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Author Topic: Cashing out into traditional banking system  (Read 766 times)
megashira1
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July 31, 2017, 06:26:59 AM
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July 31, 2017, 07:50:36 AM
 #2

You should contact a tax consultant.
I don't think the forum is the right place to get an advice on that matter... (although it's a great forum)

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July 31, 2017, 08:07:03 AM
 #3

I have a friend who has made some decent returns with crypto and now wants to cash out.

All the BTC he purchased was done anonymously using cash in hand.

The issue is that the government doesn't know he purchased these cryptos and he did not do clear record keeping of all his trades / profits over time.

My friends worried that if he tries to cash out into the tradition banking system (in order to purchase property) the authorities will freeze his account and seize the funds until sufficient evidence is shown proving where the $ came from.

Now my friend can just pay full capital gains % on the profits (no deductions) he withdraws into the traditional banking system, but where all the $ came from is still ambiguous.

Some $ was made trading, selling, gambling, airdrops etc etc.

What's the best course of action?

It depends on where your "friend" is tax resident.

Anyway, his only option is to come clean and to declare this income to the tax authorities.

One issue I can see is that part of initial funds were cash on hand. If those funds were not tax compliant, the following profit could be considered money-laundering of proceeding from crime. Your friend could be in a tricky situation.

Additionally, penalties will be charged. He could end up paying much more than the nominal tax rate on capital gains.

Good luck to him.


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July 31, 2017, 09:02:17 AM
 #4

I agree that your friend should contact a tax consultant in their country/region.

That said:
  • Someone should be able to help reconstruct your friend's transaction history of individual purchases/trades which constitute their current aggregate BTC position.
  • Then get the individual cost basis (including applicable fees) of each constituent transaction.
  • Then simply calculate aggregate net gains (or loss), and then report that to their local tax authority as profit or loss from their bitcoin activity from initial purchas(es) to cash-out.

Aside from the above, your friend might want to wait until a few days after Aug 1st to cash out due to reasons which I just cited on thread: Are You Nervous About - August 1 is D-day!.  Basically, it doesn't make sense (to me) that your friend would forego the potential to receive 1-BCH for 1-BTC with ability to potentially spend them separately on each blockchain.

-jimhash
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July 31, 2017, 09:24:21 AM
 #5

Citizens of countries which are strict in the implementation of their tax laws should be careful with everything they are doing in relation to cryptocurrency. In the first place, there should be ample recording of all the transactions and though it can really be tedious this is what is required of the law so no choice but to follow otherwise we can be penalized or worst a case can be filed against us. I am sure nobody want to face a case in the court just for doing business with Bitcoin.

Here in my country, the government is not yet that strict as far as online business or earnings is concerned. We have the liberty if we will declare the income and how much we would like to declare. This is one of the many benefits when living in a third world country. We just avoid to be showy so as not giving the government an idea to tax us vigorously.

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July 31, 2017, 09:42:36 AM
 #6

It really depends on the country and what they seek tax on?
are there thresholds as to what is allowed tax exempt?
are the proceeds of online gambling taxable?

I think there are possibly workarounds but it depends on the above!


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July 31, 2017, 09:56:25 AM
 #7

It really depends on the country and what they seek tax on?
are there thresholds as to what is allowed tax exempt?
are the proceeds of online gambling taxable?

I think there are possibly workarounds but it depends on the above!


I think it's on the physical facilities that they put the tax and those facilities like stores or bank add transactions fees or put vatable tax on their customer. I its only the way government put tax on it ,it will be hard if evedy uaers will have tax there's no way they can detect it.

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July 31, 2017, 10:04:06 AM
 #8

Must be a substantial amount for your friend to worry about the penalties, if ever there are. That is if he is really bent on converting everything to fiat and paying whatever taxes that need to be settled. Or he can go with a tax advisor so he can find ways in which to pay the taxes that wouldn’t be eat up too much on the profits he made.


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July 31, 2017, 10:08:06 AM
 #9

I have a friend who has made some decent returns with crypto and now wants to cash out.

All the BTC he purchased was done anonymously using cash in hand.

The issue is that the government doesn't know he purchased these cryptos and he did not do clear record keeping of all his trades / profits over time.

My friends worried that if he tries to cash out into the tradition banking system (in order to purchase property) the authorities will freeze his account and seize the funds until sufficient evidence is shown proving where the $ came from.

Now my friend can just pay full capital gains % on the profits (no deductions) he withdraws into the traditional banking system, but where all the $ came from is still ambiguous.

Some $ was made trading, selling, gambling, airdrops etc etc.

What's the best course of action?

If your country is one with strict tax laws and even financial laws then there is no two way about it. You will just have to face it but and a tax consultant will equally do the job but be ready to part away with some of the money. But on the other hand what if instead of cashing out everything at once and attracting attention, a gradual and piece meal cashing out could not raise a dust then the money gathered over a period of time can then be use for the asset  and another way to go about it is to get someone to borrow the money from then give him back in cash after converting the bitcoin.
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July 31, 2017, 10:11:47 AM
 #10

... now ...
No. Just no.
And tell him to stop being such a bloody fool giving 2 hoots for the legacy banking and tax 'authorities'.

If he insists on wanting a house, I can sell him a half decent one for BTC1,000.

I do not accept segwit outputs as payment, nor send them.
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July 31, 2017, 11:32:32 AM
 #11

What about simply paying the taxs then? It's for your own country (considering it is used wisely). It doesn't hurt to be in a legal situation. I never understand people trying to avoid paying their taxs . If your friend is really worried he can simply transfer small amount only. For exemple in my country up to 5000€ you stay under the radar. If he is till afraid he can use a bitcoin debit card.

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July 31, 2017, 11:37:51 AM
 #12

You should contact a tax consultant.
I don't think the forum is the right place to get an advice on that matter... (although it's a great forum)

That's true. A consultant would be great help fir situation like this. There are lot of things which needs to be cleared first like, does your government recognise bitcoin as taxable thing ( thing = currency, asset, commodity ).If it does fit so where then you can proceed accordingly.

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August 01, 2017, 04:35:26 AM
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Before proceeding to any inquiry you check yourself with legality of the bitcoin in your country. It won't be as easy as it take filing of your real job income. There are few of the countries who doesn't recognise bitcoin as currency neither they apply any tasks. It is similar to betting money for which you don't have to pay any taxes in England. So you need proper instructions first and must visit a income tax office.


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August 01, 2017, 04:51:56 AM
 #14

So the question is how much is the amount that are talking here? If thats millions then it could attract governments attention and the bank will probably raise a red flag against you. Thats the problem when your country is not crypto friendly, why not try cashing it out on other country.


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August 01, 2017, 04:55:04 AM
 #15

I have a friend who has made some decent returns with crypto and now wants to cash out.

All the BTC he purchased was done anonymously using cash in hand.

The issue is that the government doesn't know he purchased these cryptos and he did not do clear record keeping of all his trades / profits over time.

My friends worried that if he tries to cash out into the tradition banking system (in order to purchase property) the authorities will freeze his account and seize the funds until sufficient evidence is shown proving where the $ came from.

Now my friend can just pay full capital gains % on the profits (no deductions) he withdraws into the traditional banking system, but where all the $ came from is still ambiguous.

Some $ was made trading, selling, gambling, airdrops etc etc.

What's the best course of action?

In my county you can declare your tax statement via a website, crypto earnings are just "extra income".
So if I make lets say 10000$ profit with cryptos, I put there 10000$ extra earnings and then I get some Information where I do have to pay my tax.

[could be your ad]
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August 01, 2017, 04:59:47 AM
 #16

Need to go to live in Russia. Do what you want....
If you're a self-employed individual. The state facilitates your tax burden.

If, as a result of its activities made a profit.  We pay income tax to 13% and do what you want.

In America taxes much more!
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August 01, 2017, 05:04:29 AM
 #17

There are some countries where betting is legal and some or not so it will depend a lot on the location and citizenship of your friend. Well, in my country you don't have to pay any tax up to some extent but one should be able to furnish his source of income. I would suggest you, hire a public accountant or tax advisor to proceed safely in this case.

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August 01, 2017, 05:10:07 AM
 #18

Actually have to pay  17,65% to 42,65%

If you declare that you have paid tax in the country. Where the US has a Treaty to avoid double taxation.
With Russia and the United States have concluded such an agreement.
It indicated what income taxes you pay in which country.
Where the rate is lower there pay.

This approach for large amounts will result in substantial cost savings.
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August 01, 2017, 05:18:19 AM
 #19

I advice you to contact a lawyer they will suggest you the best possible way for thid problem.  I think if he will pay the income tax of his money then there isn't any problem.



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qiwoman2
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August 01, 2017, 05:21:29 AM
 #20

I think you need to go to a tax accountant and do it properly. Another way is to open an IBC, International Business company or form a company in your country. It should be easier to bring the money in as a 'corporation' rather than an Individual.

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