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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

#71

Post by kopirgan »

tom_ wrote: post #10
kopirgan wrote: post #5

Article seems to suggest if you make gains but lost them later you still need to pay tax on the gain?! That's strange..

It happens when you exchange one type of token for another, that's the point being made. Broadly: the gain is calculated any time the value of the property is realised by using it to purchase some other thing. Using the thing to purchase money is one way of realising its value, and makes the calculations easy; but when used to purchase some thing other than money, the transaction can be assigned a monetary value and…

Yes but if at the end of tax year you end up with overall loss, that's what should matter.. Not that you pay tax on each profitable transaction but not set off loss making ones.

See separate point re losses that happen next year that's tough luck lol. Govt not gonna help. Unless you go fully bust and they have nothing to collect.

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

#72

Post by kopirgan »

qwertox wrote: post #47
rsynnott wrote: post #18

Earlier quoted context omitted.

You buy a bitcoin for 20,000. You sell it for 50,000. At this point you probably owe capital gains on 30,000. You then take the 30,000, use it to buy an NFT, and later sell the NFT for 0.01 (because NFT). At this point you have had gain of 30k and loss of 30k. Now, it's going to depend a lot on exactly when all this happened and in which jurisdiction, but in many countries you probably owe tax on the 30k.

Usually if the loss happens in the same year, you can use them to lower your tax on gains. In your NFT example you'd first owe 7.5k (assuming 25% taxation), and with the 30k loss you'll be able to balance what you owe. The problem starts if you sell the NFTs in the next year, because then you can't use those losses to balance the already made gains, but only use it for future gains.

Yes this is my understanding.

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

#73

Post by kopirgan »

bryanlarsen wrote: post #52
rsynnott wrote: post #18

Earlier quoted context omitted.

You buy a bitcoin for 20,000. You sell it for 50,000. At this point you probably owe capital gains on 30,000. You then take the 30,000, use it to buy an NFT, and later sell the NFT for 0.01 (because NFT). At this point you have had gain of 30k and loss of 30k. Now, it's going to depend a lot on exactly when all this happened and in which jurisdiction, but in many countries you probably owe tax on the 30k.

Which jursidictions? Certainly not mine. If they happened in different years you'd have a tax in one year and an equivalently sized refund in another, but they'd balance out.

Can I move there lol.

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

#75

Post by onesociety2022 »

bryanlarsen wrote: post #50
sputknick wrote: post #27

Earlier quoted context omitted.

In America, the problem comes when the gain and the loss come in different years. If you make a big gain in 2024, but didn't pay taxes on that gain, then lose the money in 2025, they will come after you for failing to pay taxes in 2024 even though you no longer have the money in 2025. The lesson is to pay your taxes.

A bank will be happy to lend you the money to cover the spread since you have the collateral of a large tax refund in the future. It'll cost you a little bit of interest but it's generally not the catastrophe that people make it out to be.

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.

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

#76

Post by onesociety2022 »

skeeter2020 wrote: post #61
lifestyleguru wrote: post #41

In many countries in EU, real estate is the crypto. The only investment vehicle without capital gains tax. Maybe it's causing demographic catastrophe, but at least few people make a lot of money.

>> The only investment vehicle without capital gains tax real estate? This is the most common asset that triggers a capital gain for most people.

Well in the USA, there is the 1031 exchange which lets you defer capital gains when you buy/sell primary home and finally at death you can use the step-up basis rule to avoid paying the deferred capital gains completely when your heirs inherit it as well.

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

#77

Post by bryanlarsen »

onesociety2022 wrote: post #75
bryanlarsen wrote: post #50

Earlier quoted context omitted.

A bank will be happy to lend you the money to cover the spread since you have the collateral of a large tax refund in the future. It'll cost you a little bit of interest but it's generally not the catastrophe that people make it out to be.

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.

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

#79

Post by triceratops »

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 don't live there. Move someplace that doesn't tax capital gains. If you're unable to do that then you're admitting that your country of residence has helped you in making those gains.

Every country taxes their residents' income one way or another.

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

#80

Post by triceratops »

skeeter2020 wrote: post #51
triceratops wrote: post #19

Earlier quoted context omitted.

Is it any different from selling TSLA, buying MSFT and triggering capital gains?

not conceptually, though I don't know much about crytpo and have 2 questions: 1. can you recognize a capital loss on unregulated products like crypto and NFTs for favourable tax treatment? 2. do the exchanges (from an accounting perspective) trade directly between coins or move through a fiat (i.e. USD) currency? So it might be more like "trading" stock directly without seeing the cash hit your account, which confuse…

> can you recognize a capital loss on unregulated products like crypto and NFTs for favourable tax treatment?

Depends on the country. The US and Canada allow it.

> do the exchanges (from an accounting perspective) trade directly between coins or move through a fiat (i.e. USD) currency?

Doesn't matter. If you swap TSLA for MSFT with someone there is still tax due.

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