"No", respond taxpayers. How do they intend to record this?
I would imagine using the same mechanisms they use to track down unrecorded income from other sources.
IRS reminds taxpayers to report virtual currency transactions
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Re: IRS reminds taxpayers to report virtual currency transactions
#22They still haven't issued guidance on how to treat forks like BTC/BCH, have they?
It’s still ambiguous but the most straightforward way is to treat it as miscellaneous income, which is how I reported it.
If Apple's stock were to split and then "moon" would you claim the difference in portfolio value as misc income? That sounds nonsensical to me. The IRS guidance states it can be treated as a capital asset. You're still HODLing right? Right?
Re: IRS reminds taxpayers to report virtual currency transactions
#23"No", respond taxpayers. How do they intend to record this?
Lots of people cheat on their taxes.
This isn’t different than any other form of undeclared income.
Re: IRS reminds taxpayers to report virtual currency transactions
#24I thought you didn't need to unless you sold. If you simply buy or receive, that also needs to be reported? I have some of those stellar/lumens from when they awarded them for free for signing up back in 2016, but have never sold or transferred them.
I would say keep the Lumens till you sell them. But report it as long term investment? I would wait till the Lumen guys build their platform for trading cryptocurrencies it will likely be seamless enough to where you wont even need to shift from Lumens to BTC to CoinBase or whatever people were doing to cash out their lumens.
Re: IRS reminds taxpayers to report virtual currency transactions
#25-
This kind of talk seems childish.
Declare your income, or don’t.
Re: IRS reminds taxpayers to report virtual currency transactions
#26There are people who have lost the key to wallets. For most of them, that is the same as not owning the cryptocurrency, but a small number might get lucky and remember where they put it, or remember enough of it to eventually recover it, at some point in the future. I haven't looked in detail, but do the rules address this scenario?
Re: IRS reminds taxpayers to report virtual currency transactions
#27why don't we just... link directly to the memo... https://www.irs.gov/newsroom/irs-reminds-taxpayers-to-report...
OK! We've updated the link from https://altcoinreport.co/irs-warns-taxpayers-to-file-cryptoc....
Re: IRS reminds taxpayers to report virtual currency transactions
#28Can someone explain how a "property payment" is reported and taxed: "A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property." https://www.irs.gov/newsroom/irs-reminds-taxpayers-to-report...
Treat it as if you sold the crypto for USD (and pay capital gains). So if you bought a crypto for $10, the price appreciated to $110, and then you bough something worth $110, then you have to pay taxes on $100 of income. It’s the same place you repot capital gains for equity (I don’t remember the form number)
What if I bought 1BTC at $10, then I bought 1BTC at $200, then I bought something with 1BTC when BTC dropped to $100/1BTC? Which BTC was used for the purchase- the one I bought at $10 or the one at $200?
It sort of kills the use of cryptocurrency as "currency" in the US. Imagine if in the end of the year we had to report every dollar transaction (e.g. buying a coffee and a bagel), trace how you earned that dollar and calculate capital gains/loss.
Re: IRS reminds taxpayers to report virtual currency transactions
#29There are people who have lost the key to wallets. For most of them, that is the same as not owning the cryptocurrency, but a small number might get lucky and remember where they put it, or remember enough of it to eventually recover it, at some point in the future. I haven't looked in detail, but do the rules address this scenario?
You report transactions. So if you lost your keys there should be no transactions
Re: IRS reminds taxpayers to report virtual currency transactions
#30Earlier quoted context omitted.
It’s still ambiguous but the most straightforward way is to treat it as miscellaneous income, which is how I reported it.
If Apple's stock were to split and then "moon" would you claim the difference in portfolio value as misc income? That sounds nonsensical to me. The IRS guidance states it can be treated as a capital asset. You're still HODLing right? Right?
I did the research a few months ago and don’t remember the details, so sorry if this is vague.
There are certain criteria that are required for something to be treated as a split and IIRC coin forks were really iffy in this case. The usual case in a stock split is that you get either more of the same security or something of similar likeness (a non voting class of shares in the case of the google split), which is arguable in the case of crypto.
You could argue it’s a split to save money and if you had a huge amount in BTC at the time of the split it’d be worthwhile. My tax savings were going to end up being trivial so I went with what was “safe”.
Edit: noticed your comment about Apple stock “moon”-big. If we’re reporting the fork as income then it’d be income at the value at the time of the fork. So if you had one BTC then the BCH income would be $277 or so and that would become the cost basis going forward. I didn’t have a lot of BTC so the actual tax cost was very low. If you’re holding thousands of BTC at the time then the story would be different and you’d be incentivized to argue a different tax treatment.
Apologies for the wordiness here!!