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Author Topic: Living in USA and taxes. A simple and specific question.  (Read 47 times)
happybanana
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February 03, 2018, 07:42:05 PM
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I was new to bitcoin in 2017.  In late November 2017, I opened a Coinbase account and deposited about $150 worth using a bitcoin ATM.  After the ATM fee, I ended up with $130 worth of btc in Coinbase.  I never have withdrawn any btc and I have not deposited/received more.  I did however send $25 worth to a friend using "send" in Coinbase.  That is all.  

I want everything to be legal and legit.  Do I report this on taxes, even though I didn't cash out?  Technically, my btc did go up in value by about $50 between November and December 31st (although it's down since).  

Or do you only report when you withdraw/cashout?  Do I have to report money that I send to some address too?  

P.S.  Don't laugh, I know it's only a small amount compared to you big shots out there, but I am so careful with my legal records that I fret over mere dollars, lol.

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February 03, 2018, 08:51:53 PM
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Bitcoin (and any other crypto) is taxable whenever you exchange it no matter for what (fiat, other cryptos, products, services, etc). Donations can be claimed if requisites are met but AFAIK you are not required to report them.

In your particular case you'll have to report if you exchange BTC for any other coin, sell it for fiat or use it to buy something directly. For Uncle Sam cryptos are not money but property. That means that even if you pay for a pizza with BTC, for the IRS you first sold your BTC for USD (at a gain or loss) and used that USD to buy the pizza.


See the IRS notice shedding some light on this (it's short and readable by humans): https://www.irs.gov/pub/irs-drop/n-14-21.pdf


I'm not a tax expert. Taxes and crypto is still a gray mix for everyone. If you really want to be safe check with an accountant.
happybanana
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February 03, 2018, 09:47:56 PM
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Thanks.   Smiley  I wonder though, if I were to receive payment from a website or person later, if all I have is their bitcoin address they sent from, how would I identify them for tax reasons?  I wonder if it's something like "I received .005 btc from 1x0ff0f00988098 as payment for me doing XYZ service for them".  Will be interesting just how detailed we need to be on the sending/receiving of btc.  I would like to participate in the sites that pay you to read emails, view ads, etc.  Some of which might not have much contact info.  Hmm.
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February 03, 2018, 09:52:16 PM
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the purpose for which you transferred the btc is relevant as well, as you can effectively gift property which would not be a taxable event
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February 06, 2018, 11:41:02 PM
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You only report when you cash out.  You didn't have any alt for alt exchanges since you've only gone from USD to BTC and will then go back to USD.  
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