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IRS sends warning letters to more than 10k cryptocurrency holders

wsj.com

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Re: IRS sends warning letters to more than 10k cryptocurrency holders

#111

Post by avip »

duxup wrote: post #76
dev_dull wrote: post #2

The math behind crypto doesn’t magically make you immune to government oversight. All they have to do is ask, and you better not lie.

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.

I mean, say what you want about the tenets of Crypto Holders, Dude, at least it's an ethos.

Re: IRS sends warning letters to more than 10k cryptocurrency holders

#112

Post by Scoundreller »

bb88 wrote: post #93
Scoundreller wrote: post #89

So 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…

My understanding is they're still investment property. So probably more like a stock split. IOW, there wasn't a sale and a re-buy. You had 1000 shares of bitcoin and now you have 2000 shares, some of which are in bitcoin-A and some of with are in bitcoin-B. As to the cost you would probably assume the Day-1 value after the split for the new coins. The price of the split of the old coins should have been reflected in…

Ah, the other word I was looking for was “spin-off”, but usually paperwork needs to be filed with the government for it to be considered a tax-free distribution, instead of a dividend.

Like HP becoming 2 separate companies.

With coins, there’s no central issuing authority filing this kind of paperwork, so I always wondered if these spinoffs were taxable distributions.

Re: IRS sends warning letters to more than 10k cryptocurrency holders

#113

Post by kazinator »

hcurtiss wrote: post #13

I'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…

Come on; if you do Forex trading, you will pay taxes on your gains.

If you earn a dollar for your labor, and then hold on to it while its purchasing power increases before making a purchase, that increase is not taxable of course. It's not even quantifiable. Purchasing power can increase faster relative to a specific commodity that gets cheaper faster than other goods.

If you buy a currency and sell it later at a profit, that is taxable.

What is taxable, in a nutshell, is the result of any non-exempt activity that causes you to hold an increased numeric amount of your native currency. Increased purchasing power isn't taxed because it doesn't entail any numeric increase in the money.

Re: IRS sends warning letters to more than 10k cryptocurrency holders

#116

Post by Scoundreller »

pilingual wrote: post #104
Scoundreller wrote: post #89

So 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/greatspeculat…

The $100 for nothing, I agree.

But if something that you owned mailed you $100 because you owned them, that sounds taxable in some way.

Re: IRS sends warning letters to more than 10k cryptocurrency holders

#117

Post by yellowstuff »

donclark wrote: post #64

So why do we have to file? Why cant the IRS just tell us every year if we owe or not and how much?

Two reasons:

* H&R Block and Intuit have good lobbyists who prevent it from happening.

* Republicans want to make filing taxes difficult so that people won't like taxes. In particular Grover Norquist has managed to get essentially all federal level Republican politicians to sign a pledge not to raise taxes, and Norquist considers making filing simpler to be effectively raising taxes.

https://www.politico.com/agenda/story/2018/07/18/tax-filing-...

Re: IRS sends warning letters to more than 10k cryptocurrency holders

#118

Post by zielmicha »

dawhizkid wrote: post #46

So long as this is the case how can it possibly make sense to use bitcoin to actually transact e.g. fulfill the vision of bitcoin as "digital money" if every time you buy a cup of coffee with bitcoin the expectation is that you'd have to calculate capital gains and report every year?

I think it shouldn't be hard to do that automatically in software - you only need to know exchange rates at time of every transaction.

Re: IRS sends warning letters to more than 10k cryptocurrency holders

#119

Post by roywiggins »

a_bitcoin wrote: post #115

Sure, it makes sense to tax earnings from cryptocurrency trading. But aren't there bigger fish to fry, richer people more flagrantly evading taxes? Let's sort that out first, k

We've underfunded the IRS, and investigating the rich is really hard, because the rich can pay for armies of tax lawyers. You can't go after them without substantial resources, and anti-government extremists have teamed up with pro-business extremists to throttle the IRS' enforcement capabilities.

https://www.propublica.org/article/how-the-irs-was-gutted

Re: IRS sends warning letters to more than 10k cryptocurrency holders

#120

Post by bdcravens »

wrong_variable wrote: post #92
fooey wrote: post #82

Earlier quoted context omitted.

Offshore tax havens don't turn over their records to the IRS US based coin exchanges like Coinbase do

What prevents Coinbase to go offshore then ?

The fact that they have a ton of VC they're already beholden to that is here in the US, and who aren't interested in IRS scrutiny themselves.
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