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Due to the massive amount of capital gains taxes owed on crypto, Tom Lee believes there will be a sell off in order to pay these taxes. Following tax day, he believes Bitcoin will find footing again.
I think he is wrong, this is more likely to happen next year.
Someone used a throwaway account to share their recent personal experience on this matter at /personalfinance, titled "I just discovered that I owe the IRS $50k that I don't have, because I traded in cryptos." Original: https://www.reddit.com/r/personalfinance/comments/84huks/i_j... Update: https://www.reddit.com/r/personalfinance/comments/89ipyu/upd... They removed the story inside their update, but Google cached it…
That makes NO sense at all and I continue to be surprised at the fundamental misunderstanding of the US tax system by techies (it's really not that complicated for individuals). You pay tax on the GAINS, not on the value of the trade. If he owes the IRS $50k, it means he has a realized gain of ~$333,000. Where did that money go? The only possibility here is that he took $330,000 and reinvested ALL of it into 'altcoin…
Due to the massive amount of capital gains taxes owed on crypto, Tom Lee believes there will be a sell off in order to pay these taxes. Following tax day, he believes Bitcoin will find footing again.
A decrease of $20 for every $1 pulled from the market seems a little steep...
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That's a good question, and I too would like to know why people consider Cryptocurrencies to be "not fiat" ? Currencies either have value from 1) Being made of a commodity (e.g. gold coin) or exchangeable for the commodity. 2) Because someone says so. This is "Fiat". Usually this is a government, not not necessarily so. See "company scrip" for another example. Lack of an issuing government does not magically create a…
Because I can't actually buy anything with them, outside of a few niche markets.
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That makes NO sense at all and I continue to be surprised at the fundamental misunderstanding of the US tax system by techies (it's really not that complicated for individuals). You pay tax on the GAINS, not on the value of the trade. If he owes the IRS $50k, it means he has a realized gain of ~$333,000. Where did that money go? The only possibility here is that he took $330,000 and reinvested ALL of it into 'altcoin…
> it means he has a realized gain of ~$333,000. Where did that money go? Generally, the way this works is this: 1. You realize your gain in 2017 by exchanging for, say, ETH, at BTC $19k. 2. BTC falls to $7k, and ETH falls in accordance due to arbitrage desks. 3. You owe taxes on the 2017 gain. You could liquidate your much smaller ETH position in 2018, but you could only deduct $10k per year for 10 years on the large…
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A decrease of $20 for every $1 pulled from the market seems a little steep...
I agree. It's suspect because the numbers don't add up. From the article: " [...]Tom Lee notes that U.S. households owe an estimated twenty five billion dollars in capital gains taxes due to crypto gains." Total market capitalization of all cryptocurrencies, as of 12:18PM EST on April 6, 2018 is $248,821,531,204. According to Mr. Lee, each $1 taken from the market will result in a $22.50 decrease in aggregated market…
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> Saying that "bitcoin is a commodity" means what exactly? It means that the government does not legally consider it any kind of currency, fiat or otherwise. It's taxed like a commodity when you buy and sell it. It's not legal tender.
Ok, so if we're saying "commodity" as in "not legally any kind of currency or legal tender" then that's a valid reason. If we're using "commodity" to refer to an useful substance like wheat or silver "a product of agriculture or mining" ( https://www.merriam-webster.com/dictionary/commodity ) Then I would disagree, bitcoin does not fit this definition, the value of bitcoin is an agreement, nothing more. "Agreement" a…
I’m sure altcoinreport.co is as reputable as, say, the Wall Street Journal
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That makes NO sense at all and I continue to be surprised at the fundamental misunderstanding of the US tax system by techies (it's really not that complicated for individuals). You pay tax on the GAINS, not on the value of the trade. If he owes the IRS $50k, it means he has a realized gain of ~$333,000. Where did that money go? The only possibility here is that he took $330,000 and reinvested ALL of it into 'altcoin…
1/ Short term, so 50k tax is 150k gains 2/ Your possibility is correct - the IRS computes tax on USD-equivalent as of trades completed Dec 31; but the USD price crashed in 2018'Q1, and he can't pay his tax bill in crypto. He can deduct the USD-equivalent losses next year but only against capital gains, not his W2 income, and the tax is due now in USD.
So I'm inclined to agree with antisthenes, this person is either being untruthful or they lack a coherent investment plan and have a spectacularly bad tax planner.
A couple related observations: 1) With the dramatic rise and then fall of the Nasdaq back in 2001, with similar timing (peak right around New Years Day [0]), and a similar amount of new and uninformed market participants (online day trading just beginning to become a thing), could some of the early 2001 market performance be due to a similar dynamic? Noob traders make bank in 2000, log in to H&R block, start doing th…
The crypto market is less dependent on the US but it may also be priced at the margins and unable to absorb a big selloff.