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IRS sends warning letters to more than 10k cryptocurrency holders
181–190 of 416 posts
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#182So 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?
There is a bill that has been introduced which would make it so that you don't have to report BTC transactions less than $600:
https://www.ccn.com/u-s-bill-would-ease-bitcoin-tax-regulati...
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#183I'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…
1 USD always equals 1 USD and you pay taxes on gains relative to the USD as a US person. It's not possible for your USD to be an appreciating asset relative to the USD and that's how capital gains are defined. However, if you go to a store in America (and hypothetically) they give you change in Euros, then you take that to another store, and redeem the Euros there, you do in fact owe taxes on the increase in value of…
So that's why we can't ever have some deflation here in the modern US, it would reduce tax revenue! I always wondered about that. In this light it makes perfect sense.
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#184So 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…
Forks are a unique economic situation. I think a slightly more accurate metaphor is if someone printed money and mailed it to you. A cost basis of 0 on a sale is the most "fair" way to account for forks/drops/etc. imo. Otherwise there's too much burden on the individual to keep track of all the many forks that occur.
> Forks are a unique economic situation
Companies pay stock dividends, in themselves or in a subsidiary they're spinning out to shareholders, all the time. Using a reasonable materiality threshold (which would allow for ignoring novelty forks) this isn't a challenging accounting problem.
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#185Earlier quoted context omitted.
Ignoring the periods in the past with very high transaction fees and network congestion, for the most part it's been as practical as a card and often faster since I can just use my phone to scan a QR code and click a verify button. We can also ignore the lightning network in the calculation of practicality. Normally if I send you a payment you'll see the notification of a pending transaction with the amount on your s…
"I can call up my card company and claim a fraudulent charge after getting the goods... It takes something like 180 days before a CC charge becomes much harder for the payer to dispute, vs. bitcoin's 10 minutes for very hard and 60 minutes for basically impossible." Yes, because obviously what we need is less power to the consumer. So what if it takes you 60 minutes to get home just to test the product you just bough…
I don't mind less power in exchange for not having to give up so much of my information to merchants. As someone who's sold things before I also like that bitcoin presents a tradeoff on prevalence of buyer fraud vs. seller fraud, and that if I want more power as a consumer I can opt-in to various escrow or risk-absorbing systems rather than rely on buyer-side-bias in charge disputes as a poor man's escrow. It's not optimal to use the base network for every time of transaction, sure, but that's not true of any payment system.
I don't understand your grandma rhetoric. Not that scammers aren't already in heaven (especially targeting seniors) but I guess I'd be interested if you have any peer reviewed papers studying the means scammers use and how much cryptocurrency is part of the modern scammer's toolkit. (My understand was that wire transfers through western digital were the most common means of extracting payment.)
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#186Earlier quoted context omitted.
I'm sure those aren't the only reasons. Quite a lot of people get away with tax fraud. If the IRS really knew everything and filing taxes was just a pointless exercise, why is fraud so prevalent?
Speaking from a European country, employers are reporting salaries to the revenue service. The banks are reporting capitial gains from taxable accounts. So basically the only reasons for filing taxes are for exotic revenues (for example crypto !) or to ask for exemptions. Free lancers still have report their revenue themselves but I would say that for a very very vast majority of people, they already have all the inf…
Speaking as a German.
Filing tax forms is almost always a good idea for salaried workers because of the plethora of expenses that can be deducted from your taxable income:
- handyman bills
- expenses for the commute to work
- donations to political parties and registered charities (I save 400€ in taxes on that item alone because of regular donations to my hackerspace)
- some types of insurance premiums
- etc.
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#187As far as I understand it, IRS wants cryptocurrency traders to report USD profit on every trade. This gets extremely ugly if you are trading one cryptocurrency for another, as these trades are unclear as to whether they are an entry or an exit. Now, I simply recommend that everyone only trades USD-to-crypto and back, never crypto-to-crypto if you want to comply with tax law - it gets very complicated fast.
> This gets extremely ugly if you are trading one cryptocurrency for another, as these trades are unclear as to whether they are an entry or an exit. Trading one crytocurrency for another is a taxable event. Just like how trading one real currency for another is a taxable event. It's not unclear and trading platforms provide tax tools that solves this problem I traded crypto and paid my taxes
I believe prior to 2018 this was not the case with crypto.
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#188This is no different from any other profit or gain. The Government isn't specifically targeting these people; it just wants them to make sure they realize it's like any other investment.
Here's one situation where it is very different. Say I get paid 100 BTC for doing a job worth $100/BTC at the time or $10000. Now, say BTC drops to $1/BTC. I owe income tax on the $10000. Let's say I owe $2000 (20%) in taxes. However, I only have $100 now. My effective tax rate is 2000%. This does allow for a small deduction of capital gains each year. However you can only deduct $3000 a year in capital gains. In a l…
What if you get paid in meat, $100k worth of meat, but then you spoil all of them so they're now worth $0. It's not government's problem if your currency is volatile. You can find a job that doesn't pay you in BTC.
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#189It's not sustainable to tax regular Joe for each and every cryptocurrency transaction due to the nature of cryptocurrencies, especially in the US where people have to do all of their taxes on their own. I believe Canada has something like 20% tax on the profits you get out of cryptocurrencies for the year, which I think is a much simpler system that makes much more sense.
> I believe Canada has something like 20% tax on the profits you get out of cryptocurrencies for the year, which I think is a much simpler system that makes much more sense. This is wrong. Canada is taxed very similarly to USA meaning if it's an investment it may be capital gains and if it's a business then it's income.
In Canada, capital gains are taxed at 50% of ordinary income, unlike the US where short term capital gains are taxed as if they were 100% ordinary income.
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#190I'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…
How practical is bitcoin as a currency for day to day use. I thought the transaction time was 10 to 30 minutes. I get frustrated at the checkout counter when my credit card takes longer than 10 seconds. 10 to 30 minutes seems a lot closer to how long it takes for a stock sale to go through on E-Trade so I can see why the IRS would classify it more like a stock than currency.
> How practical is bitcoin as a currency for day to day use. I thought the transaction time was 10 to 30 minutes. I get frustrated at the checkout counter when my credit card takes longer than 10 seconds.
Its not very practical but this is mostly related to the merchant software and not the underlying technology any longer.
A) Merchants do not have to wait for a transaction to "go through", just like many credit card accepting merchants don't actually connect to the network when they swipe your card. They broadcast the transaction to the payment processor later. The same is possible with bitcoin, resulting in instant transactions for the user experience. It is an option with compromises, just like accepting credit cards is an option with compromises.
B) Consumers can broadcast the transaction to the merchant at the point of sale, but merchants do not have to wait for it to be added to the blockchain. This also results in near instantaneous transactions. It is an option, with compromises, just like accepting credit cards is an option with compromises.
C) Consumers can transmit a signed transaction to the merchant, without needing internet connectivity (nfc, qr codes, sound, bluetooth can work). Merchants can be the internet connected ones and check a balance. This would also be an instanteous user experience.
D) Consumers can transmit unsigned transactions to the merchant without needing internet connectivity, this is the same as C) but also allows for paper notes like national currency with denominations, without exposing the private key of the consumer's treasury.
so there is a lot to build.