So the real question is, what exchange can I use as an American that doesn't report to the IRS?
IRS sends warning letters to more than 10k cryptocurrency holders
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Re: IRS sends warning letters to more than 10k cryptocurrency holders
#102Earlier quoted context omitted.
> but I can't buy a hamburger with shares of stock. Sure you can, you just have to convince someone it's worth the hassle. That it is atypical doesn't mean you can't.
If you do, how do you figure out if the investment appreciated or depreciated? I mean, if I use BTC as a currency to buy things, I don't understand how I would evaluate every purchase at the end of the year to figure out whether I owe capital gains.
You can imagine you are converting BTC to dollars right before purchase. If you had 1 BTC worth $1000 at the beginning of the year and then 6 months later (when it was worth $1500) bought something with it - you earned $500 in capital gains. (Not saying this is the current law, but that method seems to make sense)
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#103Re: IRS sends warning letters to more than 10k cryptocurrency holders
#104So how does BitCoin Cash distribution get handled in USA? Is it like a dividend? A stock split? A spin-off? What about all of these airdropped tokens? Are they dividends, with tax payable even if you didn’t “collect” them in some way? Or splits? Can you deduct the Day1 value of the new token from the capital gain on the first token? Or do you assume the cost of the new token was $0 and any sale is a total capital gai…
I'm not sure the burden is on the individual unless they recognize receipt of the cryptocurrency. If someone mails you $100 and you discard it I don't think you owe taxes on it. Same for air drops and forks like Bitcoin gold.
Bitcoin cash, if you acknowledged receipt of it, is exactly like earning $266 and must be reported, at least that's what tax experts noted at the time: https://www.forbes.com/sites/greatspeculations/2017/08/04/ho...
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#105Re: IRS sends warning letters to more than 10k cryptocurrency holders
#106The math behind crypto doesn’t magically make you immune to government oversight. All they have to do is ask, and you better not lie.
> All they have to do is ask, and you better not lie. because asking everyone how much they have in offshore tax havens is working so well. heck, not even when the information is given to the IRS anything happens: https://en.wikipedia.org/wiki/Panama_Papers#United_States
Offshore tax havens are for the wealthy, who are largely immune to these things.
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#107So how does BitCoin Cash distribution get handled in USA? Is it like a dividend? A stock split? A spin-off? What about all of these airdropped tokens? Are they dividends, with tax payable even if you didn’t “collect” them in some way? Or splits? Can you deduct the Day1 value of the new token from the capital gain on the first token? Or do you assume the cost of the new token was $0 and any sale is a total capital gai…
Yeah the IRS has a lot of explaining to do before people can be expected to pay accurate taxes on cryptocurrency. I've been handling forks/airdrops as ordinary income at the time of the airdrop, at least for the ones I know about and can collect. That's the most conservative way to do it, and I suspect that the IRS will require it even though it's a stupid way to tax airdrops.
The right tax treatment would be the same as stock splits but unfortunately when I looked at the rules for stock splits they were narrowly written to apply only to stock.
IANAL, this is not tax advice, etc.
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#108I'm sure there's a lot to know about this topic, but it's odd to me that they'd treat a "currency" as an appreciating asset. If I'm given a dollar (or peso) as change, and if between the time I receive the dollar and the time I spend it the currency purchasing power increases, I do not pay taxes on that gain. I can just buy more stuff with that dollar (including other currencies). In this instance, where it's increas…
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Re: IRS sends warning letters to more than 10k cryptocurrency holders
#109So the real question is, what exchange can I use as an American that doesn't report to the IRS?
That isn't the "real question". Pay your taxes like everyone else.
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#110Earlier quoted context omitted.
The bitcoin / crptyo currency... ethos? (not sure what word to use there) seems to continuously collide into the reality of living in a society. That doesn't make them incompatible, but it does perhaps provide some lessons for everyone on why financial systems are the way they are as it is, and how you can't just jump on a technology and escape. At the very least it has all been an interesting thing to learn from.
At the very worst it is a blight on the environment. 27kWh of energy burned per transaction, with a maximum scaling limit on the order of 5 or 6 transactions per second. If everybody in the world used Bitcoin, then you'd be entitled to your one transaction every few decades.
Yeah the scams and environmental type stuff is a huge downside.
A costly lesson, interesting, but costly.