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Tax-Free Bitcoin-To-Ether Trading in US to End Under GOP Plan

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Re: Tax-Free Bitcoin-To-Ether Trading in US to End Under GOP Plan

#91

Post by gojomo »

1053r wrote: post #61
withdavidli wrote: post #53

While it was deemed to be treated as property, IRS never gave guidance on ability to treat it as like kind transaction. Accountants have been asking for this clarification for years. SEC treating ICO as a security. IRS needs to come out with more guidance, but doing taxes is going to be a pain with crypto to crypto. Not looking for trouble with IRS, especially when gains were plentiful for so many this year. Pay your…

What? The IRS gave guidance for this in 2014! It's right there under item Q-6 in Notice 2014-21. https://www.irs.gov/pub/irs-drop/n-14-21.pdf "Q-6: Does a taxpayer have gain or loss upon an exchange of virtual currency for other property?" "A-6: Yes." (quote continues, but there you go). I have no idea how folks came to the conclusion that 1031 swaps were ever acceptable, but it's always been clear that the IRS did n…

That would have been so much clearer if they'd just written "…upon an exchange of virtual currency for other property, including other virtual currency."

But they didn't, and thus the 'other' can easily be read as "other kind of property" – leaving 'virtual currency' to 'virtual currency' unaddressed.

Re: Tax-Free Bitcoin-To-Ether Trading in US to End Under GOP Plan

#92

Post by nrhk »

jMyles wrote: post #68
tonfa wrote: post #63

Earlier quoted context omitted.

They can prosecute the operators of those sites, not like it didn't happen in the internet before. Usually some things survive, but at the cost of extra hurdles (e.g. only accessible via tor, but even there, some people got busted through bad opsec).

You mean the operators of web front-ends which provide access to the exchange? I suppose that's possible. But I don't know how long that will even be the main way that people access them.

If China's firewall can't stop it, nothing will

Re: Tax-Free Bitcoin-To-Ether Trading in US to End Under GOP Plan

#93

Post by newfoundglory »

stakecounter wrote: post #20
chollida1 wrote: post #12

Earlier quoted context omitted.

It's driven off whats called your dollar cost average. So in your scenario Buy 1 ETH for say $500, your cost base is $500. If then trade the 1 ETH for bitcoin, it only depends on what ETH is worth at that moment. If 1 ETH is now worth $400, then you have a $100 loss, if ETH is worth $500 then no taxable gain or loss, if 1 ETH is wroth $600 then you owe tax on $100 of capital gains. What bitcoin is worth is irrelevant…

Thanks - given your comment it sounds like option 1 mentioned above where gains are calculated based off of USD value even if the currencies are traded directly. But as another commenter mentioned, I don’t see how this can work because the trade doesn’t involve USD at all, and the exchange rate for USD/ETH may vary widely between exchanges. And for more niche cryptocurrencies, a USD value may not even exist because t…

> the trade doesn’t involve USD at all

Neither does buying pounds in euros, but you'll still calculate your taxes in USD.

Re: Tax-Free Bitcoin-To-Ether Trading in US to End Under GOP Plan

#94

Post by thefreeman »

xur17 wrote: post #37
thefreeman wrote: post #33

Are exchanges going to provide us with necessary tax documents in order to pay these taxes? So far all I've found is a terrible csv export that shows the date and amount of purchases of various crypto currencies, but no information at all on the current price at the time of purchase or the amount sold for (this is on Coinbase). I'm starting to get a bit concerned.

I'm planning to use either cointracking.info or bitcoin.tax - they accept these exports, and use their own feeds for determining cost basis at purchase time. Overall I've been pretty dissappointed by the recommendations put out by the IRS - I ended up having to talk to pay to talk to a tax advisor due to the conflicting advice on the internet.

Awesome, thanks for those. I had no idea these resources existed.

Re: Tax-Free Bitcoin-To-Ether Trading in US to End Under GOP Plan

#95

Post by gojomo »

xur17 wrote: post #17

Most tax advisers I spoke with recommended against treating this as an in-kind exchange anyways.

But if this bill means that the IRS will only reject like-kind starting January 1, 2018, then those advisors (and their clients) made an expensive error-on-the-side-of-caution, didn't they? Perhaps even to the extent that people who followed that advice might dare to amend their 2016-and-earlier returns?

This year, the case for 'in-kind' exchange might be best for Bitcoin and its baby Bitcoins (Bitcoin Cash and Bitcoin Gold) – the functional differences are initially miniscule, though likely to grow in time.

Re: Tax-Free Bitcoin-To-Ether Trading in US to End Under GOP Plan

#96

Post by kristallizer1 »

mancerayder wrote: post #90

I don't mind being taxed at all. What I find stressful is calculating - not just the 'what was the USD price at the time of the exchange' that has to be manually entered and looked up into the exported CSV spreadsheet... BUT tying that to the movement of coin from Coinbase to the exchange. It's a pain. I regret using Bittrex, as there's almost no tooling for this available.

https://bitcoin.tax/ might be what you are looking for.

Re: Tax-Free Bitcoin-To-Ether Trading in US to End Under GOP Plan

#98

Post by newfoundglory »

icedchai wrote: post #36
jermaustin1 wrote: post #19

Earlier quoted context omitted.

It is the exact same as exchanging mutual funds at your brokerage. Like an exchange I did just this morning: $10,000 VHDYX -> $10,000 VFIAX. It creates two orders a sell and a buy. I'm taxed capital gains on the $10k sale (about $600 gain) and the buy has nothing to do with it, until I sell it in 5 years.

The difference is brokerages will actually issue you a 1099 form. The crypto exchange sites won't. Let's not kid ourselves... Nobody is going to be reporting crypto-to-crypto exchanges.

Wow, that's a lot of potential reward for someone inside the exchanges if they can put together some information to report to the IRS - https://www.investopedia.com/articles/taxes/09/reporting-tax...

Re: Tax-Free Bitcoin-To-Ether Trading in US to End Under GOP Plan

#99

Post by throwaway30yo »

mancerayder wrote: post #90

I don't mind being taxed at all. What I find stressful is calculating - not just the 'what was the USD price at the time of the exchange' that has to be manually entered and looked up into the exported CSV spreadsheet... BUT tying that to the movement of coin from Coinbase to the exchange. It's a pain. I regret using Bittrex, as there's almost no tooling for this available.

I on the other hand, mind being taxed.

Re: Tax-Free Bitcoin-To-Ether Trading in US to End Under GOP Plan

#100

Post by matchcohnn »

chollida1 wrote: post #3

Probably good news for investors long term. Bitcoin again continues to grow up and be treated as an equal to bonds, stocks, etc. If you are a holder, or HODL as the kids say, then you get the benefit of long term rates, if you are a short term trader then you pay the short term capital gains rates, just like any other currency/commodity. trade. Concrete rules will bring in more conservative money. This was the last l…

without wash trades to pump up its value, what good is bitcoin for??

- bitcoin isn't usable as a transactional currency. it costs $30-40 per transaction. Plus other currencies are gaining steam, and offering other choices for people to transact

- bitcoin isn't rare to be a store of value.....everyday there's a new viable cryptocurrency springing up

- bitcoin isn't safer than dollar.....it can drop 90% in any day; no official entity is going to prop it up and make sure it doesn't crash. it can be banned by countries (and has been by a few)

- bitcoin isn't easy than square cash or visa or wires.....it can take several weeks to send money. plus the transaction fees are high

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