Jump to content

XRP Investors: Spark Token Airdrop Tax Not As Bad As You Fear (posted 11JUN2021 at cryptotaxaudit.com)


Recommended Posts

It is worth noting that several things in this blog contradict what Flare has claimed about tax obligations. Flare said they have received written advice from a tax expert at Harvard. They have also said they will publish whatever they can about this tax advice they have received. So this blog post is not set in stone, and hopefully Flare will soon publish something official.

Edited by Seoulite
Link to comment
Share on other sites

18 hours ago, Seoulite said:

It is worth noting that several things in this blog contradict what Flare has claimed about tax obligations. Flare said they have received written advice from a tax expert at Harvard. They have also said they will publish whatever they can about this tax advice they have received. So this blog post is not set in stone, and hopefully Flare will soon publish something official.

In my tax classes the rule of thumb was "if you have an economic gain, you owe taxes". The tax code is an Economic system.

I think recieving FLR, is an economic gain, so I expect to be paying some taxes.

I dont understand why so many people are so afraid of paying taxes. I had one professor ask the class, "who wants to pay less taxes?" 90% of hands went up (I raised my had for more taxes). Then he said, "ok, then 90% of you just need to not make more money, then you wont have to pay more taxes".

Edited by KarmaCoverage
Link to comment
Share on other sites

1 hour ago, KarmaCoverage said:

In my tax classes the rule of thumb was "if you have an economic gain, you owe taxes". The tax code is an Economic system.

I think recieving FLR, is an economic gain, so I expect to be paying some taxes.

I dont understand why so many people are so afraid of paying taxes. I had one professor ask the class, "who wants to pay less taxes?" 90% of hands went up (I raised my had for more taxes). Then he said, "ok, then 90% of you just need to not make more money, then you wont have to pay more taxes".

Exactly !

Like in poker, we all hope to have the kinna year which results in us having a "tax problem."

Link to comment
Share on other sites

2 hours ago, KarmaCoverage said:

In my tax classes the rule of thumb was "if you have an economic gain, you owe taxes". The tax code is an Economic system.

I think recieving FLR, is an economic gain, so I expect to be paying some taxes.

I dont understand why so many people are so afraid of paying taxes. I had one professor ask the class, "who wants to pay less taxes?" 90% of hands went up (I raised my had for more taxes). Then he said, "ok, then 90% of you just need to not make more money, then you wont have to pay more taxes".

In this case I don't think it's so much about not paying taxes as when and how much you pay. Take two people who each hold onto the entire airdrop for more than a year after the last drop and then sell the whole thing. If one person counts everything as income based on the average trading price that day and another somehow counts the whole thing of having an initial balance of zero, their taxes are doing to look a lot difference. The first pays a lot of income tax up front and then pays long term gains on the profits. The second only pays the lower long term gains on the full amount after he sells it.

Crypto is also tricky because it's not very liquid (ironic for something with currency in the name). In normal situations, you receive income in the same currency you pay taxes in and can set some aside. It doesn't work that way with crypto, it can be expensive to convert a portion of it to dollars.

Link to comment
Share on other sites

Isn't this the same situation like the BTC forks tax-wise?

I can speak to the german situation, since I have already payed taxes on my BCH and BCG airdrops.

You get the coins for 0, so thats their initial value for tax purposes. If you sell within a year, you have to pay income tax on the gains (which is the the selling total in the case of flare), this can move you up in tax brackets. If you hold over a year, you can sell without being taxed.

Edited by Muellhart
Link to comment
Share on other sites

8 hours ago, Muellhart said:

Isn't this the same situation like the BTC forks tax-wise?

Not with the USA's tax laws. 
Forks are a special case.
For US taxpayers, airdrops are either a gift, or taxable income, like a stock dividend.
( the details are in the blog's content ) 

Link to comment
Share on other sites

12 hours ago, Muellhart said:

Isn't this the same situation like the BTC forks tax-wise?

I can speak to the german situation, since I have already payed taxes on my BCH and BCG airdrops.

You get the coins for 0, so thats their initial value for tax purposes. If you sell within a year, you have to pay income tax on the gains (which is the the selling total in the case of flare), this can move you up in tax brackets. If you hold over a year, you can sell without being taxed.

My tax advisor in the US said exactly this. Except we have to pay around 20% capital gains on the profits from initial value 0 after selling after that year.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.