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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

#71

Post by Spooky23 »

cft wrote: post #28
kentm wrote: post #13

Earlier quoted context omitted.

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…

This is precisely the same situation that you would have using other currencies.

Re: IRS reminds taxpayers to report virtual currency transactions

#72

Post by kolinko »

njarboe wrote: post #62

The problem, if one want to trade crypto currencies, is that you have to record every transaction. Then one has to figure out if the coins you have traded have been held for over a year and thus treated at the long term capital gains tax rate as opposed to the short term rate. Then, I believe with the new tax bill, one has to, going forward, sell the oldest coins first (if they are going to be treated like stocks). T…

It's not that diffiult really - most exchanges allow exporting historic transactions, and there are tools popping up that help to organise it all for the tax purposes.

Re: IRS reminds taxpayers to report virtual currency transactions

#73

Post by repsilat »

seanmcdirmid wrote: post #65
njarboe wrote: post #62

The problem, if one want to trade crypto currencies, is that you have to record every transaction. Then one has to figure out if the coins you have traded have been held for over a year and thus treated at the long term capital gains tax rate as opposed to the short term rate. Then, I believe with the new tax bill, one has to, going forward, sell the oldest coins first (if they are going to be treated like stocks). T…

IRS doesn't treat chips as stock-like things, they are treated as cash. Can you imagine if crypto currencies were treated like foreign currency instead? You wouldn't be complaining about bookkeeping at least...

At a casino your "bets in flight" could be considered securities... If the roulette wheel spins for a year while your bets are down, maybe you could claim long term capital gains on your winnings because you held the position long enough...

Re: IRS reminds taxpayers to report virtual currency transactions

#74

Post by jobigoud »

sergiotapia wrote: post #48

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 bac…

I still find it weird that he has to pay taxes in dollars on something that he doesn't know the value of in dollars since he hasn't converted his cryptocurrency assets to fiat yet.

Re: IRS reminds taxpayers to report virtual currency transactions

#75

Post by kgwgk »

akcreek wrote: post #66
ghfbjdhhv wrote: post #39

Earlier quoted context omitted.

And if your gifts are less than $15,000 per year, you don’t even have to report it. So the vast majority of gifts are not supposed to be taxed or reported.

This is how my wife and I are saving for our son's future. We gift him money (you can each gift up to the limit without reporting it or decreasing the lifetime gift limit) and then we invest the money on his behalf via a UTMA account with Vanguard. He'll owe taxes upon withdrawal in the future, 17 years from now at the earliest, but he'll also have full freedom to use the money any way he sees fit. So school, startin…

Or blackjack and hookers...

Re: IRS reminds taxpayers to report virtual currency transactions

#76

Post by whataretensors »

DoreenMichele wrote: post #61
whataretensors wrote: post #42

Earlier quoted context omitted.

FYI I removed my comment because I don't want to get targeted by the biggest killer of small business in the US.

My recollection is all you said was "The IRS needs to come up with some sane rules surrounding this issue." There was nothing wrong with saying it, never mind the spin of replies to it. I am stating that because removing the comment combined with your follow up comment looks weird and suspicious in a way the first comment did not to me. I would hate to see you subjected to the Streisand Effect here in a way that coul…

Thanks. To be clear I intend to pay my taxes fully. I also fully expect to have 6 month long mail-only communication with 2-4 weeks between insane letters, as is standard when dealing with the IRS as a small business owner.

Re: IRS reminds taxpayers to report virtual currency transactions

#77

Post by Spooky23 »

roddux wrote: post #12

"No", respond taxpayers. How do they intend to record this?

Through enforcement. Although the Congress has been de-funding IRS enforcement for some time, States, especially states being impacted by tax policy changes are making investments in increased auditing.

Re: IRS reminds taxpayers to report virtual currency transactions

#78

Post by shkkmo »

jobigoud wrote: post #74
sergiotapia wrote: post #48

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 bac…

I still find it weird that he has to pay taxes in dollars on something that he doesn't know the value of in dollars since he hasn't converted his cryptocurrency assets to fiat yet.

Didn't he convert to fiat and then used that fiat to buy alt-coins.

Re: IRS reminds taxpayers to report virtual currency transactions

#79

Post by Spooky23 »

s73v3r_ wrote: post #57
whataretensors wrote: post #42

Earlier quoted context omitted.

FYI I removed my comment because I don't want to get targeted by the biggest killer of small business in the US.

“biggest killer of small business in the US.” Owners who think they’re being clever, when they’re just violating the law?

One of my neighbors was talking like this. Turned out he was stealing employee payroll taxes and sales taxes to get current with his trade creditors.

Re: IRS reminds taxpayers to report virtual currency transactions

#80

Post by Berobero »

ghfbjdhhv wrote: post #39
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.

And if your gifts are less than $15,000 per year, you don’t even have to report it. So the vast majority of gifts are not supposed to be taxed or reported.

> $15,000 per year

Importantly, per person receiving. In principle you have a virtually infinite tax-free gift giving exception available if you distribute your assets to enough people.

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