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

bloomberg.com

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

#171
post #144

Earlier quoted context omitted.

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.

The article lede strongly implies that method is a currently operative tax advantage:

> Investors in bitcoin and other virtual currencies would lose a lucrative tax break…"

It also reports, without caveats (or attribution to "some say") that the characterization has been used successfully, so far, in the absence of an explicit prohibition:

> Under current law, such trades have been protected under a provision that allows investors to defer capital gains taxes on so-called “like-kind exchanges”

Several of the tax attorneys quoted advance the interpretation that this treatment will only stop on January 1, 2018 under the new bill.

Of course, there's a risk given the ambiguities also mentioned in the article. But the fact that it required legislation, with a future-effective-date, to clarify may give more cover to those using the treatment before that date – and focus discretionary enforcement on clearer cases in 2018.

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

#173

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…

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

#174

Can somebody explain something to me... I haven't been participating in the Bitcoin/cryptocurrency movement for better or worse, just following it from afar: I thought the premise of these currencies was to avoid government and banking oversight/control... but with both the SEC and IRS putting controls around virtual currency (which I think we all expected to happen), how does that change the original inspiration? Do…

I also wonder how this will deal with crypto coins that are specifically designed to avoid monitoring. Seeing as it's insanely easy to set up an alternate address in any coin, and that whatever the US government knows of my coins could just be a tiny percentage.. how would they know how much to tax me on? It seems so difficult as to be almost useless. Makes me think they'd be better off just considering it a foreign…

They can't and won't, anyone savvy enough can obfuscate it enough. This is just fear mongering for the masses, in other words, business as usual for the government

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

#176
post #113

Earlier quoted context omitted.

I don't think this is a reasonble analogy. I don't advance or enable child porn merely by using the internet. By contrast, I do advance and enable senseless state violence by paying taxes. It is a source of personal shame.

I believe it's exactly as reasonable as yours.

I don't really understand this comment. I didn't make an analogy.

The state takes tax money and uses it to literally put people in cages and literally drop explosives and chemicals on children. I didn't mean this as an analogy - it's a literal statement.

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

#177

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…

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

#178

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…

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

What makes bitcoin 'rare' isn't the fact that it's a cryptocurrency, just like what makes a dollar 'rare' isn't the fact that it's a piece of paper.

It's the network (i.e. hash power) behind it.

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

#179

Earlier quoted context omitted.

Spoken like someone not from Canada. When the government was funding all of the residential schools, you had no option but to pay the government or risk being tortured.

"you had no option but to pay the government or risk being tortured" Also known as just "following the law." You could also say you had no choice but to not rape someone or risk being tortured.

I don't understand your analogy. Are you trying to draw an equivalence between tax resistance and rape?

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

#180
post #171

Earlier quoted context omitted.

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.

The article lede strongly implies that method is a currently operative tax advantage: > Investors in bitcoin and other virtual currencies would lose a lucrative tax break…" It also reports, without caveats (or attribution to "some say") that the characterization has been used successfully, so far, in the absence of an explicit prohibition: > Under current law, such trades have been protected under a provision that al…

I've spoken to several tax attorneys about this over the past couple years as well, and not one has said they'd be comfortable treating these as in-kind transactions. It was therefore surprising to me to read this article today.
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