61–70 of 115 posts
I have always reported my virtual currency earnings by providing my deposits to Coinbase at tax time. Then again, I use Coinbase strictly to buy things with bitcoin, not as an investment tool.
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It shouldn't be difficult, unless you don't have access to the proper information. The bitcoins you are selling need to be tied to specific bitcoins that were bought. Once you do that, then you have a cost basis for your sale. Subtract the amount you sold them for from your cost basis and that's your gains. If the source transaction was older than a year, it's capital gains. Otherwise, it's income. (This is for the U…
Is there a "first bought, first sold" clause in US tax law regarding securities, or is it the average purchase value of your total holdings during a sale that counts? E.g. I buy 10 BTC for $1 and then buy 10 BTC for $50 and then sell 10 BTC for $100: I have to pay tax on ($100-$1)
thats why on some level it is better to run your own wallet.
You still have to buy your bitcoin somewhere, unless you earn it or mine. This is about Coinbase's brokerage activities, not its wallet services.
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That's because they are very good at picking who to audit. If you can document all your deductions, and have all your sources of income declared, and stored it all together an audit consists of hitting print, handing the scanned copies to them, and waiting.
US tax law is so dense and complicated that they can effectively implicate anyone they choose. Having worked with numerous small businesses in the past, do you know how many of them could readily provide carbon copy receipts for every single deduction they claimed in the last X years? I think there is a valuable discussion to be had about the power of a federal agency that can so easily zero their sights on anyone th…
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I'm pretty sure they'll be overwhelmed by going after larger fish and nothing will ever come of it for such a small amount.
Well, unless they scale it - like for example going to Coinbase and asking for all accounts created between 2013 and 2015 :)
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The note from the IRS about Bitcoin I read on CoinBase's site said it's similar to a security. So until you trade it out (sell it) you don't realize a gain. When you do your gains are considered similar to capital gains / capital losses (if you held for more than 1 year). Otherwise considered income.
Well again, I was about to sell some, and figuring out exactly how much I 'gained' from so many tiny buy transactions I imagine would be difficult (but might not be, I'm not sure).
It's made filing really easy, well worth the small fee.
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Coinbase has to report SARs, as well- they're a fully licensed money transmitter in the US- so maybe tone down the condescension. This is an overreach of a different type and by a different government body, and would be precedent-setting AFAIK.
SARs only apply to suspicious activity. CTRs are what your bank has to file for every transaction over $10000. Also, it's all the Dept. of Treasury. The IRS is essentially the collection agency of the Dept. of Treasury. It's listed as a bureau on the U.S. Treasury's website. https://www.treasury.gov/about/organizational-structure/bure...
For every currency transaction, not every transaction. (if you deposit a check for $50,000, that doesn't get reported unless the bank thinks something about the transaction is suspicious)
Are bitcoins classified as currency for the purposes of CTR reports?
Earlier quoted context omitted.
It shouldn't be difficult, unless you don't have access to the proper information. The bitcoins you are selling need to be tied to specific bitcoins that were bought. Once you do that, then you have a cost basis for your sale. Subtract the amount you sold them for from your cost basis and that's your gains. If the source transaction was older than a year, it's capital gains. Otherwise, it's income. (This is for the U…
Is there a "first bought, first sold" clause in US tax law regarding securities, or is it the average purchase value of your total holdings during a sale that counts? E.g. I buy 10 BTC for $1 and then buy 10 BTC for $50 and then sell 10 BTC for $100: I have to pay tax on ($100-$1)
Neither. It's all specific lots (individual orders). How Coinbase chooses which bitcoin to sell will affect what tax you owe.
With a typical brokerage (e.g. Vanguard), you can configure individual securities to sell FIFO, lowest cost, avgcost, or specific lots. Not sure if Coinbase lets you do that.
Edit: From your example:
> E.g. I buy 10 BTC for $1 and then buy 10 BTC for $50 and then sell 10 BTC for $100:
You could sell the last 10 BTC you bought, in which case you'd owe capital gains tax on the $50 appreciation, or you could sell the first 10 BTC you bought, in which case you'd owe capital gains tax on 9 * $5 + 1 * $9 (= $54, slightly more).
I buy a small amount (about $20 worth) every paycheck, so I'm really not sure how to even report that reasonably. With such a volatile price, I don't really know how much it's gone up or down without some serious calculations. I'm not really sure what to do about that. I was just about to sell some of it too, to help cover some recent expenses.
I had the same problem with the Canadian equiv (CRA). I just treated it like I bought it all at $0 / BTC. I was selling between $100 and $1000, with an average purchase price between $4 and $10, so the cost was basically minuscule.
Earlier quoted context omitted.
That's because they are very good at picking who to audit. If you can document all your deductions, and have all your sources of income declared, and stored it all together an audit consists of hitting print, handing the scanned copies to them, and waiting.
US tax law is so dense and complicated that they can effectively implicate anyone they choose. Having worked with numerous small businesses in the past, do you know how many of them could readily provide carbon copy receipts for every single deduction they claimed in the last X years? I think there is a valuable discussion to be had about the power of a federal agency that can so easily zero their sights on anyone th…