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Question: Will the IRS pursue this? Whats the outcome?
IRS will pursue this, its what they do! - 6 (40%)
IRS will pursue on BCH Wallet only! - 0 (0%)
IRS wil pursue, then drop as unworkable! - 2 (13.3%)
IRS takes no action, as unworkable - 4 (26.7%)
No frigging idea. Its the IRS. - 3 (20%)
Total Voters: 15

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Author Topic: Bitcoin split to Bitcoin Cash! (BCH) Yep! You probably owe IRS a lot of $$$.  (Read 2516 times)
Blocken
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August 06, 2017, 10:09:40 PM
 #21

I would do nothing.

If you convert to fiat pay income tax. Yes it's more than capitol gains but... it works out better for cryptos this way to not encourage the government trying to fiddle with something they have no purview with.

For all intensive purposes BTC and BCC are another "state" outside of the USA (and all countries), so long as they cannot provide basic services for them. And the reality is they can't ever really do that until they have a majority of miners. That or the government needs to have huge reserves of BTC/BCC to compensate lawfully judged court cases and claims. Yup, they can't do any of that. There is a reason none of this has seen any real challenge in court. At some point the USA may decide the value in aggressively seeking to steal capitol from cryptos with unlawful actions, or expecting to prosper from the economic gains by allowing them to flourish... This is where everyone needs to be politically active and aware.

I'm not saying I know for sure how the IRS will come down on all of it, it's not as if the government has never done any wrong.

Frankly it's literally impossible to audit all the crypto movement. For the same reason regular stock trading has "wash" rules where so long as everything stays in the exchange then it doesn't fiddle with capitol gain/loss concerns. However that is easily tracked because despite the high volume, individuals are not making a gazillion trades 24/7 like with cryptos. Plus regular stocks cannot be infinitely divided. Sadly there is "wash" law for cryptos. At best they can exist in a gray area of no-enforcement (unless CoinBase starts handing over profiles). They need to tax businesses in the USA like CoinBase, as they operate within the purview of the state fully.

A day may come where you actually need to do something. As is they can track it all, if so inclined. But that doesn't mean they want to, the returns they are looking at are not pretty by going crazy on everyone.

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Easteregg69
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August 06, 2017, 10:16:27 PM
 #22

The only thing you can hold hostage is your sausage!

BTW. Provocation increases tolerance. Duck! Enemy in the head.

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August 07, 2017, 09:35:39 AM
 #23

Bitcoin split to Bitcoin Cash! (BCH) Yep! You probably owe IRS a lot of $$$.

No they won't. I'm not a US citizen, resident or anything else to do with the US. Never have & never will. So the IRS can go and shove it where the sun don't shine  Wink

.
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August 07, 2017, 02:11:07 PM
 #24

My guess is that the IRS will not care, as long as you are not converting your BCH to fiat. Once you convert it to fiat, then you are liable to pay taxes as ordinary income (unless the transaction qualifies as long term capital gains).


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marky89
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August 09, 2017, 08:18:30 AM
 #25

My guess is that the IRS will not care, as long as you are not converting your BCH to fiat. Once you convert it to fiat, then you are liable to pay taxes as ordinary income (unless the transaction qualifies as long term capital gains).

In time (if not already) the IRS will definitely care about crypto-to-crypto capital gains. But their resources are limited, and it's easier for them to go after big fish leaving paper trails in the legacy banking system.

In this situation, I really don't see what all the fuss is about. If you don't at the very least import your bitcoin private keys into a Bcash-compatible wallet, I don't see how you have "realized" anything, or how any "transaction" has occurred.

Further, there could be millions of different forks of bitcoin that copy the UTXO set. We can't possibly know about the vast majority of them. If you move hard forked coins (and more importantly, exchange them for another currency), then we can talk...

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August 09, 2017, 08:55:21 AM
 #26

It really depends on you will use your Bitcoin Cash. Obviously we all know it came out of nowhere and it is free we can explain that it is really not income. Or the best thing to do is to be quiet about it and learn how to do out books, assuming that you have 100 Bitcoin you may have a good business also you can fake receipts and much the value of Bitcoin Cash you converted to Fiat its that simple.

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August 10, 2017, 04:29:53 AM
 #27

I would look for another CPA.

Until you convert your Bitcoin Cash to Fiat, you owe the IRS nothing.

Since you were given the Bitcoin Cash for Free, you have a Zero Cost Basis.

You will have to report the entire amount as income of what it sells at for fiat, but only when you cash out and only the amount that flowed from the Bitcoin Cash.
(Your other coins that you purchased, you can still report under the capital gains rules.)

Split your conversion of Bitcoin Cash to Fiat over a few years to keep your tax rate lower.
But keep it's accounting totally separate from your other coins, so it does not get confusing.

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This would be my assessment as well. For a comparison, you can look at how stock splits / bonus shares are taxed in the US. I doubt if they will be taxed until you actually sell them. The same should apply to Bitcoin Cash as well.
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August 10, 2017, 09:59:00 PM
 #28

I don't understand what you're even talking about here. Law doesn't work like that even in the US, where it's completely weird, if you ask me.
First of all it doesn't matter what the price was when BCC hit the exchanges. All of their deposits and withdrawals were blocked, so only a very small amount of coins were available to sell and even after that you needed over an hour for a single confirmation ( some exchanges required 20 before they showed the balance).

Another problem is the acceptance. Just like when you're inheriting something you can accept or forfeit it. Some people didn't install a BCC wallet and never did anything with their gift, so we can assume they haven't accepted it or don't know it was given to them.

Finally, addresses aren't linked to your real identities, so although the government can demand taxes, enforcing this demand is impossible. We all know that law that can't be enforced becomes nothing more than a fun fact we can mention at parties.

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August 10, 2017, 11:00:30 PM
 #29

Some people didn't install a BCC wallet and never did anything with their gift, so we can assume they haven't accepted it or don't know it was given to them.

This is the clearest explanation for why no taxable event has occurred. You can't realize gains if you haven't even acknowledged the receipt of an asset. And most precisely, an airdrop/giveaway seems to most appropriately be seen as a "gift." Gifts are not taxable in the US. Rather, the donor of a gift may incur tax liabilities by giving to others. But the mere act of receiving a gift (and not realizing any capital gains on that gift) should not trigger any taxable event. Not an attorney, but the OP makes no sense to me.
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August 20, 2017, 11:52:55 PM
 #30

One aspect of the IRS guidelines that people often overlook, including many CPAs, is that the rules cover "convertible" assets. Most altcoins and especially forks are in no way convertible to fiat or goods/services. You can't place a fiat value on something that is not directly convertible.

In the case of BCH, many people have no way to convert it unless they sell it for Bitcoin and then sell that Bitcoin for fiat or goods/services.

If I forked bitcoin on my desktop computer tonight and sold .00000001 of the new fork coin for $100 bucks, would that mean suddenly every holder of 1 BTC suddenly owes taxes on 1 Billion dollars in "gains?" There is a real lack of guidance in what constitutes as a convertible digital currency at this point. With so much variance in market availability, liquidity, and price discovery there simply is no way to reliably or fairly determine tax obligations on these sort of things.

Ultimately, if the IRS wants to achieve maximum compliance and avoid litigation, swapping should be considered a "like-kind" trade and all digitial currencies should be taxed at the value they are given when converted to fiat or used to purchase actual goods or services. The cost basis will then be calculated based on how much was paid for the initial coins. In this scenario, many successful traders would eventually be taxed at the full value with zero cost basis.

That is a windfall for the IRS and a fair and simple way of gaining compliance.
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August 21, 2017, 05:39:22 AM
 #31

After reading the first few lines of Ops submission, I disagreed with some of the salient facts there. Capital gains arises when you sell and the value at the point of sale. I did agree that 20% after one year is on the high side as in my country its 10% although bitcoin sale does not form part of it. Now in the case of BCH, technically, its not your investment rather is it your sweat its free money and asking for 20% is not too much and the 20% remains the same whether you sell for 12$ or you sell for 700$ the moment you sell, it becomes realizable gains.

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August 21, 2017, 07:04:59 PM
 #32

My guess is that the IRS will not care, as long as you are not converting your BCH to fiat. Once you convert it to fiat, then you are liable to pay taxes as ordinary income (unless the transaction qualifies as long term capital gains).

In time (if not already) the IRS will definitely care about crypto-to-crypto capital gains. But their resources are limited, and it's easier for them to go after big fish leaving paper trails in the legacy banking system.




Only if people like you faithfully accept it.

No government has purview with cryptocurrencies. The harder they try, the more their country loses valuable resources.

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August 22, 2017, 08:33:24 PM
 #33

Thank you OP for this posting, it seems there is various opinions and facts out there regarding this and many other topics, It's just on of those things it is what it is I guess....
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March 15, 2018, 10:51:48 PM
 #34

Is there a clear answer to this?  What if you never claimed bitcoin cash nor bitcoin gold?

What if you claimed it but didn't sell it. 

What about people who never bothered to claim it due to it being complicated?  Bitcoin gold i heard is very complicated.  Also there been lot of hacks in wallets due to people downloading wallet to claim cash and gold etc. 
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