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IRS reminds taxpayers to report virtual currency transactions

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Re: IRS reminds taxpayers to report virtual currency transactions

#41

Post by [deleted] »

adanto6840 wrote: post #36
gxs wrote: post #33

Earlier quoted context omitted.

Worth mentioning that there exists a $5MM lifetime max that any individual can gift before paying taxes. A common misconception is that you have to pay tax on every gift you make, but as long as you’re under that $5MM all you have to do is report it.

Not that it would probably ever apply to me, but I'm curious if that's per "individual gift giver - giver receiver" pair? Or is it the case that it's solely per individual gift _giver_? As in, would receiving a $500 gift from Bill Gates (who presumably has met the $5MM lifetime threshold) be fully taxable? Just random Sunday curiousness. :)

[deleted]

Re: IRS reminds taxpayers to report virtual currency transactions

#44

Post by isostatic »

adanto6840 wrote: post #36
gxs wrote: post #33

Earlier quoted context omitted.

Worth mentioning that there exists a $5MM lifetime max that any individual can gift before paying taxes. A common misconception is that you have to pay tax on every gift you make, but as long as you’re under that $5MM all you have to do is report it.

Not that it would probably ever apply to me, but I'm curious if that's per "individual gift giver - giver receiver" pair? Or is it the case that it's solely per individual gift _giver_? As in, would receiving a $500 gift from Bill Gates (who presumably has met the $5MM lifetime threshold) be fully taxable? Just random Sunday curiousness. :)

Would have to be per giver, otherwise it would be trivial to avoid (want Dave to get another $1m, either give $2m and have the taxes taken, or give $1.1m to Joe Bloggs, who gives $1m to Dave and keeps the rest.

Re: IRS reminds taxpayers to report virtual currency transactions

#45

Post by mindslight »

adanto6840 wrote: post #36
gxs wrote: post #33

Earlier quoted context omitted.

Worth mentioning that there exists a $5MM lifetime max that any individual can gift before paying taxes. A common misconception is that you have to pay tax on every gift you make, but as long as you’re under that $5MM all you have to do is report it.

Not that it would probably ever apply to me, but I'm curious if that's per "individual gift giver - giver receiver" pair? Or is it the case that it's solely per individual gift _giver_? As in, would receiving a $500 gift from Bill Gates (who presumably has met the $5MM lifetime threshold) be fully taxable? Just random Sunday curiousness. :)

For what GP is talking about, it's per giver. It's a combined gift/estate tax, with the goal of preventing someone from giving to escape their eventual estate tax burden.

But that isn't really relevant for the average person - gifts below the annual exclusion amount (something like $14k) are exempt from reporting/recording/tallying at your death. And this does apply per each pair of people per year, so in your scenario BG would have nothing to report.

Re: IRS reminds taxpayers to report virtual currency transactions

#46

Post by purple-again »

gxs wrote: post #33
purple-again wrote: post #4

If you are walking down the beach and find a $20 bill on the ground, you are required to report it as income. The only way that I know of that you can legally enrich yourself without paying taxes is via a direct gift and that’s because the giver pays tax instead of you.

Worth mentioning that there exists a $5MM lifetime max that any individual can gift before paying taxes. A common misconception is that you have to pay tax on every gift you make, but as long as you’re under that $5MM all you have to do is report it.

Further complicating the situation, there is a roughly $30k (don’t bother looking it up) exception per year that allows couples to gift under that amount to individuals without affecting my lifetime $5m exclusion.

So if we have 5 children and 10 grandchildren we are giving away $450,000 a year to our family and still get another $5M when we die gift tax free.

Re: IRS reminds taxpayers to report virtual currency transactions

#47

Post by [deleted] »

purple-again wrote: post #4

If you are walking down the beach and find a $20 bill on the ground, you are required to report it as income. The only way that I know of that you can legally enrich yourself without paying taxes is via a direct gift and that’s because the giver pays tax instead of you.

[deleted]

Re: IRS reminds taxpayers to report virtual currency transactions

#48

Post by sergiotapia »

Reminded me of this kid that said he bought some bitcoins and then sold to buy some alt coins.

>At the advice of my friends, I took most of my savings and bought 8 bitcoins back in early 2017 for about $7200. You can imagine how I felt when it went up. Around December 2017, I got caught up in the altcoins frenzy and sold most of my bitcoins (about $120k worth) to buy a bunch of different coins. I didn't know this back then but it looks like I owe income taxes on those trades,

Thread: https://www.reddit.com/r/personalfinance/comments/84huks/i_j...

Re: IRS reminds taxpayers to report virtual currency transactions

#49

Post by purple-again »

gxs wrote: post #40
adanto6840 wrote: post #36

Earlier quoted context omitted.

Not that it would probably ever apply to me, but I'm curious if that's per "individual gift giver - giver receiver" pair? Or is it the case that it's solely per individual gift _giver_? As in, would receiving a $500 gift from Bill Gates (who presumably has met the $5MM lifetime threshold) be fully taxable? Just random Sunday curiousness. :)

Individual gift giver. So lifetime max per person! Not too shabby.

Lifetime max $5,000,000. Yearly max changes but hovers around $15k per person (wife and husband diffrent people!) and doesn’t touch yearly max.

Re: IRS reminds taxpayers to report virtual currency transactions

#50

Post by s73v3r_ »

mannykannot wrote: post #26

There 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?

Yes. If you don’t have the key, you can’t sell. Selling is when you would realize your gain (or loss), and then do tax stuff.
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