Cryptocurrency taxes

I don't think some people ever read the Satoshi Nakamoto paper. The endgame is communism with the SHA-2 as mediator. Not too bad, really.

im holding until it becomes an adopted currency

or set up trades with people who will for things i want/need

out of all the things you can trade your "bitcoin" for why do you want usd?

In capital gains tax you'll be matched up with the equivalent bracket, so once that 39% of your wallet is taxed (in the hold until nigh-fiat scenario) because now that it is a currency it has to be listed to be able to be used. And then the IRS will just prode your crypto history to know what you've been doing untaxed to get to these millions, and then you get tried for tax evasion, or have to ex post facto pay on your history gains.

In the cash out scenerio, you just get raw income tax (again 39%) and again you have the IRS wondering where your massive revenue burst came from, so they comb you crypto history to know what you've been doing untaxed to get to these millions, and then you get tried for tax evasion, or have to ex post facto pay on your history gains.

Even if you get out alive without getting tried or jailed, your returns after taxes is really only a fraction of what you had before when holding.

But then you'd have 39% of your investment drained in that transition once it ports over if you haven't reported it or been constantly paying on it as it grows throughout the years.

what about gold

Gold is still an asset which is considered collectibles for federal income tax purposes. As such, any net long-term capital gains when these assets are sold by an individual taxpayer are subject to a maximum federal income tax rate of 28%, instead of the standard 20% maximum rate on long-term gains.

So you slide by with a slightly lower taxation on it (as long as your income tax bracket for that year isn't higher than that.)

And then IRS investigates you again.

I don't see your 39% argument as logical. I assume as BTC rises, the tax will increase. Bitcoin works to teach people that E=MC^2. Because it's using a CPU and SHA-2 protocol, you get close to noticeably breaking even. Bitcoin is to teach you that you always break even, thus to teach you that E=MC^2. Thus, to teach you the travelling salseman is delusional, for he exists in an Einsteinian block universe (travelling salesman problem).

I win 1 free internet for solving the travelling salesman problem.

Correction, *tax will decrease.

In the UK there may be a case to call it gambling - as such cryptocurrency it is not regulated by the financial Services and Markets Act. Thus not paying tax...it would almost certainly go to the high or supreme court for a ruling were HMRC to challenge it.

So what you're saying is you don't understand anything and that you didn't anticipate taxes and are going to get cucked to death by Uncle Sam by thinking he wouldn't notice you not reporting and paying on your cryptogains?

In the US there is a codified notion for things that are "gambling" categorized at:

>$600 or more at a horse track (if that is 300 times your bet)
>$1,200 or more at a slot machine or bingo game
>$1,500 or more in keno winnings
>$5,000 or more in poker tournament winnings

And for all of these, if Crypto were to be added, would get a flat 25% (not that bad) but I doubt it would clasified as such in the US.

I think that BTC will follow along an S curve until maximum USD is collected. As USD is collected until maximum USD, the US government will increasing decentralize, and as such, taxes in the U.S. will decrease (thus, due to decentralization of government due to BTC).

However, by that time, Bitcoin will more than likely be usable as its own money system, thus no real need to change it out for USD.

Or did you not read the Satoshi Nakamoto paper?

What do you mean by maximum USD

In a lot of ways, I'd like to think the total amount of money that can be supplied in United States Dollars, even if that means U.S. National Debt. So, the US National Debt is the total money supply.

But that's USD... If in USD we could say there's 40trillion USD in world money, by the time BTC reaches 40 trillion, then more than likely it will asymptote. From there, the money supply will die out due to being replaced by Bitcoin as the supply.

>set up corporation
>Sell some sort of "professional service"
>accept crypto as payment
>funnel your own crypto into the business by "buying services"
>convert to Fiat
>Pay only corporation tax
>pay yourself a salary
>pay yourself Dividends
>pay your car
>pay part of your rent or mortgage
>pay part of your utilities

still drip feed the crypto back into your personal bank account. use friends, use relatives accounts

correction: US national debt is the total USD money supply* (that's a working hypothesis in this bitcoin situation)

Fuck off faggot memes are tax free -Trump

but what about inflation? we wont stop printing money any time soon.

Inflation doesn't really exist. Bitcoin is working toward proving market equilibrium.

Even if your hypothesis were correct, in the transition of USD to BTC as currency, the government would still list it as revenue if you hadn't previous paid consistently on your capital gains tax before.

Either way you cut it you're going to get taxed into a fraction of your "actual" value when it goes live or fiat, and then you'll be audited easily for your previous transactions that you never paid on.

Barrier of entry would be setting up the business/maintaining it to be a viable outlet for
the services and then having enough proxy accounts to spread your crypto into what looks like a viable exchange. But even then you still have all of it leading back to your original wallet when it get followed back in an audit thanks to the public access of Crypto.

You're essentially doing what criminals do now which they get caught for fairly easy. And considering how many people are making money doing this, if a fuckton of people started these fronts to funnel, the IRS would catch on real quick.

spend all of my bitcoin on drugs as I originally intended

drugs arent taxable

Checkmate

Couldn't you just launder them through your NEET friends?

Oh wait

money is your only friend

>2010+7
>allowing yourself to fall prey to the tax man

Christ, y'all still living in the dark ages

Monero?

Buy hardware wallet with anonymous crypto. Transfer BTC to secret hardware wallet. Transfer from wallet to monero then back to BTC for services.

Is there really no way to muddy the BTC transaction trail? Your name and info are only attached to exchanges and your phone PC transactions/ wallets. Other wise it leads to wallets that can not be associated with anyone.

Right

same

Monero is a competing philosophy. However, I think whichever system uses less energy for maintaining an accurate blockchain will win. That more than likely means Bitcoin will win (at the moment).

How long do you think you can avoid him capone?

Or are you fortunate enough have a proper lawyer to accommodate your eventual ascension/cashout?

It'll lead back to you. There is already a papertrail unless you started originally from the anonymous wallet.

Fed can trace your BTC to the transaction where it moves to the unknown hardware wallet. They could then see the money was exchanged to another address, maybe even that it went to Monero, but after that it's gone to them.

I guess they could get you for the gains from purchase until it was off loaded.

Sooo... fuck bit coin buy only user currencies like monero. There fixed it.

Fuck u uncle Sam

bet people are regretting paying hundreds of BTC for a sheet of acid a few years ago.

Can a trezor be traced?

Does it have unique identifiers that are only used on a particular wallet?

Uncle Sam would see the transaction go to a hardware wallet address but how do they legally match you to the wallet?

I've made a life of doing things gubmint doesn't like and getting away with it. There's many and more ways to obfuscate your gainz

File police report saying user held a gun to your head and said send your bit coin to this address.

When time comes to cash out years down the road immediately transfer BTC to Monero and then pay yourself back in BTC (this will be new BTC). Pay appropriate income Corp or gift taxes if needed.

>Lose all BTC into unknown Monero account with a police record of it

>Mysteriously get paid by unknown benefactor to get the same amount relative to income back

Yeah sure, the feds will just ignore that.

>Still doesn't cover all the capital gains taxes you had to pay prior to the Monero switch

Hold for a year and you only have to pay 15%-20% max depending on how much you cash out.

Less than a year and it counts as income so basically 35%-45%. Sucks for all those day traders because it's going to be a bookkeeping nightmare.

>mfw majority of Veeky Forums didn't calculate for tax or how their holding endgame would be to get into the real world

I wonder what those dumb college kids who bought bulk bitcoins are gonna do when they cash out and have 8+ years of capital gains tax to make up for and a 39% cut on their value.

I just invest, make sure I get at least a >20% return on held investment for a year (because I'm in the $37-91k bracket) so no matter what I break even or more on held for year, while making quick cash on moonrises but never letting my total revenue for the year exceed 91k so that I'm still in that bracket when I file.

Learn taxes before you meme kids.

Day trading is max 20% taxed profit..

where do they keep pulling out 39% are they in slovakia?

Trading bitcoin to an alt coin is not taxable right?

Also cant you just cash out bitcoin to amazon gift cards?

The tax man is going to bust into your safe of amazon gift cards eventually, and you're going to give him the combination.

Look at it like this.

>Jan 2017
>Buy 1000 XLM at $0.002
>XLM jumps to cap at 0.03 by end of year as you held it in crypto
>(assuming wagecuck job) Have pay 15% of acquired $15000 held (2250)

>If you cash out part of 15000 to pay the 2250 you not only lose your held capital but possibly raise your tax bracket and add to your annual income (but was instantly lost to cover)

or

>Pay off $2250 with wagecuck money, now have to pay a minimum of 15% more of $15000 when cashing out (another 2250)

Sure in this ideal high investment x30 situation you net between $9500-10500 for the year after taxes, but this is very niche and implies cashing out.

Most people here are bag holders and have years of captial gains tax to fight if they want to reach their goal of "millionaire" legally while also having the daunting 39% tax waiting when the ascend to nigh-fiat BTC or cash out the big enchilada.

All gains for the year held by an individual that are not made into fiat are taxable by capital gains tax relative to your annual income in the tax bracket.

They're going to make money.

Can you not just create a company? Either something like an S-Corp or LLC or whatever and have the purpose of that company be something like an "investment firm". How does that change taxes?

Ok look, let say you are the luckiest and got Bitcoin at $1 back in the day who are exactly a millionaire now (588 btc).

Whether they paid it out yearly or in bulk today, they have to essentially pay at least 10% of everything (assuming they NEETed all 7 years and stayed in the bottom bracket) for capital gains tax from their original $588 investment. (That is $199882.)

Now with only $900,058 we now need the cash out taxes for it to become income instead of capital gains. (39.6% as it exceeds 418k minimum of highest tax bracket)

That leaves the supposed lucky innovator who held out for 7 years with only $552636 of legal cash in his pockets for it all.

Now compare that to your own shitty investments relatively and ask me if you are gonna be rich by holding BTC or ETH and cashing out when you hit 7 figures.

Can i have a quick rundown on the UK's stance on tax in relation to these things

You seem like the kind of person who thinks people earning millions per year actually pay 40% tax.

Home of the slaves.

~1000% return AFTER tax over 7 years is bad.

m8...

They're not on the moon, but they can still buy a hill from trading e-pogs on the internet.

How about the guy that spent 10k BTC on 2 'za?

As an non-American you can just set up a company in whatever region you want, preferably one with no crypto taxes.

sounds like that dumb college kid still made out like a bandit

As if any of you guys can afford the lawyers to mitigate every possible expense, loophole, and tax right off or know much about tax law at all.

And on top of that my example just shows that even the early adopters in the best possible situation still only come out with 1/2 their actual value because of raw taxing.

Remember my example is of the best possible situation (high bid, long ride 7 years, full NEET for minimum taxes).

Just making minimum wage can bump the capital gains to 15% or 20% with a real job.

It's a relativistic example for how the notion of at this point breaking into the 7 figures is not readily viable a dream after taxes.

This is true but I don't think anyone are aware to calculate:
(wallet value * x * y) for their actual, minimum return after taxes
X = captial gains taxes relative to original investment at beginning of year
Y = income tax when cashing out or BTC transcending to Fiat by government recognization

Yes but he is literally the best case scenario, so people here need to study and understand their local taxes as well as lower their expectations for long term investments in crypto.

Not trying to shit on the Veeky Forums parade, just trying to be a realist with the real world factors outside the cryptosporidium that could influence your investments down the line m8

What I'd like to know is if you bought $100 of bitcoin in 2010 and now you're sitting on your $2.5M - did you (legally speaking) have to pay capital gains on that every year from 2010, or do you pay tax once you cash out?

Coz I wonder if a NEET with $100 back in 2010, who's circumstances have likely not changed much, would be able to cough up $1M in taxes when there is technically no money to pay it with until it's cashed out

See
You would have to pay capital gains for every year that you gained value on your capital over the years at the relative tax bracket of your income (10% for no income NEETs)

If you never did you taxes for 7 years you'd either get fined by the IRS to death to the point of no return, jailed for tax evasion if you don't fess up to it, or under very unlikely but fortunate circumstances you would just have to scale, file, and pay off the captial gains tax for each years gains from your initial investment to the cash out.

But technically as long as he cashed out between January and April of the subsequent year before he had to address the IRS, he can have the money liquidated to pay his taxes.

If any of these motherfuckers here make it to 6 figures with via BTC we would be at the point where it is as good as cash under the mattress anyway.

At that point they could look to basically fund their own shitty ICO that would pay them an income through dividends on the tokens, say like an edgeless type casino with a whale who keeps losing, to himself.

Can't you just sell ETH in cash or move out of the country once cashing?

You have to pay capital gains tax even when you are not cashing out? wut

no, it's when you sell, but that isn't restricted to 'cashing out' for fiat - if you traded say ETH for BTC at a higher dollar value, that needs to be recorded and is taxable. CGT events are what you want to be looking at.

Just hire a fucking shady accountant you idiots. They'll set up an overseas company like a PO box in the Netherlands or Bahamas or some shit, then claim it as income from those overseas assets. EZ

will quickly add if that BTC then say crashed, and you shit yourself and traded out to something else at a loss in dollar terms, that would offset your gains come tax time

Say I bought BTC and the same day I exchanged it for Ether. Does that trade count as a taxable event since its the BTC price is the same days price.

OP is a nocoiner who doesn't understand the tax code and is operating under the assumption that the IRS has the capacity to singlehandedly end cryptocurrency.

investopedia.com/university/definitive-bitcoin-tax-guide-dont-let-irs-snow-you/

If anyone actually wants to educate themselves on how to properly record their earnings, reading the above link is a good start.

>Capital gains tax

It's in the name man, gains on capital.

>Buy $4000 stellar lumen at .002

>Rises to .06 over the year, you hold through year of 2017 into 2018

>Now have 120K in lumen held as CAPITAL as you go into 2018

>Have to pay taxes relative to your income tax bracket (example let's say you are NEET, so only 10% because you don't make income)

>You now owe 10% of the difference between your total value at the end of the year (120K) and your initial investment at the beginning of the year in captial (4K)

So now you owe the government $11,600

But, for example, 2010 I bought $100 of coin at 7c each coin (1428 coins)

End of 2010 it was worth 28c per coin ($400 total)

I file my taxes - do I note that $300 capital gain and pay tax on it in 2010?

Then, end of 2011 it was worth $5 per coin ($7,140 total)

Do I file 2011 taxes noting the $6,740 capital gains?

So on so forth...

Because it gets ugly a few years later when it's in the millions - so either one has to begin selling off bitcoin to pay capital gains, or there's some other tax ruling about when to declare/pay capital gains

Read from a reputable source or hire an accounting service ffs. The difference between paying capital gains vs income is if you have held a property for over a year or not.

The bottom line is if you make a significant amount of money, don't be a greedy cheapskate and not pay for a service that will help you figure out taxes.

Yes this is exactly the issue. So you either have a secondary stream of income to cover your taxes or you will slowly have to forego captial just to pay the capital gains taxes to continue holding, and get diminished returns if you aren't consistently going up 10% to cover the (best case scenario with NEET tax bracket) 10% you'll lose in taxes to stay by the book with the IRS

y u mad tho?

I'm on a jamaican kung fu religion forum coz I'm curious and ask questions, not coz I'm a greedy cheapskate.

My tax bill from KPMG last year was $7,000 so I have an adequately reputable accounting service. I just don't waste their time with fictional scenarios.

I guess they'd just have to keep holding, open a new wallet when ready to cash out, transfer to that wallet, cash out, declare it as a gift from a non-USC and there ya go, 0 tax.

>how the fuck do you deal with the fact that the tax man will cut you down to 1/4th of your investment in both scenarios?

Some shill claimed to be a lawyer on here but I guess you get what you pay for eh

>tax ruling about when to declare/pay capital gains

Therule is, I believe and correct me if I'm wrong, lawyercunts, you pay gains tax when you GAIN the income. When you buy a car, it might go up or down in value but you only GAIN when you sell it which is the difference between the selling price and the buying price in your Tax man's fiat currency.

That's more in line with what I'm thinking. After all, we don't pay capital gains on our house until it's sold... even though it might go up in value quite a lot...

I'd hope so for crypto-cunts

American here. Where is this 39% coming from?

"There are a few other exceptions where capital gains may be taxed at rates greater than 15%"

irs.gov/taxtopics/tc409.html

What did you pay him in, beans?

Its relative to your initial investment on the capital in question through the end of the year, yes, on what you gain, relegated to your respective tax brackets.

If I dump a bunch into Bean and it flops hard, I actually can claim a loss on an investment and potentially get tax deductions. Its literally how our president got through some hard years.

You don't get taxed unless you sell though.

Just like you don't get taxed on shares, just on the dividends.

Hi FBI!

Are you moisturizing your hands in anticipation of all of those sweet NEET bucks, out are you just going to post image macros and watch those non elites sweat from your ivory tower?

Wasn't there like less than 800 on coinbase who payed?

*less than 1000 people

Withdraw in increments below the brackets of capital gains tax.

the capital gains is on holding.

The income tax is on withdrawal.

So doing it like that you could accommodate to keep from occuring capital gains at the end of the year is one way around it, but you have to keep track of all your transaction for tax season to account for all your cashouts.

>put your millions in a pendrive
>cash out in a tax haven
or
>wait for tax havens to accept btc payments everywhere
>dont cash out and just pay with btc

theyre slovakians or from ukraine

this is stupid

ive made thousands of transactions, and lost a ton of data due mtgox, cryptsy etc going down with it, so i dont have those trades

fuck that shit

imagine a day trader having to report 99999999999999999 trades lmao

just buy and hold

This is what im doing if i cash out, pay on increment of capital once, thats all.

Just go to any country that only requires that.

The fuck?

So if I bought a house in 2011 for $200,000 and then now it's worth $300,000 while I'm still living in it I suddenly owe the IRS "capital gains" even though I don't even have the fucking money because I never even sold the house? Pretty sure you're lying. You don't pay capital gains until you SELL the asset, not just for holding.

Let's look it up: irs.gov/taxtopics/tc409.html

>When you SELL a capital asset, the difference between the adjusted basis in the asset and the amount you REALIZED from the sale is a capital gain or a capital loss

Oh yup. You were fucking lying what a surprise. It's not a tax on "holding" it's a tax for selling.

Also, you don't have to pay an additional income tax on crypto you already paid capital gains tax. It only falls under income tax if you mined the bitcoins or you get your wage paid in bitcoins. Again think of the house example. Do you pay capital gains just for living in a house that's appreciating and then pay income tax on it AGAIN when you sell it? No you fucking stupid piece of shit. Just capital gains when you sell it. Stop giving advice.

Finally, if you exchange BTC for an alt-coins that might qualify as a like-kind exchange which allows you to post-pone paying the tax until you finally convert into fiat.

irs.gov/uac/like-kind-exchanges-under-irc-code-section-1031

Almost everything you said was wrong. Shut the fuck up.

You forgot to mention me very trade is a tax event and trades between crypto are as if you sold BTC to cash immediately.

From what I understand: you buy 1 BTC ( let's say 1,000$).

You buy 20,000 XRP a few hours later with it when 1 BTC is at 1,100$.

You are tax liable for 100$ in profit.

Multiply this on an average trade day.

Also same tax events occur when you move from alts to BTC.

If that doesn't hurt enough...you are fined up to 10,000$ for each account you don't report to the IRS plus undeclared gains + interest.

YouTube "bitcoin taxes"

Correct on all counts. If you keep your crypto holdings for an entire year before selling, you sidestep capital gains tax entirely.

Just curious where did you find the actual literature/regulations regarding BTC/alt pairs? Because as long as you don't exchange it to fiat how can it be counted as a capital gain?

Thanks for educating the retards in here.

Oh and OP is a massive faggot.

>It only falls under income tax if you mined the bitcoins or you get your wage paid in bitcoins.
Does this mean getting paid in STEEM stuff (the tip jar for content makers there) is counted as taxable income?

I plan on converting whatever steem tips come around into BTC

So what you're saying is day traders WILL get omnifucked by only getting 80-90% of their transactions actual value after taxes and will have to have a massive laundry list of things to report to the IRS for their individual exchanged come tax time?