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therefore you miss the most important premise in reducing or avoiding taxes all together. "YOU" are subject to whatever taxing authority in the jurisdiction you are legally connected to. As I stated if a company is in a jurisdiction that taxes crypto profits a 0% (yes they do exist) then the company or person owes not taxes. This is uses by companies all over the planet to reduce taxes to zero even thought they operate in the USA or other similar taxing jurisdiction. As an example there are hundreds of hedge funds in Connecticut, USA that have offices their and employ thousands of individuals to work in said offices. But they all LEGALLY and for TAX PURPOSES reside in the Cayman, Islands at the exact same address.
Why? because they paid politicians to have inserted in the IRS code an exemption that reduces their US tax liability to ZERO in many cases.
There are hundreds of exemptions like this in the USA IRS code and there is no reason why Americans should not take advantage of every exemption offered.
We are all interested in a tax outcome which reduces our wealth by the least amount legally possible. This much I grant you, and in accordance with this you are responsible for doing your own personal research concerning the applicable tax code.
You hold cryptocurrency which has appreciated in value, and you wish to sell that cryptocurrency. You purchased it in a particular jurisdiction, and you expect to sell it in that same jurisdiction. The tax authorities of that jurisdiction prove that they are entitled to a 33% tax as a result your capital gain in accordance with applicable laws, which calculation is based on the amount of profit rather than the amount of sale. Note that this is not exactly unfair, given that you did nothing more than purchase a digital currency which appreciated in value in a manner unrelated to your actions, and that your purchase and sale of that currency was protected by the applicable laws of that tax jurisdiction.
You appear to be under the misimpression that by squinting hard enough at the tax code, you might find some clause which says "notwithstanding anything contained herein, Recipient may waive any and all tax liability associated with this transaction by standing naked in the middle of a large wheat field at midnight and shouting to the heavens, 'I hereby waive all tax liability!'". Sadly, such evasions are not available. If you attempt to evade taxes that you unambiguously owe, you will be liable to criminal penalties.
That said, while you can't change your tax liabilities retroactively (which is what you appear to be trying to do here), you can make decisions which will have an effect on your tax liabilities going forward.
Here's the first and most obvious point: What if you don't sell any crypto? If you need cash, you don't need to sell. You only need to take out a cash loan, collateralized by your crypto holdings. I'm not saying this solves everything, but it will change the tax analysis. I am unclear as to why the others in this thread haven't suggested this already.
If that simple and obvious solution does not appeal to you, be aware of the following caveats:
Changing your residency to a different jurisdiction may have the effect of changing your tax liabilities *going forward*. However, this change of jurisdiction will only apply if you can prove that your residency actually changed. Thus, you must consider all aspects of moving to a different jurisdiction before making the move, not just the tax consequences. If you move to Malaysia, you might incur fewer taxes in connection with your crypto-trading, but you may also have to pay for private security forces (instead of the free police protection you are accustomed to), among other novel expenses.
On the other hand, the suggestion has been made in this thread that you may be able to take advantage of a foreign jurisdiction's tax policies while neither residing there nor conducting business there, by way of a "shell" corporation. To the extent such (shell) corporation may be legally recognized (not something I would guarantee), prior posters on this thread have been extremely unclear as to how you may be expected to recover funds from this (shell) corporation. Hint: such recovery will involve bringing the assets or currency back to your resident jurisdiction, at which point the tax liability of your current jurisdiction goes into effect as usual. While offshoring may provide some benefits to some legitimate domestic corporations (by virtue of their ability to legitimately confine certain aspects of their supply chain to particular tax jurisdictions), the shenanigans suggested in this thread will not.
Oh, and if you're still considering using "shell" or similar corporations for the purpose of avoiding taxes, read up on the concept of "piercing the corporate veil". You might be surprised by what you learn.
You hold cryptocurrency which has appreciated in value, and you wish to sell that cryptocurrency. You purchased it in a particular jurisdiction, and you expect to sell it in that same jurisdiction. The tax authorities of that jurisdiction prove that they are entitled to a 33% tax as a result your capital gain in accordance with applicable laws, which calculation is based on the amount of profit rather than the amount of sale. Note that this is not exactly unfair, given that you did nothing more than purchase a digital currency which appreciated in value in a manner unrelated to your actions, and that your purchase and sale of that currency was protected by the applicable laws of that tax jurisdiction.
You appear to be under the misimpression that by squinting hard enough at the tax code, you might find some clause which says "notwithstanding anything contained herein, Recipient may waive any and all tax liability associated with this transaction by standing naked in the middle of a large wheat field at midnight and shouting to the heavens, 'I hereby waive all tax liability!'". Sadly, such evasions are not available. If you attempt to evade taxes that you unambiguously owe, you will be liable to criminal penalties.
That said, while you can't change your tax liabilities retroactively (which is what you appear to be trying to do here), you can make decisions which will have an effect on your tax liabilities going forward.
Here's the first and most obvious point: What if you don't sell any crypto? If you need cash, you don't need to sell. You only need to take out a cash loan, collateralized by your crypto holdings. I'm not saying this solves everything, but it will change the tax analysis. I am unclear as to why the others in this thread haven't suggested this already.
If that simple and obvious solution does not appeal to you, be aware of the following caveats:
Changing your residency to a different jurisdiction may have the effect of changing your tax liabilities *going forward*. However, this change of jurisdiction will only apply if you can prove that your residency actually changed. Thus, you must consider all aspects of moving to a different jurisdiction before making the move, not just the tax consequences. If you move to Malaysia, you might incur fewer taxes in connection with your crypto-trading, but you may also have to pay for private security forces (instead of the free police protection you are accustomed to), among other novel expenses.
On the other hand, the suggestion has been made in this thread that you may be able to take advantage of a foreign jurisdiction's tax policies while neither residing there nor conducting business there, by way of a "shell" corporation. To the extent such (shell) corporation may be legally recognized (not something I would guarantee), prior posters on this thread have been extremely unclear as to how you may be expected to recover funds from this (shell) corporation. Hint: such recovery will involve bringing the assets or currency back to your resident jurisdiction, at which point the tax liability of your current jurisdiction goes into effect as usual. While offshoring may provide some benefits to some legitimate domestic corporations (by virtue of their ability to legitimately confine certain aspects of their supply chain to particular tax jurisdictions), the shenanigans suggested in this thread will not.
Oh, and if you're still considering using "shell" or similar corporations for the purpose of avoiding taxes, read up on the concept of "piercing the corporate veil". You might be surprised by what you learn.
