Why the bank freeze the account  ?? , there is no reason , I think the bank is a private istitution , why they have to do the job  of the government  ???  that nonsense...

Banks answer to the government, particularly Charter Banks...and they don't like risk, of any kind...

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1 minute ago, xrpmeplease said:

Banks answer to the government, particularly Charter Banks...and they don't like risk, of any kind...

At the end of the year, banks are required by law to send the clients statements to the government  tax agency, if there is something strange , they can take some action, but a bank can't take any decision , they can't froze an  accont , that is a decision of tax government agency  but only after the bank have sent the client statement to them.

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1 minute ago, ieiaiel said:

At the end of the year, banks are required by law to send the clients statements to the government  tax agency, if there is something strange , they can take some action, but a bank can't take any decision , they can't froze an  accont , that is a decision of tax government agency  but only after the bank have sent the client statement to them.

Banks can definitely freeze an account of their own accord if they have concerns something fishy is happening, I've seen it happen to clients before, usually relating to out of the ordinary activity (deposits and/or spending/withdrawals)...it usually get sorted out and unfrozen, but it happens without the government or the tax agency (CRA in Canada) being involved...they can also shut your account and refuse to do business with you if they want, without any explanation...

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1 minute ago, xrpmeplease said:

without the government or the tax agency

Nonsense, they get sued. You pay tax to government not to your bank, that nonsense.

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