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Crypto investors face tax crackdown as 70% non-compliant

thepost.co.nz

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Re: Crypto investors face tax crackdown as 70% non-compliant

#81

Post by vkou »

wongarsu wrote: post #66
skeeter2020 wrote: post #59

Earlier quoted context omitted.

I don't think this is specific case here; seems more like less sophisticated investors buying new products don't know that selling them triggers a capital gain at the time of the transaction, regardless of what they may do with the proceeds AFTER the transaction date. In a nuteshell: a successful investment and an unsuccessful investment will be treated as independent events at the time the transaction occurs.

It's also not immediately obvious to the uninitiated what should happen when you swap one asset for another, like when you trade DOGE for BTC. Or trade between BTC and a stablecoin, if you feel clever and think this avoids triggering capital gains. Imho it's all just forex trading, but ask 3 tax authorities and you get at least 4 opinions so you really have to know the local rules

> It's also not immediately obvious to the uninitiated what should happen when you swap one asset for another, like when you trade DOGE for BTC.

When I swap between MSFT and AAPL, I trigger capital gains, because sale of one realizes my (formerly paper) gain or loss.

Why should crypto be privileged? Why should people who don't even understand how traditional investments work, and are speculatively trading in a novel instrument get to cite ignorance as an excuse?

Re: Crypto investors face tax crackdown as 70% non-compliant

#82

Post by myvoiceismypass »

scotty79 wrote: post #43
triceratops wrote: post #23

Earlier quoted context omitted.

> zero practical assurances when it comes to protecting your crypto assets What would that look like?

If a crypto market fails with my money I'd like to be reimbursed. Like when the MtGox failed and Japan did a full bankruptcy process and reimbursed creditor to their best ability. I don't mind paying tax on my trades to Japan whatever it might be. But paying a country I accidentally live in, just because I was lucky enough to get some gains that this country contributed nothing to, not even a legal framework, feels p…

So you want the equivalent of FDIC insurance on cash deposits for all stocks and crypto?

When the trump or melania crypto coin eventually bust, should the US bail out holders? Can we get that for housing too? Make every asset completely risk-free?

Re: Crypto investors face tax crackdown as 70% non-compliant

#83

Post by onesociety2022 »

bryanlarsen wrote: post #77
onesociety2022 wrote: post #75

Earlier quoted context omitted.

Maybe if you are an ultra high net worth individual. I don’t see your avg Joe walking into their neighborhood Chase bank asking for a $500k loan using their potential tax refund as collateral is going to get it. That seems like an esoteric financial product.

AFAICT most tax refund loans are to low income individuals who need the money today rather than two months from now.

Tax refund loans are offered in conjunction with the tax filing service like TurboTax or H&R Block because they already know what your refund amount is going to be and it’s relatively risk free (small refund amounts) and easy to automate. They are similar to pay day loans.

Crypto bro showing up with $1m gains and losses from crypto transactions and asking for a refund loan at their neighborhood bank is probably not going to go anywhere (it’s too large a risk because it’s not just a few thousand dollars but at the same time it’s too small an amount for them to do custom due diligence to underwrite a loan).

Anyway you can’t erase gains in year 1 with losses in year 2 at least in the USA (you can only offset $3k/yr max in year 2 if you don’t have any other gains).

Re: Crypto investors face tax crackdown as 70% non-compliant

#86

Post by scotty79 »

brendoelfrendo wrote: post #26
scotty79 wrote: post #6

If a country gives you zero practical assurances when it comes to protecting your crypto assets, what is the tax for?

The tax is for everything the state does. Your capital gains taxes aren't just a fee to the government in exchange for protecting your crypto, and it's weird to assume that they are.

Of course they aren't. Country takes taxes because it can. And takes it wherever it can. Pretexts don't matter. But I can't blame people who have expectation of fairness to rebel when the government doesn't even bother to provide a plausible pretext.

Re: Crypto investors face tax crackdown as 70% non-compliant

#87

Post by scotty79 »

ambentzen wrote: post #20
scotty79 wrote: post #4

> Doyle says many crypto investors mistakenly think they can sell some Bitcoin to buy some Etherium, and that making that a switch like that did not trigger an obligation to pay tax. Make a stupid rule, be surprised people are non-compliant.

Why is that a stupid rule? If I sell Nvidia stock to buy AMD stock, I need to pay tax on my Nvidia stock gains.

Because, unlike at the stock market, the government provides no assurances regarding any part of the crypto trade that is being made. When things go south, fraud happens in crypto, government is pretty much zero help in most countries of the world at most times.

I imagine if it turned out you never possessed any AMD or Nvidia stocks and all of that was just fake number on a fake piece of paper there would be serious government involvement pretty much everywhere.

Also on more practical note, a single sale of crypto can really be a 50 sales to 50 people at various prices. Calculating gain is virutally unworkable. Especially between crypto pairs where the value of one or the other isn't really known.

When you sell NVidia stock and buy AMD it's a sale and a purchase. But if somebody gave you some AMD stock for your NVIDIA stock, there's no sale or purchase and the value of each is only a guess.

That's why reasonable countries decided it's way better to tax stuff on exit to fiat, via conversion or purchase. And it works just fine. When it's crypto it remains Miki Mouse money, but when it exits to fiat and there's more of it than was put in, there's real and taxable gain.

Re: Crypto investors face tax crackdown as 70% non-compliant

#88

Post by scotty79 »

flakeoil wrote: post #17
scotty79 wrote: post #4

> Doyle says many crypto investors mistakenly think they can sell some Bitcoin to buy some Etherium, and that making that a switch like that did not trigger an obligation to pay tax. Make a stupid rule, be surprised people are non-compliant.

What's stupid about that?

A single sale of crypto can really be 50 sales to 50 people at various prices. Calculating gain is virtually unworkable. Especially between crypto pairs where the value of one or the other isn't really known and changes every second and depends on particular exchange out of may you could be trading on.

When you sell NVidia stock and buy AMD it's a sale and a purchase. But if somebody gave you some AMD stock for your NVIDIA stock, there's no sale or purchase and the value of each is only a guess.

That's why reasonable countries decided it's way better to tax stuff on exit to fiat, via conversion or purchase of something other than crypto. And it works just fine. When it's crypto it remains Miki Mouse money, but when it exits to fiat and there's more of it than was put in, there's real and taxable gain.

Taxing crypto on every trade would be like taxing forex on every trade.

Re: Crypto investors face tax crackdown as 70% non-compliant

#89

Post by egman_ekki »

lifestyleguru wrote: post #65
skeeter2020 wrote: post #62

Earlier quoted context omitted.

that's wild - I guess they (knowingly or not) really want to discourage speculative and volatile investments!

How buying Novo Nordisk or Maersk is a volatile investment? It's to keep peasants away from capital markets.

This is only for Crypto. For stocks, it's even (but some instruments are taxed at every Dec 31st, even when unrealized).
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