Wish there's a way to change the regulation to leave crypto alone.
Me watching too much fight club and partying with too much tea..
IRS sends warning letters to more than 10k cryptocurrency holders
381–390 of 416 posts
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#382Earlier quoted context omitted.
Well a lot of people are treating cryptocurrencies as speculative assets. ICOs wouldn't have been such a big thing if people didn't do that. So why shouldn't the IRS do the same?
The ICO market crashed and trading volume on crypto exchanges keeps dipping lower and lower and lower. Its main use-case has shifted back to currency after a failed bid as a security.
Can you refer me to the source of "crypto exchanges [volume] keeps dipping", please? I'm looking at BTC volume and it's not dipping at all. There was a sharp drop in Jan '17 when Chinese exchanges were forced to close. Other than that volume correlates to the price.
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#383To highlight how nuts this could be: I travel to India every year, and I always carry with me a few hundred USD worth of rupees (the local currency). It would be insane for me to try and track the value of the rupees (in USD) for every time I bought something, and calculate the deltas between that and what I originally gave to the money changer. It is completely impractical to do that, and while I'm not an accountant…
There's a $200 threshold for reporting gains. Almost no one hits that while traveling.
Crypto is basically different because the high volatility resulted in large gains being realized.
Source: publication 525 https://www.irs.gov/pub/irs-pdf/p525.pdf
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#384Earlier quoted context omitted.
It applies if there are gains. What's not clear if you have to report the value of the gain when you did your transaction, or the current value. Crypto prices change a lot
You report the value of the gain at time of taxable event. Trading crypto for other crypto, or fiat, or buying real goods with it.... are taxable events. The capital gain is the appreciation in value at time of transacting.
So if you hodl you are not (yet) taxable? Only when you convert btc back to usd and there is a gain?
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#385Earlier quoted context omitted.
According to the IRS news release, and posts in r/bitcoin, what they're getting are Letter 6173, Letter 6174 or Letter 6174-A https://www.irs.gov/newsroom/irs-has-begun-sending-letters-t... https://www.reddit.com/r/Bitcoin/comments/chupoe/irs_we_have... https://www.irsmind.com/audits/irs-begins-targeting-taxpayer... > Letter 6174– this is a soft notice informing the taxpayer that there is a likelihood that they did n…
The phrasing "requires a response" on Letter 6173 is a bit slippery. To be absolutely clear, if your lawyer thinks you shouldn't send a response, you don't have to. And if it's not already blindingly obvious, literally nobody should even dream of sending in a signed affidavit affirming "under penalty of perjury that they are in compliance with tax laws" without first consulting legal counsel - HN pooh-poohing about t…
> a signed affidavit affirming "under penalty of perjury that they are in compliance with tax laws"
Can you be forced to sign anything like this? I would never sign such a document out of my free will (what's the upside?). Tax law is so complicated that I wouldn't be surprised if nearly everyone is not super 100% in compliance. I mean completely independently of this particular Bitcoin issue.
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#386Earlier quoted context omitted.
> When the internet bubble collapsed in 2000, it literally bankrupted people who had been compensated with stock options Best practice is to sell stock sufficient to pay for taxes when exercising options. (Same for workers subject to U.S. taxation being paid in a foreign currency.)
Alternatively, you can sell a covered collar that protects your downside enough to know that you'll have the cash on hand come tax time. This limits your upside somewhat, but usually less than selling the stock outright. Mark Cuban famously used this strategy to protect his Broadcast.com payout under lock-out. https://www.acceleratedfi.com/real-world-options-example-how... (Check the details of your contracts with an…
Trading options against employer's stock may be forbidden by insider trading policy. It was in my previous job (along with shorting, and only trading during trading windows). Can't say I disagree with such policies.
Other than that yeah, get a collar or just straight up buy some puts. Or like others recommended - sell some % instantly and put in high grade bonds, or a savings account. Forgetting taxes is a big mistake.
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#387Earlier quoted context omitted.
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 pro…
Where can I obtain these magical dollars whose purchasing power increases over time? The purchasing power of all my dollars seems to go down the longer I hold onto them.
Long term treasuries are pretty good, averaged 5-7% per year since 1981. And yes you do pay taxes on those.
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#388Having talked to many people I do believe there is low tax compliance, but having read how the IRS rationalized the Coinbase subpoena to the judge I realize they have no idea to tell if they have compliance or not. They merely did a search string for 2015 for "bitcoin" in tax filings and found 800 people filed that way. So I checked my 2015 tax filings and saw I had manually entered "LTC" for closing a litecoin trade…
"Coinbase doesn't know what any of the holdings or transactions represent" I had a KYC interview with Coinbase wondering where my coins came from. (I mined them in the 2009 to 2010 era when they were worthless, mined before the famous 10000 bitcoin pizza delivery, LOL). So they have a statement from me, which is probably now on file with the IRS. Now here's a puzzler... I got my 6174-A and so I verified my coinbase r…
As always - get a professional to look into your situation. Hopefully you've made enough profit to pay the few hundred $ and forget about it. And if you made it big time - congrats man!
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#389Earlier quoted context omitted.
Exactly. It falls in line with similar to "don't talk to the police". Just keep quiet. This applies to everything when dealing with any government agency. The government is not your friend.
People say stuff to police that's later used against them in court all the time, so I agree keeping quiet is generally good advice. You should still use your common sense though. I have a friend who took this advice way too literally when we were 18. I was in the car when he got pulled over for speeding once, and he refused to say a single word to the officer. He handed over his license, registration and proof of ins…
> [..] I fully believe [..]
> [..] I urge common sense [..]
That's the problem with your post.
You fully believe [..] and you urge common sensen.
You fully believe, but you don't know for sure what would've happened in your alternative reality. We miss a lot of details as well. For example, are you POC? What about your friend? White privilege is still real in 2019 (and I say that as someone who's whiter than white). I fully believe I got away with things in my youth someone who's POC would not have gone away with. Not just cops specific, but also community specific, neighbor specific, etc.
The point being, what might be common sense to you or me might not be common sense to any random person.
Here's a famous video [1] of a lawyer and former cop who suggest you never talk to the police. ACLU also has videos online with examples of how you may incriminate yourself even whilst you're fully innocent.
Re: IRS sends warning letters to more than 10k cryptocurrency holders
#390Earlier quoted context omitted.
I hate that people treat currencies as an "investment". In my mind, crypto concurrency is the perfect value-store (like gold used to be), not an appreciating asset. Yet because people treat it like stocks, it behaves like stocks.
If I bought and sold gold or British Pounds, I'd still be subject to taxes on my gains. I'm not sure I see your point.
TIL when you convert back and forth foreign currency, you have to declare capital gains. I'm not sure a lot of people realize it either.