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Author Topic: Is Hawaii the best state to incorporate in for tax?  (Read 62 times)
sparkystacey
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February 22, 2018, 04:07:53 PM
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If cryptocurrency is interpreted as property in the US, then it would seem that one should look for the best state for property taxes.

The states with the lowest property taxes are:

Hawaii - 0.28 percent
Alabama - 0.43 percent
Louisiana - 0.51 percent
Delaware - 0.55 percent
District of Columbia - 0.57 percent
South Carolina - 0.57 percent
West Virginia - 0.59 percent
Wyoming - 0.61 percent
Colorado - 0.61 percent
Arkansas - 0.62 percent

Delaware is known for no income tax and is the traditional harbor for corporations in the US. Any recommendations/experience?
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February 22, 2018, 07:42:07 PM
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Very impressive these insanely low property tax rates. I however think for that exact reason, these states will not classify crypto as property. If you look at how massive the long term growth potential is for crypto, then it's pretty safe to say that they will classify crypto as something that will bring in +20% in tax income annually. From there I would definitely advice people to remain conservative if anyone is planning to actually make a move to one of these states. Unless one of these states tries to become the crypto hotspot within the US, there is no way I realistically see crypto be put in the property category. Governments smell money, and that's what crypto's booming market allows them to have....

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February 22, 2018, 08:24:45 PM
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Very impressive these insanely low property tax rates. I however think for that exact reason, these states will not classify crypto as property. If you look at how massive the long term growth potential is for crypto, then it's pretty safe to say that they will classify crypto as something that will bring in +20% in tax income annually. From there I would definitely advice people to remain conservative if anyone is planning to actually make a move to one of these states. Unless one of these states tries to become the crypto hotspot within the US, there is no way I realistically see crypto be put in the property category. Governments smell money, and that's what crypto's booming market allows them to have....

I agree with your comments. I'm sure that when the US government sees crypto as potential to get more tax then they will change their stands and will put another classification that will fall in the category of 20%-30% tax.

Interesting to note as well that Russia's own back up cryptocurrency is pegged around 28% so most probably I would surmise that it can also go around that ballpark.

It will be heavily tax in the US that's for sure and I don't think that there will be like crypto hub as well.

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sparkystacey
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March 07, 2018, 05:50:44 PM
 #4

Update: Wyoming, which is in this list is moving to delist crypto as property. I do not see that they are looking to tax it though - they are looking to embrace it to become the crypto capital of the US.

http://www.newsweek.com/wyoming-cowboy-state-poised-today-become-blockchain-valley-828124
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March 08, 2018, 03:32:58 PM
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Update: Wyoming, which is in this list is moving to delist crypto as property. I do not see that they are looking to tax it though - they are looking to embrace it to become the crypto capital of the US.

http://www.newsweek.com/wyoming-cowboy-state-poised-today-become-blockchain-valley-828124

That could get nuts because within Wyoming, they allow Indian reservations to dance around a lot of predatory lending laws.  That's where you get the 35% interest payday loans.

Mike
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March 08, 2018, 03:37:32 PM
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What does property tax have to do with anything?  Property tax is real estate tax.  You don't get taxed anywhere I know of for crypto holdings.

Traders usually incorporate in states with no income tax.  Some trader friends of mine incorporated in Nevada.  No income tax, cheap to incorporate.

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March 08, 2018, 03:56:07 PM
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Real estate tax is only a small part of the cost of maintaining real estate. Current and major repairs of real estate can reduce your profit to zero. I am not in favour of this method of investment. Bitcoin is much more reliable and profitable. Everyone is interested in the problem of taxation bitcoin. But I am sure that soon the problem of transactions will be solved and bitcoin will be taken for payment by all online stores. Then why pay taxes?

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March 11, 2018, 01:13:53 AM
 #8

If cryptocurrency is interpreted as property in the US, then it would seem that one should look for the best state for property taxes.

The states with the lowest property taxes are:

Hawaii - 0.28 percent
Alabama - 0.43 percent
Louisiana - 0.51 percent
Delaware - 0.55 percent
District of Columbia - 0.57 percent
South Carolina - 0.57 percent
West Virginia - 0.59 percent
Wyoming - 0.61 percent
Colorado - 0.61 percent
Arkansas - 0.62 percent

Delaware is known for no income tax and is the traditional harbor for corporations in the US. Any recommendations/experience?

It is considered an asset presently.  When you see "property tax", that's really real estate tax.

Our organization is incorporated in New Jersey, but it's a non-profit and we were advised that we didn't have anything to gain by incorporating out of our home state for the non-profit.

For the businesses we launch, we're very carefully looking at Nevada, but that's a review we're going to keep current on as projects graduate the incubator.  Business and crypto savvy lawyers are advised!

We also don't rule out forming businesses outside of the United States if the regulatory climate requires it, but I'm really hoping the US doesn't fall behind because they shove regulations we can't live with down our throats.

Best regards,
Ben

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March 11, 2018, 08:07:57 AM
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Everything sounds too good so to be implemented into reality later. Do you really believe this scenario may take place?

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sparkystacey
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March 12, 2018, 10:43:54 PM
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What does property tax have to do with anything?  Property tax is real estate tax.  You don't get taxed anywhere I know of for crypto holdings.

Traders usually incorporate in states with no income tax.  Some trader friends of mine incorporated in Nevada.  No income tax, cheap to incorporate.

Currently tokens (vs security regulated coins) are considered property and taxed as such. It's weird for sure, but that is how the government is approaching it. So, if you raised $5M in an ICO, you would get a property tax bill on that. It's prohibitory for some companies, so there is lots of effort around treating tokens as "gift cards" for deferred income but still they are usually taxed under property schedules.

Wyoming (also on this list) just passed some really good legislation to allow companies operating with tokens to proceed without an unnecessary tax burden. https://bitcoinmagazine.com/articles/wyoming-blockchain-bill-rockets-ahead-signing/
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March 12, 2018, 11:06:21 PM
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What does property tax have to do with anything?  Property tax is real estate tax.  You don't get taxed anywhere I know of for crypto holdings.

Traders usually incorporate in states with no income tax.  Some trader friends of mine incorporated in Nevada.  No income tax, cheap to incorporate.

Currently tokens (vs security regulated coins) are considered property and taxed as such. It's weird for sure, but that is how the government is approaching it. So, if you raised $5M in an ICO, you would get a property tax bill on that. It's prohibitory for some companies, so there is lots of effort around treating tokens as "gift cards" for deferred income but still they are usually taxed under property schedules.

Wyoming (also on this list) just passed some really good legislation to allow companies operating with tokens to proceed without an unnecessary tax burden. https://bitcoinmagazine.com/articles/wyoming-blockchain-bill-rockets-ahead-signing/

Hi Stacey,

I apologize but I think you should check into the taxation of Bitcoin in your jurisdiction.  Maybe you're somewhere that I'm not aware of the tax law, but in the United States, Bitcoin is treated as a capital asset, which yes, is "property".  It is not, however, subject to what is commonly referred to as "property tax".  Property tax, assessed at the state/county/local level, is assessed on real estate, land and improvements to land (i.e. buildings).

At the Federal level, Bitcoin is taxed as a capital asset, which means that gains are subject to capital gains taxes.  A smart tax advisor would structure things in a few creative ways to achieve a minimum of taxation.

As far as an ICO, if they (the ICO issuer/startup business) was smart in how they structured their entity/entities, they wouldn't pay any taxes on incoming investment.  Again, this varies depending on if the crypto asset is considered a security pursuant to Howey and/or any other applicable exemptions from the Securities Act.  A token that represents prepaid usage might have to be treated differently, but again, I can think of a few interesting ways to structure things to avoid/minimize taxation, which any competent tax professional would advise.

Of course, I am not a tax professional and you should seek one for guidance specific to your circumstances.  Talk to your doctor about Bitcoin.

One last thing, we need tax policy to reflect Bitcoin and other cryptocurrencies as currency, true tokens as prepaid services, and Securities Act applicable tokens as, well, securities.  IRS is forming an advisory committee shortly that is going to examine this issue in the context of their existing statutory authority, when they publish the nominations notice in the Federal Register, I'll let all of you know.  We have to stay on top of this stuff.  Plus get some revisions to the laws.

Best regards,
Ben

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