Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

IRS sends warning letters to more than 10k cryptocurrency holders

wsj.com

Post reply on HN
Print view View original

391–400 of 416 posts

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

#391

Post by jobigoud »

sjy wrote: post #349
parliament32 wrote: post #313

Earlier quoted context omitted.

Any time you "realize" a currency or commodity (that is, sell it or trade it for something else) you need to pay tax on the capital gain, if there is one. At some point, you purchased those CAD. If the value of CAD is higher when you use it to pay for your coffee, there was a capital gain, and you just realized it. Say you purchased X amount of CAD a few years back for $0.70 USD. It doesn't matter how much you purcha…

I did not realise you were assuming that the taxpayer already held the CAD for some period of time before the coffee purchase. So US tax law provides no exception for trivial capital gains on personal use assets? Clearly it makes sense to bring forex gains and losses to account when dealing with large transactions and investments expected to produce a return (eg. cryptocurrency). But in my country, a small balance in…

From what I read elsewhere the threshold for reporting is $200 of gains.

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

#393

Post by firemancoder »

firemancoder wrote: post #392

I got a notice that registered mail failed to deliver from the IRS. Since I have no other dealings/reason for them to send me mail, I'm assuming I'm one of the ones. Will find out Monday.

And for the record, all my bitcoin dealings have been this year (late starter) so I have nothing to worry about with unclaimed income. (Thank you flying spaghetti monster)

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

#394

Post by tgb »

brianpgordon wrote: post #360
fooey wrote: post #94

Earlier 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…

Do you know that Letter 6173 makes such a request? I would guess that it's more likely it requires you to either simply acknowledge receiving the letter or to agree to something like the statement that you already had to sign to when submitting your taxes:

> Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and accurately list all amounts and sources of income I received during the tax year.

Though of course you are right that anyone should consult a professional in such a case.

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

#395

Post by lawn »

Analemma_ wrote: post #325
blhack wrote: post #320

Earlier quoted context omitted.

Which I think is a mistake. The tax code should be accommodating; it should not be adversarial. Many people do not treat bitcoin like gold, they treat it like a paypal account.

Strongly disagree. In terms of both actual usage and the rhetoric I most commonly see on crypto fora (“digital gold!”, “store of value!”), commodity, not currency, is the correct categorization.

Just because some people are loudly shouting it's only a "store of value" (i.e. they only speculate with it), doesn't mean others aren't using it as money. Furthermore that's only the Bitcoin maximalists and it doesn't apply to all other cryptocurrencies (since Bitcoin is only really useful for speculation).

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

#396

Post by fortran77 »

jobigoud wrote: post #390
fortran77 wrote: post #59

Earlier quoted context omitted.

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.

I think people who trade foreign money as an investment strategy realize this.

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

#397

Post by jobigoud »

fortran77 wrote: post #396
jobigoud wrote: post #390

Earlier quoted context omitted.

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.

I think people who trade foreign money as an investment strategy realize this.

Probably, yes. But everyone else is still subject to this law. For example the UK pound may or may not go down in value in case of hard brexit, if a brit had some euros stashed and the pound crashed, they would have to pay capital gains when exchanging their euros back into pounds.

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

#398

Post by BowBun »

logfromblammo wrote: post #296
gnulinux wrote: post #188

Earlier quoted context omitted.

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.

The problem there is that meat doesn't come in dollars; it comes in kilograms. If you are paid in meat, you get something like 100 kg of pre-formed frozen ground beef patties. That doesn't have a dollar value unless you can find a buyer for it. Which is pretty easy to do if it's a commodity. So let's try a more broken example. You get paid in sandstone triangular prisms machined to be 31 mm on the two longer sides, 1…

I think I follow what you're saying, you think the IRS should accept BTC as the tax payment, so it is at least always correlated to the asset you earned/lost.

While I agree, it's kind of backwards to ask for this now, after the IRS is finally making their moves/intentions clear. I know a majority of the crypto crowd was quietly hoping the IRS wouldn't keep track of the absurd money people were making, so this just feels like a reckoning.

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

#399

Post by PKop »

mirekrusin wrote: post #384
PKop wrote: post #88

Earlier quoted context omitted.

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?

When you convert BTC to anything and there is a gain, denominated in the currency you pay taxes in, so buying something for BTC, trading to other cryptos, trading for USD, trading for Euros, etc.

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

#400

Post by cheald »

MereInterest wrote: post #315
cheald wrote: post #300

Earlier quoted context omitted.

Crypto like bitcoin is necessarily an appreciating asset because it is deflationary by its very nature. Over a long enough time period, if BTC were in fact behaving like a currency (that is, as a medium for the exchange of value, rather than a store of value) the value of BTC as expressed in exchangable goods must rise, unless the global production of goods contracts, and there is no reason to expect that to happen.…

>Crypto like bitcoin is necessarily an appreciating asset because it is deflationary by its very nature. That assumes that the demand for cryptocurrencies remains constant. If the demand for cryptocurrencies drops faster than the deflation of the currency, then the value goes down.

Absolutely! My point is that it's ill-suited to be a currency because we know now that stable currencies need to be able to match supply to demand. Because of crypto's fixed supply, it behaves more like an asset (though it certainly need not be an appreciating asset).

Overall, I believe that a successful crypto will behave more like an asset than a currency. The failing ones are just dust.

Post reply on HN