Tom Lee Predicts Cyrptocurrency Market Outflow to Fiat Currency Before Tax Day

Post by provost » Fri, Apr 06, 2018, 10:25 PM UTC

dustingetz wrote: post #45

dustingetz wrote: post #39

Earlier quoted context omitted.

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.

Continued: As a though experiment: lets say 100% of crypto traders owe 1/3 of their gains (obviously not real). There is nowhere close to enough USD liquidity to handle a sell like that and it would liquidate everyone and still leave them unable to pay their USD tax bill. The apparent USD liquidity is mostly actually Tether liquidity. There is not actual USD liquidity – nobody is buying huge amounts of BTC who doesn'…

Post by votepaunchy » Fri, Apr 06, 2018, 10:52 PM UTC

seanmcdirmid wrote: post #55

tom_ wrote: post #36

Earlier quoted context omitted.

Short-term CGT in the US is around the 40-50% mark, something like that. Our hero bought 8 BTC for $7,200, or so goes their story, then sold it for $120,000-worth of altcoins, making a taxable gain of $113,800. 45% of that taxable gain = ~$50,000.

Short-term CGT is basically your ordinary income tax rate. So if you are taxed around 50%, then you aren't in the USA since the top rate is 39.6%. Also, your ordinary income tax rate depends on your income, the rate for $120k is 28% (but that only applies to income after 90k, before that it is taxed at 25% or less). You would only be taxed at 39.6% for gains after $418k.

Post by jandrese » Fri, Apr 06, 2018, 10:59 PM UTC

ska wrote: post #15

jandrese wrote: post #11

Earlier quoted context omitted.

Won't the capital gains only be owned when people try to convert to fiat currency in the first place? If you're leaving your stuff in cryptocoin form I don't think you would pay capital gains. So this is only a problem for the people cashing out, and if they've cashed out then they should have the cash to cover their tax bill. And this assumes they didn't cash out to the Cayman Islands account. Probably not a lot of…

"If you're leaving your stuff in cryptocoin form I don't think you would pay capital gains." Note this is only true if you hold onto particular coins. If you exchange some bitcoin for etherium, for example, you will realize capital gains or losses. This has nothing specifically to do with cryptocoins, the same thing would happen to you if you bough silver, say, and then exchanged it for gold. Your latter point is str…

Post by seanmcdirmid » Sat, Apr 07, 2018, 12:12 AM UTC

votepaunchy wrote: post #73

seanmcdirmid wrote: post #55

Earlier quoted context omitted.

Short-term CGT is basically your ordinary income tax rate. So if you are taxed around 50%, then you aren't in the USA since the top rate is 39.6%. Also, your ordinary income tax rate depends on your income, the rate for $120k is 28% (but that only applies to income after 90k, before that it is taxed at 25% or less). You would only be taxed at 39.6% for gains after $418k.

Most Americans are also paying state / local / city taxes so it is possible to pay a ~50% marginal rate.

Post by thinkmassive » Mon, Apr 09, 2018, 4:04 PM UTC

SideburnsOfDoom wrote: post #53

thinkmassive wrote: post #49

Earlier quoted context omitted.

> Proof of work is valuable in itself? This is actually an interesting way to analyze it. The trust created by PoW apparently does create value to many people.

I don't think that it does in itself, actually; but there seems to be the perception that it does. How much would you pay for an hour of video of me digging a hole with a spade and then filling it in. That's proof of work, and also worthless. How much would you pay for someone to provably burn ton of coal? It's only valuable if it does something useful for the energy expended. The blockchain's proof of work has been…