[2017-12-18] Tradng Bitcoin for an Altcoin Won’t Shield You From the IRS Anymore

[vhiancs]

Trading Bitcoin for an Altcoin Won’t Shield You From the IRS Anymore

Any American bitcoin investors who were hoping to avoid paying taxes for their profits this year by trading them for altcoins are in for an unpleasant surprise. New regulations have been tailored specifically to make sure U.S. taxpayers can’t use this method to avoid giving the IRS their cut.

Bitcoin to Altcoin is Not a “Like Kind” Exchange
Trading Bitcoin for an Altcoin Won't Shield You From the IRS AnymoreUntil today a crafty tax attorney or accountant could have tried claiming that trading bitcoin for another cryptocurrency is not a taxable event, but U.S. authorities are now moving in fast to plug this loophole. The latest tax bill contains clarifications which make this a non-valid tax-minimizing strategy going forward.

The issue arises from the IRS categorizing bitcoin as property, which can be argued makes crypto to crypto trades “like kind” exchanges under Section 1031 of the Internal Revenue Code. The new tax bill defines “like kind” exchanges to pertain only to real estate deals. To make things as clear as possible, this means that if you trade bitcoin for tether (USDT) for example, that is a taxable event.

“Some people think, ‘I’m taking my bitcoin, which the IRS has deemed to be property, swapping it for another property and doing it for investment reasons,’ so it sounds like it could be a 1031 exchange,” Evan Fox, tax manager at New York accounting firm Berdon, told CNBC. “I think it’s a stretch.”


source: https://news.bitcoin.com/trading-bitcoin-for-an-altcoin-wont-shield-you-from-the-irs-anymore/

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[Slugmonkey]

Internal Revenue Service (IRS) responsible for collecting taxes and assisting taxpayers can choose to audit anyone's taxes from the last 3 years.
They use services from the likes of a New York based startup, an expert in blockchain analysis, Chainalysis, started in 2014, to track bitcoin users who evade taxes. So, any evasive activity which might not come under scrutiny now can retrospectively cause you fines and penalties.

[CryptoBry]

Internal Revenue Service (IRS) responsible for collecting taxes and assisting taxpayers can choose to audit anyone's taxes from the last 3 years. They use services from the likes of a New York based startup, an expert in blockchain analysis, Chainalysis, started in 2014, to track bitcoin users who evade taxes. So, any evasive activity which might not come under scrutiny now can retrospectively cause you fines and penalties.

We have no choice but to pay the tax required for many transactions especially in USA where the IRS is really serious in doing its job of running after tax evaders. I have no problem with tax but sometimes the government has an annoying habit of overtaxing people...this is not good for the economy and for individuals. So what are the things that the government is offering in return for stricter cryptocurrency transaction tax? The best thing to do is to come up with a package which can make everybody happy while the government is also smiling collecting their revenues. Anyway, it is still good that the government of US has not followed the myopic approach made by China last September.