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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

#141

Post by arcticbull »

jMyles wrote: post #112
arcticbull wrote: post #110

Earlier quoted context omitted.

Spoken like someone who's never lived under a functioning socialized government like, say, Canada.

I love Canada! I have no problem with Canada. But I don't think it's fair to consider one nation in isolation; the entire world system has afforded hegemonic states for over a century now. Time to bring it to a close.

I agree, I picked a single one, though I could also have pointed at the UK, Ireland, Norway, Sweden, Finland, Iceland, Denmark, Germany, France, the Netherlands, Switzerland and so on. Curious what you mean by bringing it to a close, though.

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

#142

Post by vertex-four »

Zentgraf wrote: post #137

Can someone please explain to me huw the government wants to track trading in Anonymous currencys? They don't know it's me whi traded btc for eth

The Government also "tracks" large amounts of cash, which are about as anonymous, through audits - both random and based on red flags. Basically, they send round someone with the ability to lock you up if they can prove you've intentionally hidden assets from them, and they're very, very good at seeking out inconsistencies in your books.

Taxes existed before credit cards, you know.

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

#143

Post by Florin_Andrei »

throwaway30yo wrote: post #99
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.

> I on the other hand, mind being taxed.

Surely you also mind being the member of a civilized society.

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

#144

Post by gojomo »

ultraluminous wrote: post #102
gojomo wrote: post #95

Earlier quoted context omitted.

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 Bitco…

The in-kind rule is not going to apply to any kind of crypto. TFA states it's now formally restricted to domestic real-estate.

TFA is explicit that it is reporting on a legislative change (expected but not yet signed into law) that'd be effective January 1, 2018. It strongly implies a more-favorable treatment is being lost, and that more-favorable treatment was still available for ty2016, and is still available 'now', and through December 31, 2017.

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

#145

Post by justblendin »

wbl wrote: post #122
icedchai wrote: post #108

Earlier quoted context omitted.

You and I may be compliant. The point is, most people won't.

How many convictions will it take?

https://en.wikipedia.org/wiki/Calculus_of_negligence

Premeditated tax-negligence is fraud according to the IRS, but the thinking remains.

How many convictions will it take? Depends on how much is on the line.

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

#146

Post by gamblor956 »

chollida1 wrote: post #12
stakecounter wrote: post #11

Is the cost basis calculated by the US dollar value of each at the time of the exchange? Or based on the exchange rate of the two currencies? Scenario: 1. I buy 1 ETH for 1 USD when rates are 1 ETH/USD, 2 ETH/BTC. 2. I trade 1 ETH for 1 BTC when rates are 2 ETH/USD, 1 ETH/BTC. Option 1: I’ve incurred a loss, because the sale is reported as first a sale of ETH for USD, then a purchase of BTC at whatever the cost basis…

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…

It's driven off whats called your dollar cost average.

This is wrong for cryptocurrency, at least for Bitcoin. Because bitcoin is an asset for tax purposes, each coin (meant here as any quantity of cryptocurrency, not a specific unit) is subject to an individual tax computation, so you must use the actual price paid for each coin as the basis for computing taxes. You must also compare each coin's basis against the actual selling price of that coin at the time sold.

Note that this is generally also how you calculate gains/losses related to foreign currencies.

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

#147

Post by sremani »

chollida1 wrote: post #107
matchcohnn wrote: post #100

Earlier quoted context omitted.

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…

> without wash trades to pump up its value, what good is bitcoin for?? Can you please explain in clear terms how a wash trade pushes up the value of bitcoin? I can see it increasing the volume but not the value.

I do not think bitcoin has this problem because of the volume, but "painting the tape" is done to a lot of alt-coins by shark-pools.

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

#148

Post by gamblor956 »

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.

If you substantially understate[1] your income (including crypto-exchange income), the statute of limitations on your tax return never starts running. That means the IRS has until the end of time to audit you and assess penalties and back interest.[2]

[1] Currently that means excluding items individually or collectively worth more than 25% of the gross income actually stated on the return.

[2] If your omission of crypto-currency income is within 25% of your actual stated gross income, the IRS only has 6 years to audit you and assess penalties...unless they decide that the omission is a deliberate attempt to evade taxes, in which case the unlimited statute of limitations could apply.

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

#149

Post by gamblor956 »

gojomo wrote: post #144
ultraluminous wrote: post #102

Earlier quoted context omitted.

The in-kind rule is not going to apply to any kind of crypto. TFA states it's now formally restricted to domestic real-estate.

TFA is explicit that it is reporting on a legislative change (expected but not yet signed into law) that'd be effective January 1, 2018. It strongly implies a more-favorable treatment is being lost, and that more-favorable treatment was still available for ty2016, and is still available 'now', and through December 31, 2017.

No, TFA is saying that a potential method of characterizing bitcoin exchanges is being explicitly eliminated. It never says that this method was acceptable. Unlike other forms of law, tax law can be retroactive (see, e.g., the loss-harboring tax shelter scandal).

You could always play with fire and try this for your 2016 and 2017 transactions, but if you get audited, expect penalties.

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

#150

Post by mancerayder »

jandrese wrote: post #126
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.

A CSV file is a dream compared to what you might have to go through with on normal stocks. My wife inherited a small amount of telecom stock from her grandmonther who worked for AT&T back in the early days. No records had been kept as to when the stocks were bought (they were part of her salary I think). Of course they were all acquired before the Bell breakup. So what she inherited was a big mess of baby bells and a…

Something like that I'd collect all the paperwork, put a few stickies with whatever additional information, and give the pile to my accountant.

I can't for the life of me comprehend why people do their own taxes. A quality accountant costs maybe 400-500 bucks, which sounds a lot but depending on your salary, it can represents many thousands of dollars of savings. My theory is it's the do-it-yourself fix-the-house type mentality. But that mentality misses that the tax system is intentionally left complicated, requiring experts to help the rich save their riches.

Just get an accountant. :-)

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