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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

#61

Post by robinzfc »

Roark66 wrote: post #18
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…

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…

> In Poland there is no checkbox on a tax forms

Yes, there is, in 2022 it was in PIT 38, sec. E. You need to report purchases even when you have not sold anything as this entitles you to subtract cost when you sell later.

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

#62

Post by throw0101c »

Analemma_ wrote: post #35
ljf wrote: post #5

Earlier quoted context omitted.

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…

> 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 This is a lot of cope and ex post facto justification. "Store of value which can't actually be used for real-world transactions" was absolutely not the rallying cry for Bitcoin for its first many years of existence, and people only pivoted to that when it became undeniable that Bitco…

> This is a lot of cope and ex post facto justification.

First sentence of the original paper:

> Abstract. A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. […]

* https://bitcoin.org/bitcoin.pdf

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

#63

Post by chromatin »

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…

> except the highs of 2021

Au contraire!

Interestingly, even if you had started purchasing at the *all time high* (~US$69,000) on 8 Nov 2021, if you consistently purchased daily, weekly, or monthly, you would still be up something insane like 37%, outperforming basically all other market sectors.

You can check this yourself at a variety of DCA calculators (NB I noticed at least one [https://dcabtc.com/] was broken and didn't have any price data for the last 6 months)

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

#64

Post by siftrics »

Erwin wrote: post #56
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…

https://koinly.io/ is a popular recommendation here in Denmark. Denmark may have the worst possible taxation for crypto: every time you sell, use or convert your crypto, that's an event where you have to calculate your gains or losses. Gains are taxed like personal income (so up to 53% tax), but losses can only be deducted at 26% they do not offset the gains directly. A school teacher speculating in crypto ended up l…

That's so evil. How do you put up with that? Why don't Danes change their obviously evil tax code regarding deducting losses?

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

#65

Post by kkielhofner »

PeterisP wrote: post #57
adolph wrote: post #7

What is the mechanism for “crypto assets to avoid tax?”

There are two rather popular mechanisms. One is simply using crypto as cash equivalent - a mechanism to receive (and spend) undeclared income without paying the relevant taxes, so that drives adopting pretty much the same regulations as for cash, just as there already are various requirements to declare and deanonymize large cash transaction, the same gets implemented for various crypto-assets. The other is using NFT…

This money laundering approach also has an additional potential (almost certainly illegal) tax upside.

The sockpuppet that buys from you can sell it downstream at a greatly reduced price to another sockpuppet (or back to you) and report it as a loss offsetting other reported income while the cycle repeats. Obviously anyone involved in this can loop and repeat this any number of ways for a variety of preferred outcomes. Awww shucks, I just made a bad investment and got "unlucky" this time...

I think there is an analysis somewhere that more-or-less proves this is exactly what Lindsay Lohan did via NFTs.

Not new to NFTs or crypto at all but it is much easier and far more nebulous when ugly JPGs of Apes were "trading" in the hundreds of thousands of dollars.

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

#66

Post by jjoonathan »

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…

When was the last time you used bank reserves to purchase anything? Even the stuffiest traditional finance systems have layers.

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

#67

Post by siftrics »

PeterisP wrote: post #49
23B1 wrote: post #28

Earlier quoted context omitted.

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 ha…

You can do extremely complicated things on chain that require manual human analysis to figure out how to report it. You can do this thousands of times per year. It adds up to a huge amount of work.

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

#68

Post by siftrics »

Geee wrote: post #54
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…

People confuse a lot of things about volatility, risk, and long term valuation. Bitcoin is an inherently good long term store of value, because it has deterministic and finite inflation schedule, which is also plausibly immutable (contrary to fiat cryptocurrencies, called "cryptos"). On the other hand, fiat currencies are a lousy store of value, because they have non-deterministic, but always positive inflation sched…

> contrary to fiat cryptocurrencies, called "cryptos"

This is wrong. No one says this.

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

#69

Post by voxic11 »

josu wrote: post #43
jcranmer wrote: post #25

Earlier quoted context omitted.

> 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.

What countries don't regulate crypto these days? Certainly the US and EU does.

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

#70

Post by siftrics »

wojciii wrote: post #45
ljf wrote: post #5

Earlier quoted context omitted.

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?

Why'd you buy it in the first place if your only perception of its value is to use it to buy something else?

Why not just buy the thing you wanted to buy?

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