Will people be selling after the 1st of the year for tax benefits?

[btcprice]

A lot of bitcoiners and altcoiners made a lot of money this year with the runup. If they cash out their profit before the end of the calendar year they (theoretically) have to pay taxes on their gains.

I'm guessing a lot of people are waiting until after the 1st of the year to sell their coins in order to cash out and realize a profit. Cashing out after the 1st of the year allows them one whole year to find tax havens such as mortgage interest and Roth IRAs.

Will people be selling a lot after the 1st of the year?

[1714941744]

1714941744

[1714941744]

1714941744

[1714941744]

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[Wilhelm]

Yes everyone will cash out at once 

[Chalkbot]

Cashing out after the 1st of the year allows them one whole year to find tax havens such as mortgage interest and Roth IRAs.

...While not cashing out saves them this headache altogether... hmmm.

[jamesc760]

hodl instead of sodl until 2016???

[Joe200]

I'm guessing a lot of people are waiting until after the 1st of the year to sell their coins in order to cash out and realize a profit. Cashing out after the 1st of the year allows them one whole year to find tax havens such as mortgage interest and Roth IRAs.

My understanding of tax law in the US is that, for forex (and bitcoin), you pay taxes on a marked to market basis. You calculate dollars out (or dollar value of bitcoins) minus dollars in, and pay taxes on that. It does not matter whether you "cash out" or not -- the tax is the same.

[Soopaman]

I'm guessing a lot of people are waiting until after the 1st of the year to sell their coins in order to cash out and realize a profit. Cashing out after the 1st of the year allows them one whole year to find tax havens such as mortgage interest and Roth IRAs.

My understanding of tax law in the US is that, for forex (and bitcoin), you pay taxes on a marked to market basis. You calculate dollars out (or dollar value of bitcoins) minus dollars in, and pay taxes on that. It does not matter whether you "cash out" or not -- the tax is the same.

If you've been hodling since the beginning of the year and haven't done any day trading, you don't have any taxes since you haven't realized profits. I think the idea here is that some of these long term hodlers may be waiting for the beginning of the year to realize their profits so the income isn't factored into their 2013 taxes when they file them in April.

[virtualfaqs]

I'm guessing a lot of people are waiting until after the 1st of the year to sell their coins in order to cash out and realize a profit. Cashing out after the 1st of the year allows them one whole year to find tax havens such as mortgage interest and Roth IRAs.

My understanding of tax law in the US is that, for forex (and bitcoin), you pay taxes on a marked to market basis. You calculate dollars out (or dollar value of bitcoins) minus dollars in, and pay taxes on that. It does not matter whether you "cash out" or not -- the tax is the same.

If you've been hodling since the beginning of the year and haven't done any day trading, you don't have any taxes since you haven't realized profits. I think the idea here is that some of these long term hodlers may be waiting for the beginning of the year to realize their profits so the income isn't factored into their 2013 taxes when they file them in April.

That's what I was thinking. Also another strategy is if you sold during the year and rebought. If the price drops significantly, you can resell and rebuy to offset capital losses, but with slippage that might not work at all.

[Raize]

I sold ~$50k this year (Novemberish) to see what will happen with my taxes. I should know by April 15th if I'm going to continue to live in the US or not as I still own coin. If you guys want, I can start a blog about it or something. Right now I'm just doing as many home improvements and charity donations as I feasibly can.

[nastybit]

A lot of bitcoiners and altcoiners made a lot of money this year with the runup. If they cash out their profit before the end of the calendar year they (theoretically) have to pay taxes on their gains.

I'm guessing a lot of people are waiting until after the 1st of the year to sell their coins in order to cash out and realize a profit. Cashing out after the 1st of the year allows them one whole year to find tax havens such as mortgage interest and Roth IRAs.

Will people be selling a lot after the 1st of the year?

There will be no major cash out, US citizens only hold a small part of the BTC in circulation
And you forget that holders are greedy, we are all waiting for the next bubble aren't we

[2dogs]

A lot of bitcoiners and altcoiners made a lot of money this year with the runup. If they cash out their profit before the end of the calendar year they (theoretically) have to pay taxes on their gains.

I'm guessing a lot of people are waiting until after the 1st of the year to sell their coins in order to cash out and realize a profit. Cashing out after the 1st of the year allows them one whole year to find tax havens such as mortgage interest and Roth IRAs.

Will people be selling a lot after the 1st of the year?

I was wondering the same thing.

[neordicICE]

A lot of bitcoiners and altcoiners made a lot of money this year with the runup. If they cash out their profit before the end of the calendar year they (theoretically) have to pay taxes on their gains.

I'm guessing a lot of people are waiting until after the 1st of the year to sell their coins in order to cash out and realize a profit. Cashing out after the 1st of the year allows them one whole year to find tax havens such as mortgage interest and Roth IRAs.

Will people be selling a lot after the 1st of the year?

There will be no major cash out, US citizens only hold a small part of the BTC in circulation
And you forget that holders are greedy, we are all waiting for the next bubble aren't we

This applies to most countries I guess, I mean paying taxes from income in previous year 
And I dont plan to sell, because the right time to sell is when you dont need to sell anymore

[TERA]

Do bitcoin profits count for taxes if you only have usd on an exchange but haven't withdrawn?  Bitcoin is very risky - I could make another trade tomorrow and lose it all or the exchanges could shut down and run away with the funds, get seized, or get hacked, and I could lose everything that way. This type of exchange risk isn't there in the stock market. The money I have on exchange is like imaginary cloud money goxbux disneydollars etc that could all be lost - I don't see it as real money that I've actually made yet. So I don't think taxes should need to be paid anyway until you actually withdraw USD back to a bank. What do you guys think?

In fact I lost money from BitFloor - can I deduct that?

[freethink2013]

I presume we can deduct silk road loses?

[btcprice]

I sold ~$50k this year (Novemberish) to see what will happen with my taxes. I should know by April 15th if I'm going to continue to live in the US or not as I still own coin. If you guys want, I can start a blog about it or something. Right now I'm just doing as many home improvements and charity donations as I feasibly can.

Or if you could post in this thread. I think I will do the same.

The problem is how many accountants are well-versed in bitcoin, not to mention altcoin transactions? Would your local CPA know how the IRS considers these investment vehicles? Or am I going to have to find a bitcoin accountant online?

I'll try doing Google searches to find out.

[btcprice]

Do bitcoin profits count for taxes if you only have usd on an exchange but haven't withdrawn?  Bitcoin is very risky - I could make another trade tomorrow and lose it all or the exchanges could shut down and run away with the funds, get seized, or get hacked, and I could lose everything that way. This type of exchange risk isn't there in the stock market. The money I have on exchange is like imaginary cloud money goxbux disneydollars etc that could all be lost - I don't see it as real money that I've actually made yet. So I don't think taxes should need to be paid anyway until you actually withdraw USD back to a bank. What do you guys think?

In fact I lost money from BitFloor - can I deduct that?

All good questions. I'll try to find out by finding an accountant who has experience with these things.

[skivrmt]

Do bitcoin profits count for taxes if you only have usd on an exchange but haven't withdrawn?  Bitcoin is very risky - I could make another trade tomorrow and lose it all or the exchanges could shut down and run away with the funds, get seized, or get hacked, and I could lose everything that way. This type of exchange risk isn't there in the stock market. The money I have on exchange is like imaginary cloud money goxbux disneydollars etc that could all be lost - I don't see it as real money that I've actually made yet. So I don't think taxes should need to be paid anyway until you actually withdraw USD back to a bank. What do you guys think?

In fact I lost money from BitFloor - can I deduct that?

Many people think this but it is wrong per US law.  Any transactions are considered taxable, it doesn't matter if you withdrawal the funds or not.  Poker players on Stars or Tilt asked many of the same questions who were in a very similar situation. 

Think of it as day trading.  You add funds to ETrade.  You buy and sell Tesla stock.  You make money on some trades, you lose some.  You never withdrawal funds.  You still owe taxes on all the trades.

Now of course how does the IRS track offshore trading platforms...that should be the next question...ie, they can't.  The US tax system is mainly based on the honor system.  Until you get audited of course!

[the_sunship]

I sold ~$50k this year (Novemberish) to see what will happen with my taxes. I should know by April 15th if I'm going to continue to live in the US or not as I still own coin. If you guys want, I can start a blog about it or something. Right now I'm just doing as many home improvements and charity donations as I feasibly can.

Or if you could post in this thread. I think I will do the same.

The problem is how many accountants are well-versed in bitcoin, not to mention altcoin transactions? Would your local CPA know how the IRS considers these investment vehicles? Or am I going to have to find a bitcoin accountant online?

I'll try doing Google searches to find out.

I'd also like to find an accountant who understands bitcoin as mine is considering it currency trading ala Forex. I don't know if that is correct or not. I'd be happy to go to someone else who is an expert in this. There were a lot of losses and even more wins.

If names come up, please let us know. I'll also look....

[MAbtc]

Do bitcoin profits count for taxes if you only have usd on an exchange but haven't withdrawn?  

Yes. But without that USD entering your bank account, how will IRS know?

Question is, will you report each trade? 

Hell, BTC-E doesn't even require dox.....

(ahem, I mean, pay your taxes......)

 

[Elwar]

It would be more wise for those who are taking earnings out throughout 2014 to take it out steadily throughout the year.

To take it out on January 1 when the price could jump 10x (as it has done most years) by 2015 would be foolish.

[TERA]

Do bitcoin profits count for taxes if you only have usd on an exchange but haven't withdrawn?  

Yes. But without that USD entering your bank account, how will IRS know?

Question is, will you report each trade?  

Hell, BTC-E doesn't even require dox.....

(ahem, I mean, pay your taxes......)

 

This is pretty tricky because I've sent lots of coin between exchanges and arbitraged btc and alt coins. So I'll try telling my accountant "I bought some btc at btce and sent it to mcxnow where I traded worldcoin. Then I bought litecoin and sent to cryptsy where I bought ppc and sent it back to btce. I now have a portfolio of usd, btc, ltc, ftc, and xpm which have weekly fluctations inbetween some value and no value."