Bitcoin Forum

With the new tax bill recently being passed, it is reported that we will be required to pay tax on all cryptocurrency to cryptocurrency trades.  Does anybody know how much tax we would have to pay on trades.  How do you even calculate that?

https://townhall.com/columnists/lindsaymarie/2017/12/29/brace-yourselves-cryptocurrency-investors-taxes-are-coming-n2428153

Which countries will follow this... And obviously some countries are working on regulations, maybe restrictions.

Well the IRS would be US, so it should at least affect the US exchanges.

In the US (as with most countries) the IRS or whoever is the taxing authority requires you to report all income regardless of how it is derived.  And thus you are supposed to pay tax on cryptocurrency trades even prior to 2018.  Just because tax is not withheld doesn't mean its not owed.

Look at the recent news on the IRS and Coinbase (IRS tried to get all names and records and judge ruled they can get records for those with trades exceeding $20k for the year).  Might be a good idea to report your income now before they catch up as the penalties are quite high.

Just an FYI...

If I am getting this right, if I invest in a shitcoin, it moons 100x and I sell for bitcoin, I have to pay taxes on the 100x surge? This is an outright steal, because when BTC goes down, all the alts go down.

It was required before the change. Unless you are meticulously keeping track and filing the specific forms for like-kind exchanges, you aren't doing it properly anyway.
Changing from one currency to another is a taxable event and your capital or income gains would need to be reported. Changing a word here or there doesn't change that.
You would still owe taxes normally based on your capital or income gains, just the trade itself is a taxable event so they must be reported based on that event. Otherwise if you did not make an exchange, you do not need to report capital gains until you do make an exchange.

It makes it more difficult for people speculating because they may have gains one year and losses the next, and that makes filing even more complicated (but this was the case before the law change). People who are new to complicated tax schemes are just getting filled in on how these things actually work.

Sounds kind of ridiculous and is most likely going to ruin it for part of the americans.

Wow that is an insane law if it upholds and gets passed. What you really have to wonder is are other countries going to follow this outlandish law or leave it to the USA alone? Also at the same time we must ask would they allow deductions of tax loss if we lose? I sincerely think not but man am I glad I don't have to deal with this stuff on a daily basis, you guys doing cryptocurrencies in USA are legends.

Sorry to hear that,US citizens deserves better,cryptocurrencies shouldnt be regulated because the main aim of crypto is to counter centralization this is bad to our community.

In simple terms, as an american:

1) You are required to file income taxes for all gains based on speculation. You don't have to pay tax on transacting between currencies, but it is a "taxable event" as far as capital gains are considered.
2) Capital gains are only required to be filed when a taxable event happens - i.e. you convert one currency to another or to fiat. So if you held bitcoin for 5 years then traded it for ETH, you are required to file your capital gains on those bitcoins.

Distinguishing between whether capital gains or income taxes are owed is pretty easy, but talk to an accountant.
All this was the case prior to 2018. If you have traded frequently you probably owe income tax. If you held for a long time and converted to anything else, you owe capital gains. There was no cryptocurrency exemption prior to this and there isn't one now.

I have been doing this for a while.  But the thing is this is way too complicated.


First off, imagine someone is receiving/sending btc all the time.  Like someone might send them 5 dollars worth of btc.  Other people send 1 dollar etc.  Or you send small amounts etc.  You are suppose to use either fifo, lifo or weighted average etc.  How in the world is it possible to do it if you have say 50 transactions where you send/receive like 0.00003 btc etc.  That would be beyond ridiculous.  You need to record every single time and check the price when you received it?  Also i watched a video on youtube where someone talked about the issue on this.  Imagine someone who daytrades and does 50 trades a day.  You want them to record how much they bought the altcoin at... which isn't that hard since bittrex and binance shows the usd price.  The issue comes when you are selling the btc for altcoin because you cannot almost all altcoins without btc.  Then when you sell the altcoin ... you can only sell for btc.  Imagine you sell 5000 shares of a coin for 1 dollar and say 3000 got filled at certain price.  Then 102 get filled at another price.  First off, you would know the price in btc because it should show in the buy/sell order history.  However, it does not show you the usd price at that time.  So how can someone even do this.  So when they are busy daytrading, everytime there is a sale, you want them to check the usd price every single time?  Imagine you sell 5000 shares of a coin for 1 dollar and it took 10 orders because it was sold at 1 dollar, 98 cents, 96 cents etc.  So basically you have to stop trading because you need to record every single time someone buys even 1 shares?  Imagine having 20 orders because certain people want 1 share or 10 shares when you have 5000 to sell.  The issue is how are you suppose to record the fifo or lifo of your btc.  I mean who can record it like this... okay sold 1 shares of altcoin for 1 dollar at 13201 usd price.  Then sold 10 shares of altcoin for 0.00 at 13230 price.  Then when you ready to buy altcoin with it, you want someone to go ... okay i bought 1000 shares of altcoin.  So using lifo... i bought 0.0000001 btc at 13201... sold it at 0.0000001 btc at 13208?  You guys can imagine how ridiculous this would get whether its fifo, lifo or whatever method you use.  This would basically be almost impossible.  You would have to spend hours a day doing this maybe.  


First off let say you got 1 btc to make it simple.  Let say you got it at 10k for the btc.  The issue is this is rarely the case as you cannot get it at an easy round number.


Now let say you buy altcoin.  But let say when you do this, the btc price is around 12500 on bittrex.  Well here is the issue.  When you sell the btc for altcoin, you are selling it at 12500 minus fees right?  Thus you pay taxes on the 2500 btc gain?  Fees are 0.25 percent so around 5 dollar fee so $2495?


Now let say you buy 12495 shares of that altcoin with that 12495 at 1 dollar each.  Later on it goes up to say 1.50.  You sell all of it and of course you cannot sell it for usd or usdt.  You only can sell it for btc.  So here... you are getting 12495 + (6247.50 - 0.25% fee) = 12495 +6231.88 = 18726.88 worth of btc.  So here... you have to pay another tax on $6231.88 profit right?


The thing here is also when you do this, let say btc is around 30k now.  If thats the case, you only get back around 0.62 btc... less btc than you started with which is 1 btc.  But here... you made total of 2495 + 6231.88 = 8726.88 profit right?


However this gets even more complicated.  Let say you now use that btc to buy another altcoin.  The issue here is it would be easier if you buy an altcoin with your entire btc balance but thats rarely the case.  Now say you buy altcoin b.  When you buy altcoin b, you have to calculate what price are selling the btc at.  How are you suppose to do that?  Say you buy 10000 shares of altcoin b at 50 cents.  Well everytime you buy a coin, even if you got it at the same price which is basically almost impossible since btc prices changes every few seconds etc, you have to pay a FEE.  So how does that fee get calculated?  Is it calculated within the buy of the altcoin?


Now the other issue is this.  After the buy, you would still have like over 0.40 btc.  So whenever you sell it for cash or altcoin, you have to put what price you sell it at.  But let say you just hold the btc and do no more trades.  So you are going to owe taxes on 8726.88 profit even though you havent cashed out anything.  I saw many people complain about this which makes sense but i do understand that a bit.  However the issue comes when what happens when say in the future you cash out your btc or say btc drops to 0... can you claim a loss?  Like imagine you were to sell the btc you have left but when you do this, you only have say 0.25 btc and price is like 10000 dollars each.  So here you would be cashing out around 2500 usd to your bank account.  Thus you lost around 16226.88 on your btc balance whether its altcoin trading or just holding btc.  So would you be allowed to claim the 16226.88 loss?  Thus would you at least get back the taxes that were paid on your 8726.88 profit in that year when you made money with trading but didnt cash out a cent to your bank account?  Because if the answer is no, then this is beyond ridiculous.  Thus if you can't carry over losses on cryptocurrencies, then this wouldn't even make any sense because you are paying taxes on gains that you did not cash out to your bank account... but if you have a loss in the next year or so and then cash out, you cant get your tax paid back?  Anyone know the answer to this?


Because if this is true, does anyone here have advice/tips to avoid something like this happening with having year of claiming capital gains but then being able to carry losses and get taxes paid back?

U.S citizens should file a petition to revoke this decision,cryptocurrencies are decentralized the government should stay away from our market.

I thought this was the case too for a lot of other countries too, such as some countries in Europe (I couldn't quote the specific ones or the details, but It was something along the lines of needing to report EVERY single transaction you did ever).

So supose you go into Poloniex, trade back and fort tiny amounts worth of satoshi between altcoins... well you have to report ALL of that, even the smallest tinniest satoshi transactions! this is absolutely nuts. I wonder why they do this to themselves? their services will collapse looking at all this data.

Also the big problem that I (and a lot of other people) have is that we have lost some of our trading history on dead exchanges like Cryptsy... what do we do then? how do we report our trading history here? the exchange is dead!

In Europe we are waiting news from Bruxelles, where terrocrats are trying to find a way to tax crypto.
Of course they will partially succeed as usual people are scared.
But I think that with some care and intelligence, they'll have difficult time to catch us :-)

I was told by accountant when doing these taxes that it doesnt matter what you exchanged bitcoin for whether its altcoin or usd etc.  So i guess its not confirmed for everyone since some ppl might interpret it a bit difference as like exchange.


What if you have btc and altcoins in your bittrex account still and then withdraw it to your wallet?  But dont do any trading on bittrex?  I assume thats nothing since thats a withdraw to your wallet right? 


So if someone trades on bittrex and just does a 500 dollar trade such as btc for altcoin and then sell it when they profit say 100 dollars, they have to report it.  But the thing is, is bittrex going to report your transactions to the government?  Because even if they do, obviously that doesn't mean anything because you could have 100 dollar profit here but then lost money doing other trades with other nonus exchanges etc.  The issue here is there is no fiat on bittrex with bitcoin or altcoins.  If there were, calculating taxes would be much easier.  Also what about fees you pay when sending btc.  I still am not sure if that is suppose to count or its basically an expense.  I added it to the buy/sell of a coin etc.   Does anyone know the answer to this.

get off american exchanges, one way to sidestep the issue. Until the IRS can vacuum up out of country exchanges.
At least that's my plan for now.

This could be a bad start for the traders in U.S they should file petitions against this!

My accountant mentioned i believe not 100 percent sure but he said any trade whether altcoin to altcoin is taxable.  He said like exchanges doesn't apply.

The thing is even if bittrex gives out financial info, there is no usd being traded.  So if someone does a trade for 100 dollars profit and that person doesnt report capital gains or losses, then they would have issue?
The other issue if ppl could use other exchanges and have gains or losses there.  Like someone could profit 5k on bittrex but lose 5k or more on binance.  But you are telling me that person better have some number showing for capital gains then?

What about if you dont do any trading on that date and afterwards but have bitcoin and altcoins there and dont do any trading?  What about if you withdraw your btc or altcoins to your wallet etc.  Obviously that is nothing right since you arent trading it?

Yea the thing is if they do it where they actually send you a 1099 or whatever that is, then it would be very easy.  Thus here is your profit/loss statement.  The issue though here is this number wouldn't even be correct because when you sell the btc for altcoin and vice versa, they have no idea at what price you bought the btc you send them at.  So there would be no way to calculate it.  I think you could calculate profit loss on the site only but not the entire case because your btc could be bought at 1k or 5k or 10 etc.  It would be nice if these exchanges did everything in usd.  If that was it, its easy to calculate.

The issue is those ppl who do lot of trades.  Or those ppl who receive and send btc a lot but do tiny amounts like 10 dollars and below.  When you are using fifo, lifo or whatever method... that is a huge headache.  How can anyone even do this?  The other thing is what about fees you pay when trading?  Are those fees expenses?  Or are those fees like a 10 dollar fee... a fee that is from btc being bought at a certain price.  I mean imagine you get btc 30 times and got them at 30 different prices and these prices were between 1 dollar and 5 dollars.  You going to have to record not only every single transaction, but you need to deduct depending on fifo or lifo how much btc is left etc.  This is basically impossible for someone to do this if they receive btc or send btc many times with small amounts.  The only ppl that wont be affected by this are those ppl are just buy and hold or buy few times only.  When you sell, its a headache because what if during that time, you had friends sending you 5 dollars in btc several times etc.  Then you buy altcoin again.  Well you have to make sure that 5 dollar in btc from those friends of yours are the last one out or something. 

Does anyone here get what im saying here?  Because this would be beyond ridiuclous to calculate.

Don't think like kind exchanges are exempt from taxes in crypto. also I would make the best effort in paying taxes even if it seems like the IRS themselves will have a hard time tracking it.

taxes are voluntarily actually

Obviously that they will affect and follow the US residents, now the ones who are in another country. The IRS has their main sede (if not the only one) in there.


If you have enough balls you can easily avoid them ,but you all know that it is never good to try to avoid taxes, specially on the US in where the IRS is veryyy strict.


Maybe avoiding taxes in there could make you being punished with jail for more than years.

Why the government always wants to regulate anything that are threats to their wrong doings?there wont be any freedom in U.S if this is really true.

seems impossible and impractical to calculate tax like this.

better for them just to accept capital gains on crypto to fiat

roll on DEX's

Not true. Crypto is not the first, or even the 10th "currency-like" commodity in the history of taxation. The rules on how to do this have been LONG ESTABLISHED. Just because you aren't familiar with them does not mean the sky is falling. The minor wording change also does nothing to affect this.


Also not true. First of all, as I mentioned, like-kind exchanges require filing specific tax forms that you have not likely been filing. So if you are going to claim it is a like-kind exchange, you need to be filing these forms. If you are day trading, the point is already moot and you are required to pay income tax on your gains, whether or not you cash them out to fiat. Like-kind exchange does not apply to day trading and is completely irrelevant.


This is again wrong. Changing currencies is a "taxable event". I explained what this means - it means you are due to pay capital gains if you realized any. If you are day trading, this is irrelevant as you owe income tax. You are not being taxed on each and every transaction - that is silly.


No, you will not.


Nothing has changed.

Day trading (or whatever the actual window of time is, it's much longer than 1 day) is considered income and taxed at income tax rates. Filing them as capital gains will get you some hefty back tax fines.

I am not an accountant, but I believe the established rules are to maintain a daily log of your total assets, you do not need to record individual trades. A daily log of total assets is not difficult.

But if you are day trading, you need to file INCOME TAX GAINS, not capital gains, or you will be misfiling and will incur significant penalties.

The IRS would like our feedback.



The exodus begins!?
https://i.imgur.com/IjGiPBM.png

That would seem the case.  Its analogous to holding a stock or bond, you can buy hold them with no tax on the "profit" from them rising until you sell them.  What the article is discussing is where people have traded one asset for another, seems to be a loop hole that these aren't taxed and they just tied up that hole.  My understanding is trading already needs to be declared and taxed, so this is probably only going to affect those that dont declare crypto trades as tax under the "property" classification.  Its not a change to tax on crypto trades, its a clarification.

Very funny. And what happens when you actually lose money. Will the IRS give you your money back?

You can credit your losses to a future tax return. These are all well established rules.

I have argued previously that crypto to crypto trades are taxable and now it is law. However I think that this means that the IRS will probably not challenge like kind transactions for tax years prior to 2018. So now I plan to claim like kind for 2017 which will save me a lot. If you do this you must file IRS form 8824 though!

Governments world over will be looking for ways to tax cryptocurrencies because they are missing out on huge tax revenues, I'm skeptical as to how crypto to crypto would work. I would think the best way to tax would be similar to stocks where profits are only taxed when stocks are liquidated. I guess however that may not work for cryptos as they can be used as a means of payment.

Governments already have a way to tax crypto, using the same mechanisms as stocks.  The common understanding that stock profits are only calculated when liquidated appears to be misguided.  Apparently if you trade one stock for another (or one asset for another asset) that is also considered a taxable event and taxes due, with the amount based on market value at time of transaction.  Look at it this way, governments have had many decades to see and close loopholes with stock and asset trades, they just apply the same rules to bitcoin and no new regulation is required, just some statement that bitcoin is classified as an asset, which they have done across major jurisdictions.

Condolence to US residents with the silliest law ever. Crypto tokens should not be taxed like this, because they don't really have any definite USD value, and many are not even traded against USD. It is when you actually exchange crypto token to USD, goods or services you know its USD value exactly, and at this moment it should be taxed. How IRS is going to audit day traders? This is just not possible technically.

That's basically terrorism against cryptos, since your revenues in cryptos are already subject to be taxed, so it is not clear what this law would add to the status quo, beyond some additional harassment.

I would say that it affects only US citizens. I work with US exchanges but I am resident in a different jurisdiction, so IRS has no right to impose taxes on me at all. I hope that they also tax shares and funds.

It is going to ruin it one way but I am not sure how this would all end up. It is insane honestly, and I really do not envy the Americans right now. This is also why the whole idea of having decentralized exchanges would make a lot of sense, but this is something that we may not see for now and will just have to live with the attack on the crypto users and just unfortunate US is first.

I guess that this is a reason to start shifting away from US exchanges. No one knows for now but I am sure it is going to get integrated into the exchange fees somehow and until then, we may not know. It is crazy though as this would bring more like an era where trading fee may start being a huge one but let's see. Whichever way though, I am looking forward to how that is going to play out.

All the more reason to hodl and not pay the steeper income tax rates and wait a year or more and just pay the long term capital gains tax. Which is also based off your normal income but shouldn't be that bad depending on what you already make.

centralization in a decentralized platform?this is ridiculous the U.S citizens are good paying their taxes very well,i am against this regulation.

How does this stop you from trading cryptocurrencies on an offshore website instead of a main exchange that is based in the USA?

felling bad for US residents with the silliest law ever. Crypto currencies should not be taxed like this, because they don't really have any definite USD value, and many are not even traded against USD. It is when you actually exchange crypto token to USD, goods or services you know its USD value exactly, and at this moment it should be taxed. How IRS is going to audit day traders?could ever it be possible technically?

I am rather seeing the whole tax thing as more like an attack on the usage by the Americans.
I am not sure how they will be able to get this played out, but I am really trying to see how it ends up working. There is a lot that would go on this year with the government as I feel some wars would be declared on crypto, but that would be a war they cannot win. For now, the crypto market looks strong and no taxation can scare people off from using it.