Bitcoin Taxes USA

[bitfools]

So how is every one handling taxes?

I have some questions.

Is it legitimate to consider all coin-to-coin trades as like-kind exchanges for 2017 and therefore not taxable? It seems even tax professionals have no idea as I see articles saying yes and articles saying no.

Also, using FIFO accounting, does this apply to coins across addresses? Like say I have 10 Bitcoin in Coinbase, but earlier in the year I sent 1 BTC to an exchange and have been trading with that a lot (total volume of trades being far above 10 BTC). Does FIFO apply across accounts? So when I trade that 1 BTC the first time my sell price after the trade minus my original buy on Coinbase for my first Bitcoin would give me my profit...but then the next time I trade that 1 BTC + profits, for tax purposes do I count the original value of that trade as the second Bitcoin I bought on Coinbase earlier in the year (FIFO operating at the person-level instead of the account-level) or do I just use the value of the BTC that I'm trading at the time I make the trade as the initial value of the trade, since the BTC in my Coinbase account and my exchange account are clearly separate Bitcoins.

For 2017 Tax Year and previous years, I would treat all trades between crypto as like of kind exchanges , so no tax due until cashing out to fiat.

In 2018 Tax year and beyond, I would move all trading to a Non-US Exchange and do normal trading there ,
only bringing crypto into and out of US exchanges when I needed to Cash out or send money to the overseas exchanges to keep it simple.

US Tax Law states no US citizen has to pay tax on earnings overseas less than $90,000.
So do the bulk of your trading overseas so you don't get unnecessary taxed.
Trade earning less than $90,000 and you owe uncle sam Nothing.

Tax mongers, really don't seem to comprehend Crypto is Global , get mistreated in one country move it to another.
If you do really well, you can always move to another country and cash out there.

And if you really like the other countries and decide to emigrate, you can always give up your US Citizenship so the asshats can't tax you anymore.


╥Aztek

As a resident  of more than six months a year, can you have a $90k of INCOME ( from working ) tax free,

but you got FATCA, which means you must declare to CHICAGO every-year about every BANK in the world or exchange the you have your wealth as a USA citizen, failure to fail yearly FATCA reports means that they can have IRS make claim of 200% of your Wealth as taxable by IRS, which means should  you have any bank or property in USA then its goes to LIEN and you lose all

Nobody on earth who is a USA citizen escapes UNCLE-SAM, USA is only country on earth that does this to its citizens,

These days no country on earth will open a bank-account to a USA citizen, just a pain in the ass.

The current price to give up your USA citizenship is now astronomic so that game is OVER, no exit but death

[bitfools]

The government of US are too naive. What gives them the right to tax a currency that is not decentralized? Also people earning coins work hard for it and they consume time and electricity. Both of which are already taxed by the government itself. I think these taxes must only be applied to investors of the cryptocurrency market.

The USA is owned by ISRAEL, since they killed JFK in 1963, the USA is citizen is a tax-cow to be taxed, and grazed.

Nobody gave Israel the right, they have the right cuz GOY are cattle to raped, robbed, and sheered, BEEN this way forever.

They created FATCA, effective since 2009, all off-shore accounts including BTC exchanges must be reported yearly, failure to report means that U owe IRS up to 300% of account balance, which means they seize all your wealth in USA, and upon return to USA they put u in prison.

If you live in USA, and they catch you ( because you have something mailed to your house from abroad ), then they can take everything you own, for failure to report the offshore accounts

**

COINBASE is owned by IRS-USA, if you live in USA, u may as well just play the game by their rules, otherwise they will castrate u, and you will be caught, IRS has more agents working abroad looking for these accounts, than they have agents on USA soil, even china&russia has IRS field offices all over the country looking for USA citizens under the radar,

To escape, means you go to a 3rd world country, and bank off the grid, far from any city, my finding is that IRS field agents rarely venture more than 50 km from the home office, as say in china, they don't have armed swat teams to come with them

[Suptiele]

they say that because when you find any chat pumping 1000% in one year you must say it is bubble. all old models and analysis say that.
The part that was ignored is that the price is based on technology that may solve many problems in the world and therefore a lot of profits may be achieved.
we cant say it is bubble because of that
people on tv talk about numbers more than we do

[nelsmining]

Tax laws are unclear at best and generally set up so they can be manipulated to be enforced in any way governments see fit at any time they like. You would assume that taxes would come into play when Bitcoin is exchanged for fiat but you can bet government is trying to find ways to overtax you anyway they can.

[RamesesLabs]

Here is the official IRS guidelines for filing taxes on cryptocurrencies.
 
https://www.irs.gov/pub/irs-drop/n-14-21.pdf

Here is how Coinbase is interpreting the law to generate their reports. While they aren't providing tax advice, or nor am I, I think we are getting taxed like this:

1.)Taxed on withdrawals from Coinbase to wallets.
2.)Taxed on fiat currency withdrawals from Coinbase, minus your original withdrawal in cryptocurrency at the recorded market price at the time of withdrawal. no 1099's unless your over $20,000 as a business user or GDAX user with more than 200 transactions.

Here is the link to Coinbase's methodology for generating reports.

https://support.coinbase.com/customer/portal/articles/1496488

Here is the method for computing the capital gains taxes on trading.

https://www.irs.gov/pub/irs-pdf/p544.pdf

I think we are given a little flexibility this year in whether or not we consider the currencies assets or not. Unlike stocks, bonds, securities, we can use digital currency to purchase goods in which we are taxed on the fiat currency rate on personal income. So there is a big grey area there, however Congress already has multiple bills have already been drafted by members of Congress to protect digital currencies from over taxation in an effort to develop the blockchain technology behind the coins. So all in all, if you pay a fair percentage on earnings I think you'll be fine on your income taxes.

[thecodebear]

Here is the official IRS guidelines for filing taxes on cryptocurrencies.
 
https://www.irs.gov/pub/irs-drop/n-14-21.pdf

Here is how Coinbase is interpreting the law to generate their reports. While they aren't providing tax advice, or nor am I, I think we are getting taxed like this:

1.)Taxed on withdrawals from Coinbase to wallets.
2.)Taxed on fiat currency withdrawals from Coinbase, minus your original withdrawal in cryptocurrency at the recorded market price at the time of withdrawal. no 1099's unless your over $20,000 as a business user or GDAX user with more than 200 transactions.

Here is the link to Coinbase's methodology for generating reports.

https://support.coinbase.com/customer/portal/articles/1496488

Here is the method for computing the capital gains taxes on trading.

https://www.irs.gov/pub/irs-pdf/p544.pdf

I think we are given a little flexibility this year in whether or not we consider the currencies assets or not. Unlike stocks, bonds, securities, we can use digital currency to purchase goods in which we are taxed on the fiat currency rate on personal income. So there is a big grey area there, however Congress already has multiple bills have already been drafted by members of Congress to protect digital currencies from over taxation in an effort to develop the blockchain technology behind the coins. So all in all, if you pay a fair percentage on earnings I think you'll be fine on your income taxes.

Taxed on sending coins off coinbase to other addresses is obviously crazy and makes no sense. Definitely not going to worry about that.

[ggbtctalk000]

Here is the typical difficulties I can see:

scenario 1:
you buy btc 0.5 amount at 15k$ which is 7.5k$
Through shufflling and shapeshifting, once converted back to BTC now you BTC has grown to 1 BTC at 15k$ with no change in market price of BTC itself.

Now you sell your 1 BTC  back at 15k$

Here are the problem with this:
1. How do one know if 1 BTC sold back is really originated from 0.5 you purchased earlier? or was it mined? it is hard to say because you have been shufflng.
2. Okay assume entire 1 BTC  is originated from the previous purchase of 0.5 BTC but in case it is not, then it will be also head-scratcher.
3. Assuming your sale of  1 BTC is originated from 0.5 BTC earlier, is your gain? 7.5k$? That sucks because BTC price at the purchase and sell was same and there is no way, you could have made 7.5k$ then.

The above is just one of many thousands of different possible scenarios.

[JuliaEnnyPen]

If I send Bitcoin from the USA to India, do I have to pay capital gain tax on it?

[ssocoins]

https://turbotax.intuit.com/tax-tips/tax-payments/tax-tips-for-bitcoin-and-virtual-currency/L1ZOgU00q
You can check this link, is give some information of it

[kc999991]

Countires misuse tax money and wasted a lot of resources into things that are unnecessary. In my country people on benefits earn more money than a normal worker which is very wrong. So I am very against paying more taxes than i am already paying.

[Biscutard]

I believe that those exchanges was undergone at taxes already before they start to operate their business because they were under in the banks contract and some of them required a personal identification of a user so the bank will know who they are dealing with.

[jerry0]

Isn't everyone going to basically record it incorrectly since you cannot do it accurately due to no set price on altcoins?  Which altcoin price are you suppose to use?  The one on bittrex?

The other thing is what about when you sell altcoin for btc.  How do you know the exact btc price then if you sell it?

[codewench]

You owe no tax on the 80K as long as it stays overseas,
If you convert it to a Fiat overseas, and then transfer it into a US Bank Account, there should still be no tax due as you are just moving fiat across borders.
Since you earned no income in the US , No US Tax.

To exclude foreign income, you'd have to be living abroad - and likely paying income tax to a foreign country.

However... if you had 80K of crypto gain, maybe the right thing to do is spend 7 months kicking back on the beach in Phuket?

Just as if you had brought gold into the US, and then sold the gold here, you have to pay income tax on the entire sell price since it was earned on US soil.

It doesn't matter where you bought a capital good, your purchase price is your basis.

[thecodebear]

So here's the things I want to get some consensus on for US taxes:


1. Can you use like-kind exchange to not be taxed for crypto-to-crypto trades? If so, do you still have to report those as like-kind exchange on some tax form? Or do you just not report them at all?

2. Can we choose any method of accounting we want, as long as we stay consistent? FIFO, LIFO, etc.

3. And can we do tax accounting per address, so that you can keep your long term coins separate and untaxed in their own wallet address while trading and getting taxed on short term profits on an exchange?

[giogio0504]

Most major economists on television and news outlets are saying Bitcoin is worthless. I'm going to use that "expert" analysis to do my accounting for trading Bitcoin. I don't see how they could tax your trades as the value of the coins fluctuate so rapidly. I think they are only talking about cashing out Bitcoin into fiat currency, but I'm no accounting expert. I will just play dumb as I don't plan on converting any of my holdings into cash this year.

By my opinion this "experts" thin that bitcoin is worthless because it is not very well regulated by legislation, and they do not really understand the nature of crypto currencies. I think that bit coin and any other alt coins constitute a future of the economics.

[AravinthP]

I wonder why there is no clear distinction like in other countries for tax. Like in india tax on capital gains is flat 15%.

[codewench]

1. Can you use like-kind exchange to not be taxed for crypto-to-crypto trades?

Not any more due to the recent tax bill. Like kind now only applies to "real property", i.e. real estate.

2. Can we choose any method of accounting we want, as long as we stay consistent? FIFO, LIFO, etc.

Probably.

3. And can we do tax accounting per address, so that you can keep your long term coins separate and untaxed in their own wallet address while trading and getting taxed on short term profits on an exchange?

I don't see why not. This is how stock trading works - if you can identify the specific block of stock being traded, then gains/losses are specific to that block.

[Empiretoken]

    Government that has from the onset told its citizens to stay away from cryptocurrency calling it SCAM are the
    ones taxing its citizens from profits generated from cryptocurrency related investment and business.

[thecodebear]

1. Can you use like-kind exchange to not be taxed for crypto-to-crypto trades?

Not any more due to the recent tax bill. Like kind now only applies to "real property", i.e. real estate.

2. Can we choose any method of accounting we want, as long as we stay consistent? FIFO, LIFO, etc.

Probably.

3. And can we do tax accounting per address, so that you can keep your long term coins separate and untaxed in their own wallet address while trading and getting taxed on short term profits on an exchange?

I don't see why not. This is how stock trading works - if you can identify the specific block of stock being traded, then gains/losses are specific to that block.

Thanks! Though for #1 I am referring to taxes for 2017, the new tax bill doesn't apply to those. I probably will just assume I have to pay taxes on all coin-to-coin trades just to be safe.

[Altcoin Magazine]

What are Taxable Events!

It’s likely that all cryptocurrency transactions will be treated as a taxable event; some being treated as income and others being treated as a capital gain or loss.
This can include:

* **Trading Cryptocurrency:**** **Buying and selling cryptocurrency can generate a capital gain or loss. Fortunately, losses can be used to offset gains.
* **Coin/Token Exchanges:**** **Exchanging between cryptocurrencies. For example, purchasing Ripple for Bitcoin would be considered a taxable event.
* **Selling Bitcoin for Fiat:** When converting cryptocurrency back into fiat (USD or other sovereign currency) this is treated as a taxable event generating a capital gain/loss.
* **Receiving Cryptocurrency (as a payment):** If a cryptocurrency is received in exchange for a product or service or a salary/wage (it is treated as ordinary income) the value of the transaction is calculated at the fair market at the time of receipt.
* **Air drops:**** **Treated as ordinary income based on the value of cryptocurrency on the day of the airdrop. Also, at time of exchange there will be a capital gain taxable event.
* **Exchanging Bitcoin for something of value:** This is a taxable event and may generate a capital gain or loss.
* **Cryptocurrency Mining:** Mining is considered ordinary income (determined by the fair market value on the day the coin/token was mined)

6 Ways to Avoid Capital Gains Tax on Your Bitcoin Transactions (https://medium.com/altcoin-magazine/6-ways-to-avoid-capital-gains-tax-on-your-bitcoin-transactions-cdea03e17eb4)