bitcoin capital gain tax

[Harryan Us]

If i sell btc on coinbase and I have the $$$ just sitting in the coinbase account and never wire the money to my bank; do i need to still pay taxes on it....or is it only once i transfer it to the bank that i would need to pay taxes?

If I transferred the cash to another exchange out of the USA, would that avoid taxes?

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[DannyHamilton]

If i sell btc on coinbase and I have the $$$ just sitting in the coinbase account and never wire the money to my bank; do i need to still pay taxes on it....or is it only once i transfer it to the bank that i would need to pay taxes?

Legally, in the U.S., the act of selling the BTC is a taxable event regardless of whether you transfer the money out of Coinbase.
 

If I transferred the cash to another exchange out of the USA, would that avoid taxes?

That depends on the specifics of the situation.  If you use those bitcoins, or sell those bitcoins after you transfer them, then the IRS would probably be able to charge you with Tax Evasion and collect the back taxes, plus penalties, plus interest.  If you simply store the bitcoins outside of the U.S., and pay the necessary taxes when you spend or exchange them, then you'll probably be fine.

It would be best to get advice from a tax professional that is familiar with the laws in your specific jurisdiction, since there may be obligations to state and local governments as well.

[DannyHamilton]

Spend bitcoin on goods and services directly, then it will not become a taxable event, then you will be able to spend it and avoid taxes and maybe even bitcoin will grow even more before you spend it all

This is NOT true in the U.S.A.

In that country, spending bitcoins on goods and services directly IS a taxable event.

Or if you really want to exchange it to cash, you can do it via some other good, like gold for instance, chances are it will not be a taxable event either.

This is NOT true in the U.S.A.

In that country, exhanging bitcoins for some other good or asset IS a taxable event.

[Feuerbach]

With bitcoin hitting all time high, like to hear what everyone is doing with their taxes for the profits.  Be honest, lets have a open discussion.

I plan to file with irs and pay the capital gain tax. I think it's just a matter of time before coinbase hands over all records to irs anyway, they are fighting for the 2015 and earlier info now, but i am sure 2016/2017 will be easier to get. 

I am fine paying my share of the taxes due, only real concern is irs will use it as an indicator to flag me for audit.  So basically trying to do it right but end up getting screwed.

What is everyone's thoughts and plan? given it's almost tax season.

I think that most people will not pay tax for cryptocurrency, because there are ways to avoid this.. And this is quite rational))

[icanscript]

Spend bitcoin on goods and services directly, then it will not become a taxable event, then you will be able to spend it and avoid taxes and maybe even bitcoin will grow even more before you spend it all

This is NOT true in the U.S.A.

In that country, spending bitcoins on goods and services directly IS a taxable event.

Or if you really want to exchange it to cash, you can do it via some other good, like gold for instance, chances are it will not be a taxable event either.

This is NOT true in the U.S.A.

In that country, exhanging bitcoins for some other good or asset IS a taxable event.

But storage bitcoin does not lead to the need to pay any taxes?

If I bought pizza for one bitcoin, would this mean that the seller made a profit of $ 15,000- $ 25?

[marky89]

With bitcoin hitting all time high, like to hear what everyone is doing with their taxes for the profits.  Be honest, lets have a open discussion.

I plan to file with irs and pay the capital gain tax. I think it's just a matter of time before coinbase hands over all records to irs anyway, they are fighting for the 2015 and earlier info now, but i am sure 2016/2017 will be easier to get.

The fight for the 2013-2015 records is over. The court reduced the scope of the order to those with $20,000 or more in transactions during any one year. So that was ~ 3% of customers.

This does establish some precedent, though. If you have annual trading activity on Coinbase approaching that amount, I would be very careful to report taxes correctly going forward, and I'd also consider amending previous years if there were egregious errors. In the future, I think they'll be sending all US customers 1099s, and I think the threshold for reporting will be lower than $20,000.

I am fine paying my share of the taxes due, only real concern is irs will use it as an indicator to flag me for audit.  So basically trying to do it right but end up getting screwed.

What is everyone's thoughts and plan? given it's almost tax season.

IMO, do not mention "bitcoin" or "cryptocurrencies" on your tax return. Treat them like any other capital gains (or whatever method of taxation your advisor advises) and pay the amount due. Coinbase isn't sending anything to the IRS, no 1099. So there's no reason to treat it like anything out of the ordinary. If you treat it as capital gains, it's just like selling stock.

[DannyHamilton]

But storage bitcoin does not lead to the need to pay any taxes?

Not typically in the U.S.A. But you should check with a tax professional that is familiar with your specific jurisdiction to be sure.

If I bought pizza for one bitcoin, would this mean that the seller made a profit of $ 15,000- $ 25?

If you pay 1 BTC for pizza today, that better be some REALLY GOOD pizza!

[Marry Finch]

In my country, there is no profit tax on crypto currency, and while there is still time to enjoy relative freedom in this regard. However, two projects on the legalization of the crypto currency have been submitted to the highest legislative body of the country, and, in my opinion, none of them establishes mandatory taxes on income from operations with crypto currency. Moreover, one of the projects provides for tax breaks for crypto currency, and in connection with this, such activities will not be taxed at all.

[DARKANGEL6415]

We all knew this was coming to us folks in the United States complements of the internal revenue service. No way they are going to let this milk cow of taxes go uncollected.  I just wonder if i mined at home if i will be able to take home business deductions for things like electricity and internet.

[100action]

There are 3 tax scenarios in Australia:

100% of capital gains counts towards taxable income: If you purchase cryptocurrencies with the intention of making a profit
50% of capital gains counts towards taxable income: If you purchased cryptocurrencies and held if for a period longer than 12 months and sell at a profit
0% of capital gains counts towards taxable income: If you purchased cryptocurrencies for personal use (typically under $10,000 in total).  The definition of 'personal use' in australian tax law, from what I understand has been subject to much debate and is quite complex.

[bug.lady]

There are 3 tax scenarios in Australia:

100% of capital gains counts towards taxable income: If you purchase cryptocurrencies with the intention of making a profit
50% of capital gains counts towards taxable income: If you purchased cryptocurrencies and held if for a period longer than 12 months and sell at a profit
0% of capital gains counts towards taxable income: If you purchased cryptocurrencies for personal use (typically under $10,000 in total).  The definition of 'personal use' in australian tax law, from what I understand has been subject to much debate and is quite complex.

uhhh, that is dirty. What intention might one have to purchase and hodl crypto?

In Israel they have recently introduced a new law that sais about treating bitcoin as property, and it entitles them to first tax it 17% VAT and then on top of that 25% capital gain tax, 42% of taxes in total.

[OROBTC]

Spend bitcoin on goods and services directly, then it will not become a taxable event, then you will be able to spend it and avoid taxes and maybe even bitcoin will grow even more before you spend it all

This is NOT true in the U.S.A.

In that country, spending bitcoins on goods and services directly IS a taxable event.

Or if you really want to exchange it to cash, you can do it via some other good, like gold for instance, chances are it will not be a taxable event either.

This is NOT true in the U.S.A.

In that country, exhanging bitcoins for some other good or asset IS a taxable event.

Having spent a lot of time working with our tax accountant (USA) in 2017 and 2018, I can confirm that spending or trading BTC for other assets is indeed a taxable event.

Spending or trading BTC is typically seen as a Capital Gain (in the eyes of our IRS).

Doing the work is tedious, and usually requires records of BTC buys and sales (trades).

Do as Danny suggests, consult a tax pro.  Don’t ask for trouble.

[boranes]

My country does not accept bitcoin. Bitcoin is not a coin. and they have no value for exchange. So bitcoin is not taxed.

From where are you?
It doesn't matter whether is bitcoin seen as currency in your country or not, after you exchange it to fiat and cashout to bank you are obligated to pay tax according to your local law.
It is like selling fruits on internet, if you sell apple for money you have to pay tax.