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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

#201

Post by [deleted] »

TallGuyShort wrote: post #194
s73v3r_ wrote: post #178

Earlier quoted context omitted.

It's not the government's fault you lost track of your records.

I'm not even talking about that - parent comment talks about requirements that are literally impossible to comply with, and I talk about laws that are put into place after a tax year ends and apply retroactively, and official documents that contradict one another and the inability to get an official explanation from the government prior to the filing deadline. How is any of that even remotely "losing track of my reco…

[deleted]

Re: IRS reminds taxpayers to report virtual currency transactions

#202

Post by [deleted] »

saosebastiao wrote: post #174
bringtheaction wrote: post #166

Earlier quoted context omitted.

> Can I use any price from any exchange that day? You should use the fair market value.

So any price from any exchange at any time during the day? You haven't clarified a thing by telling me to use the fair market value, because there is no standardized way to determine fair market value. These aren't stable mature markets, a blink of the eye and the market may be transacting at +/-10%. Determining fair market value is the primary problem with cryptocurrency taxation . If you're lucky enough to be tradi…

[deleted]

Re: IRS reminds taxpayers to report virtual currency transactions

#203

Post by [deleted] »

markonthewall wrote: post #96
kentm wrote: post #18

Earlier quoted context omitted.

Coinbase and other crypto exchanges report to the IRS for one. There’s also forensic accounting where large unexplained cash flows (i.e. buying a house for money far above your income level) establish probable cause, which allows them to go fishing.

It's actually trivial to dodge US taxes. The most basic and effective way to accomplish that is to establish fiscal residency in a friendly european country. It becomes /really/ easy when you have dual citizenship. Same applies for crypto gains, if you avoid using US based crypto-exchanges you are probably OK for the foreseeable future. I have found that many americans overestimate the reach, competence, and sheer wi…

[deleted]

Re: IRS reminds taxpayers to report virtual currency transactions

#204

Post by lsc »

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…

You might want to look into putting some of that money into a 529 plan; that allows the kid to pay for college without paying taxes on the gains.

It's a risk if the kid doesn't end up going to college; you end up paying, I think, regular taxes on the earnings plus like 10% penalty.

Still, 17 years of tax free growth would be a pretty good reward if the kid does go to school.

Re: IRS reminds taxpayers to report virtual currency transactions

#205

Post by justincormack »

vollmond wrote: post #161
spookthesunset wrote: post #99

Earlier quoted context omitted.

It's no weirder than having to pay tax on selling MSFT for AMZN. Once you sell an asset, you pay the tax on any gains. doesn't matter how the transaction took place "physically". Just because this crypto space thing is The Future of Money and uses The Internet, doesn't somehow exempt it from real world tax law. Seems like people should have found better exchanges that would have helped facilitate tax reporting...

In the MSFT/AMZN transaction, doesn't the value pass through USD on the way? If I use ShapeShift to convert BTC to LTC, USD isn't involved. Not saying it affects the situation, but it is still a different type of transaction in the way that a lot of laypeople would think of it.

In that case yes, but not with converting JPY to EUR say, or selling and buying shares of a European company which trades in EUR not USD. Only some assets have cross markets.

Re: IRS reminds taxpayers to report virtual currency transactions

#206

Post by wtallis »

CryptoPunk wrote: post #181
zorpner wrote: post #173

Earlier quoted context omitted.

There's got to be a better term than "reverse virtue signaling" to describe how the use of specific terminology (outside of a legal setting) like "pernicious", "females", or "virtue signaling" instantly means that someone can be safely dismissed.

This is called ad hominem. No matter how tempting it is, it's better to refrain from it. Focusing on superficial and peripheral qualities like use of particular words, instead of the claim being made, is fundamentally anti-intellectual.

There's nothing anti-intellectual about questioning your phrasing. You're just pissed that anyone is calling attention to your rhetorical tactics, because that blunts their effect. And without the flowery language, your comment has almost no substance.

Stripping your comment of its rhetorical content to get at the logical meat of the argument is required in order to have an honest intellectual discussion.

Re: IRS reminds taxpayers to report virtual currency transactions

#207

Post by lsc »

JumpCrisscross wrote: post #82
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…

> if one want to trade crypto currencies, is that you have to record every transaction This is true for all capital assets. With cryptocurrencies, the data are all public. There may be room for a service which, given a set of wallets, produces a sample tax transcript.

that sounds like a fun little project; way less privacy concerns than your usual tax application, as all the data is public. just a "find the data for a 1099-B for the following wallets"

it actually seems like it would be pretty easy to do if the user stayed within bitcoin and did all the transactions themselves.

Seems like it would be harder/impossible if they used a broker with a common wallet, which is I thought how most of the brokerages worked.

Re: IRS reminds taxpayers to report virtual currency transactions

#208

Post by chx »

markonthewall wrote: post #96
kentm wrote: post #18

Earlier quoted context omitted.

Coinbase and other crypto exchanges report to the IRS for one. There’s also forensic accounting where large unexplained cash flows (i.e. buying a house for money far above your income level) establish probable cause, which allows them to go fishing.

It's actually trivial to dodge US taxes. The most basic and effective way to accomplish that is to establish fiscal residency in a friendly european country. It becomes /really/ easy when you have dual citizenship. Same applies for crypto gains, if you avoid using US based crypto-exchanges you are probably OK for the foreseeable future. I have found that many americans overestimate the reach, competence, and sheer wi…

> You would be surprised at what /doesn't/ happen if you stop filing taxes.

You are right: the sun would still rise everything morning, life would continue pretty much unchanged, no one would break down the door to haul you away for not filing your return. This is not Hollywood. But a little envelope could show up in a year, two years -- or twenty years. If you do not file there is no time limit on collection of taxes, interest and penalties. https://www.irs.gov/irm/part5/irm_05-001-019 Maybe you are living in a van now and getting cash on the nail and can't care less. But... what if you clean up in ten years and want to live better? Even a zero return is better than no return.

And if you do not live in a van but have an actual income with a paper trail, the IRS might just file a Substitution for Return on your behalf and then, if you do not respond, they will, with the full force of the law, come after what they think you owe them, putting a federal tax lien on your real property, garnishing your wages and so on.

Once you or they filed a return, there's a ten year time limit on collecting the money, but, again, that doesn't apply if you do not file.

What really doesn't happen is criminal tax evasion charges. That's truly rare and reserved for the heavy hitters.

Re: IRS reminds taxpayers to report virtual currency transactions

#209

Post by adrianratnapala »

TallGuyShort wrote: post #194
s73v3r_ wrote: post #178

Earlier quoted context omitted.

It's not the government's fault you lost track of your records.

I'm not even talking about that - parent comment talks about requirements that are literally impossible to comply with, and I talk about laws that are put into place after a tax year ends and apply retroactively, and official documents that contradict one another and the inability to get an official explanation from the government prior to the filing deadline. How is any of that even remotely "losing track of my reco…

> in fact my own record keeping and fastidiousness led to the discovery of all 3 of those problems.

Does that mean it might be safer to be less fastidious so that no-one can uncover records that never existed?

Re: IRS reminds taxpayers to report virtual currency transactions

#210

Post by hippich »

makemoniesonlin wrote: post #169
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.

Isn't it likely the person who lost the $20 bill already paid tax on it?

as well as employer, who paid tax on that $20 to the person who lost it

as well as person who found it, who paid tax on that $20, who paid employer for service, who paid person who lost it

this could be non stop recursion :)

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