Now do "international convention to spend tax revenues more prudently."
This. Never going to happen though
You would never even get agreement on what more prudently means.
48-nation bloc to crack down on using crypto assets to avoid tax
21–30 of 116 posts
Re: 48-nation bloc to crack down on using crypto assets to avoid tax
#22I’m not a crypto person, but I have always been curious - how does the tax situation actually work if you don’t want to commit tax evasion? I know that on US tax returns you need to tick a box if you’ve transacted in crypto, and you have to pay tax on the realized gains/losses. How do you actually go about doing that accounting practically given the volatility and the number of transactions? Are there special pieces…
> I know the real cynical answer is that most people just don’t report correctly, but I’m curious how you’d do it if you wanted to be legit.
If you want to follow the letter of the law, you need to consider each and every transaction in calculating your cost basis, converting to USD at each step. The latter is particularly problematic as it’s possible to transact in something that does not have a clear USD price.
So the usual approach is that people just make up numbers, hopefully using some consistent methodology, and pray/hope/beg that if they get audited it’ll be enough to appease the IRS.
Not having any standard way of getting the details is another problem. If each and every transaction is not recorded at the time of execution, good luck trying to get that detail back again.
Re: 48-nation bloc to crack down on using crypto assets to avoid tax
#23What is the mechanism for “crypto assets to avoid tax?”
Except for people who profited from the rise and cashed their profits on a foreign land, nope, crypto is not really good to avoid taxes. That and you eventually need to bridge with the traditional monetary system and suddenly crypto is worse than most alternatives out there. The thing is, crypto exchanges somehow are not banks and thus are not "technically" subject to CRS. This is kind of a CRS for crypto exchanges.
In reality, these laws are made to control money flows and not to improve taxation (the big corporations still avoid taxes and rich people still use expensive lawyers to nullify their tax bill). This will make the business environment for the average person worse. Which, surprise, might push people to actually use crypto as a medium of value transfer instead of speculation. Just hang in there and watch.
Re: 48-nation bloc to crack down on using crypto assets to avoid tax
#24As for the stable coins, the researchers from the University of Chicago claim that their stability is a bit more nuanced. Especially, even a stable coin cannot defend against a run https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4226027
This doesn't seem to encompass stablecoins that are fully-collateralized, as many claim to be (which is disputable in a lot of cases).
Getting money from users for a token on which you pay no interest and getting the full interest yourself does seem like a good business, it's just not one that would attract customers that have better options.
Re: 48-nation bloc to crack down on using crypto assets to avoid tax
#25I’m not a crypto person, but I have always been curious - how does the tax situation actually work if you don’t want to commit tax evasion? I know that on US tax returns you need to tick a box if you’ve transacted in crypto, and you have to pay tax on the realized gains/losses. How do you actually go about doing that accounting practically given the volatility and the number of transactions? Are there special pieces…
> How do you actually go about doing that accounting practically given the volatility and the number of transactions?
It's basically the same as with stocks. Work out the equivalent USD value for every trade, and subtract the cost basis to figure out how much capital gains/loss you have on that trade. If valuation is hard (you're trading 5 shitcoins for 1 altcoins), figure out a method you can justify with a straight face and taxman will generally be happy (this, incidentally, is why auditing rich people is difficult).
Re: 48-nation bloc to crack down on using crypto assets to avoid tax
#26I’m not a crypto person, but I have always been curious - how does the tax situation actually work if you don’t want to commit tax evasion? I know that on US tax returns you need to tick a box if you’ve transacted in crypto, and you have to pay tax on the realized gains/losses. How do you actually go about doing that accounting practically given the volatility and the number of transactions? Are there special pieces…
In Poland there is no checkbox on a tax forms to say "you've dealt with crypto", but every transaction over 10K EUR is reported to the gov, and when I was a UK tax resident with a Polish bank account my Polish bank asked for my UK tax info to send the details of any such transactions to HMRC in the UK. I suspect it's an EU wide thing. I'm not sure why these 48 countries single out crypto assets like this. You can eva…
All this really is is forcing any company that buys and sells crypto in this locations to do KYC/due diligence and share details with the relevant authorities. Unless you are buying privately, you've had to do the same with any serious amount of gold trading too.
Re: 48-nation bloc to crack down on using crypto assets to avoid tax
#27Earlier quoted context omitted.
This. Never going to happen though
You would never even get agreement on what more prudently means.
This - to me prudently is something like prioritising: health care, infrastructure, social security, education, defence and policing.
I know that many people (even just across the UK), would either disagree with this list, or with the various % that should be attributed to each. One persons 'prudent' would be another persons too much/little etc.
Re: 48-nation bloc to crack down on using crypto assets to avoid tax
#28I’m not a crypto person, but I have always been curious - how does the tax situation actually work if you don’t want to commit tax evasion? I know that on US tax returns you need to tick a box if you’ve transacted in crypto, and you have to pay tax on the realized gains/losses. How do you actually go about doing that accounting practically given the volatility and the number of transactions? Are there special pieces…
It's not difficult at all. This is 2023, we have spreadsheets, lol. You just generate a list of all transactions and losses/gains. Active traders have been doing this one way or another for a century now with stocks and derivatives. If cryptocurrency was actually used for purchasing goods/services it would be more tricky.
Single transactions are easy to do. Extremely hard when your trading volume is substantial.
Re: 48-nation bloc to crack down on using crypto assets to avoid tax
#29I’m not a crypto person, but I have always been curious - how does the tax situation actually work if you don’t want to commit tax evasion? I know that on US tax returns you need to tick a box if you’ve transacted in crypto, and you have to pay tax on the realized gains/losses. How do you actually go about doing that accounting practically given the volatility and the number of transactions? Are there special pieces…
> I know the real cynical answer is that most people just don’t report correctly, but I’m curious how you’d do it if you wanted to be legit. If you want to follow the letter of the law, you need to consider each and every transaction in calculating your cost basis, converting to USD at each step. The latter is particularly problematic as it’s possible to transact in something that does not have a clear USD price. So…
> Not having any standard way of getting the details is another problem. If each and every transaction is not recorded at the time of execution, good luck trying to get that detail back again.
If only there were some sort of publicly available record showing transactions performed. (Yeah, I know, they don't include the USD value)
Re: 48-nation bloc to crack down on using crypto assets to avoid tax
#30I’m not a crypto person, but I have always been curious - how does the tax situation actually work if you don’t want to commit tax evasion? I know that on US tax returns you need to tick a box if you’ve transacted in crypto, and you have to pay tax on the realized gains/losses. How do you actually go about doing that accounting practically given the volatility and the number of transactions? Are there special pieces…
In Poland there is no checkbox on a tax forms to say "you've dealt with crypto", but every transaction over 10K EUR is reported to the gov, and when I was a UK tax resident with a Polish bank account my Polish bank asked for my UK tax info to send the details of any such transactions to HMRC in the UK. I suspect it's an EU wide thing. I'm not sure why these 48 countries single out crypto assets like this. You can eva…
Crypto being digital and weightless makes it much easier to hide and move around vs several tonnes of steel or mobile phones.