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48-nation bloc to crack down on using crypto assets to avoid tax

theregister.com

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Re: 48-nation bloc to crack down on using crypto assets to avoid tax

#41

Post by koolba »

jon-wood wrote: post #29
koolba wrote: post #22

Earlier quoted context omitted.

> 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)

> If only there were some sort of publicly available record showing transactions performed. (Yeah, I know, they don't include the USD value)

I don’t even mean the USD value. I mean the raw transaction itself.

In theory it’s persisted forever. In practice, the data is neither readily available nor searchable in the ways you’d actually need to properly account for transactions.

On the flip side, if you can’t get the data there’s no chance the IRS would ever be able to figure it out right?

Re: 48-nation bloc to crack down on using crypto assets to avoid tax

#43

Post by josu »

jcranmer wrote: post #25
noodlesUK wrote: post #12

I’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…

>It's basically the same as with stocks.

In many countries, since crypto is not regulated, you can't write off the losses, but you still have to pay taxes on the gains.

Re: 48-nation bloc to crack down on using crypto assets to avoid tax

#44

Post by ljf »

tyingq wrote: post #39

Perhaps coincidental, but interesting timing given the role crypto plays in getting money into Gaza. It's purportedly a small part of funding that goes in, but maybe one of few left in the current situation.

I'm intrigued as to the actual mechanisms of this, especially currently. How does a person (or organisation) in Gaza turn crypto into cash or goods - given the controls that exist in everything that comes into or out of Gaza.

Re: 48-nation bloc to crack down on using crypto assets to avoid tax

#45

Post by wojciii »

ljf wrote: post #5
roenxi wrote: post #2

> ... and a lousy store of value I expect this to be true eventually, but so far Bitcoin has been doing OK as a store of value. Unless people bought in the relatively short peaks, HODLers aren't losing crazy amount of money and one could reasonably anticipate that it'll reach $60k/bitcoin again in the near future. There seem to be people convinced that the crypto types are coming out a long way behind but I'm not rea…

I was talking to a very pro-crypto friend - part of my (sour grapes) issue with Bitcoin is that is actually a pretty impractical way to purchase items day to day - but he pointed out that this is more of a feature than a bug. He likened it to buying and selling physical gold as a store of value, I hadn't thought of it that way before. I am still stinging from not buying in when I first became aware of it (approx. $1…

I sold my bitcoin recently after trying to find a practical method to use it. I paid my taxes which were about 50% from the earned amount.

In my opinion it's useless as a currency as no one uses it for anything worthwhile.

I could have converted the BTC to another crypto currency .. but I would have the same problem. How to buy something with it?

Re: 48-nation bloc to crack down on using crypto assets to avoid tax

#46

Post by xur17 »

23B1 wrote: post #28
fdkjhasdf wrote: post #19

Earlier quoted context omitted.

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.

Very true. I have a spreadsheet that tracks every trade I ever made, including fees. I export that into a csv, and feed it into another piece of software that produces a list of capital gains and losses each year.

Some of the challenges:

* Figuring out how to classify certain trades (wrapped versions of tokens, bridging assets between chains, staking, etc)

* Making sure I have all trades tracked in the spreadsheet (there is automated software for this, but there are a number of ambiguous situations it doesn't hand well, hence needing to manually track it)

* Spot checking wallets to make sure trades weren't missed

Re: 48-nation bloc to crack down on using crypto assets to avoid tax

#47

Post by seydor »

this_user wrote: post #38
roenxi wrote: post #2

> ... and a lousy store of value I expect this to be true eventually, but so far Bitcoin has been doing OK as a store of value. Unless people bought in the relatively short peaks, HODLers aren't losing crazy amount of money and one could reasonably anticipate that it'll reach $60k/bitcoin again in the near future. There seem to be people convinced that the crypto types are coming out a long way behind but I'm not rea…

> but so far Bitcoin has been doing OK as a store of value No, it hasn't. A store of value is supposed to be stable, it's about volatility. By that same reasoning you could argue that Apple or Tesla stock, or even the stock market in general, is a great store of value. But nobody would ever call it that, because it is far too volatile on a daily basis. Trying to argue that a vague long-term uptrend in prices makes so…

Volatile compared to what? Dollars. The us government is able to steer dollar as it likes but that comes with violence, it's not "naturally" stable

Re: 48-nation bloc to crack down on using crypto assets to avoid tax

#48

Post by Detrytus »

jcranmer wrote: post #25
noodlesUK wrote: post #12

I’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…

In my country it’s even simpler: no one cares about you converting one shitcoin to another, they want fiat currency values of how much crypto you bought and sold, and total crypto assets you own. They calculate taxes based on that (I’m bit fuzzy on the details)

Re: 48-nation bloc to crack down on using crypto assets to avoid tax

#49

Post by PeterisP »

23B1 wrote: post #28
fdkjhasdf wrote: post #19

Earlier quoted context omitted.

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.

How is that different? The transaction data export from most crypto-exchanges takes up the same amount of clicks no matter if you have 5 or 5000 transactions, as do the adding of whatever formulas you might need in excel to manage your business - which is obviously the case if your trading volume is substantial; if you were doing a substantial trading volume in, say, collectible card game cards, you'd also have to have a custom accounting process for tracking the goods you're reselling and how they appreciate, and you'd obviously have to record every transaction just as if you're trading in physical goods.

Re: 48-nation bloc to crack down on using crypto assets to avoid tax

#50

Post by josu »

this_user wrote: post #38
roenxi wrote: post #2

> ... and a lousy store of value I expect this to be true eventually, but so far Bitcoin has been doing OK as a store of value. Unless people bought in the relatively short peaks, HODLers aren't losing crazy amount of money and one could reasonably anticipate that it'll reach $60k/bitcoin again in the near future. There seem to be people convinced that the crypto types are coming out a long way behind but I'm not rea…

> but so far Bitcoin has been doing OK as a store of value No, it hasn't. A store of value is supposed to be stable, it's about volatility. By that same reasoning you could argue that Apple or Tesla stock, or even the stock market in general, is a great store of value. But nobody would ever call it that, because it is far too volatile on a daily basis. Trying to argue that a vague long-term uptrend in prices makes so…

>a vague long-term uptrend in prices makes something a store of value

A stable and 100% predetermined issuance schedule, along with its scarcity, it's what makes Bitcoin a good store of value. The steady uptrend in prices is the consequence.

>useless technology.

Just because it's functionality is limited it doesn't make it useless. A store of value that doesn't require boring the planet, or building empty houses, seems like a great improvement to me. I think that you are conflating the cryptobro culture, with the true value that Bitcoin brings to the table.

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