REMINDER: Q3 ESTIMATED TAXES

>klasing-associates.com/possible-1031-exchange-bitcoin-ethereum-electroniccrypto-currencies/

yeah, this is so fucked up

you won money doing this? good. pay us.
you lost money? fuck off.

I've made a lot of money, so I have no choice but to do it all properly. but I still think it's a good idea for small timers to do it properly as well, for the same reason I started to do it in the first place.

I was losing money the first couple of years, then BOOM, 2017 hit and that all changed. so now, I'm selling coins that were purchased 3 years ago. if my records aren't complete over the past 3 years, then well - that will be difficult for me to file without either fudging the numbers or just paying tax on 100% of the net proceeds outright.

so if you start off doing it correctly, then you won't run into problems when you do get rich.

how do you handle putting up a sell order only for the exchange to turn your order into like a dozen or more separate transactions in different amoutns and possibly at different prices?

i was planning to just copy and paste from binance, gemini, and bittre when doing my taxes in april 2017. didnt know i have to pay estimated quarterly taxes on $5k of gains. fuck.

AFAIK, you just report your holdings when you do your taxes in april, not every quarter.

I am a developer by trade, so I've created databases to do most of the heavy lifting for me, but in general I report every one of the transactions.

the important thing is you report the correct cost basis per lot, because that's how the gains will be tracked. I did get a little looser this year in a couple of situations and just recorded exactly what I put on the sell order as 1 trade instead of the 40 it created, but the actual net proceeds calculation difference there if I was audited would be only pennies, or less. I have been doing it right for a few years, so I'm comfortable with that, but most people should probably should just record everything.

Hey fuck faces , any of you have student loans? You do? Well good news, the interest is tax deductible. But not interest accrued, only tax paid. So pay your fucking student loan interest off (principle payments not deductible) first you fuck faces.

If you have held bitcoin or Ethereum for less than one year, the gains are taxed as ordinary income. So good news, if you just got in this year, and made less than $10,900.00 than you don't have to pay taxes on it either. Fuckers. If you did make more, fucking declare it, fuck faces.

If you've held more than one year, then guess what fuckers, it's capital gains tax. And for most of you that's 15%. But if you're a broke ass bitch with no ordinary income then you only have to pay the tax if your gains are over $10,900.00 a year.

On another note. Am I wrong for thinking that capital gains tax isn't due until you convert to USD ?? I am pretty sure that if you hold bitcoin forever, you only have to pay tax once you take it out of your portfolio and into your wallet.

>On another note. Am I wrong for thinking that capital gains tax isn't due until you convert to USD ??
yes, but it's not 100% yet. the safe, and highly recommended approach is to pay tax on every trade. if you want to explore claiming altcoin transactions as 1031 like-kind exchanges to carry over the cost basis from the first transaction and delay the taxation until you cash out, then you should consult with a tax attorney.

It's 6 months for cgt not a year fuck face. And yes after converting to fiat you fuck.

Why not just pay 15% of how much you've made?

because the 15% is only for lots that you've held for over a year. if they IRS can tax you 25-30% on a trade because it's a short term gain, then they are going to.

But that's only if you cash out.

Normally you are just going to pay the 15% in april of whatever you made for that year.

How do you pay taxes in fiat on every trade if you aren't cashing out any fiat?

If I traded 2 apples for 3 oranges 1 day and then the next day I trade 3 oranges for 4 apples do I owe the IRS an apple?

So I just hold all my coins for over a year? What if I hold a certain amount but cash out a little bit. Say I'm holding like 1 Eth, but cash out like 10 Arks.

>Having to pay taxes on unrealized gains on monopoly money
Ahahaha, Jesus Christ
Feels good living in a country too advanced to be inconvenient to live in, but too behind with the times to have shitty laws like the US

this

I cannot condone the method of "only paying when you cash out." I can give you advice on the safest way to do it (ie: paying tax on every trade), because I don't believe the IRS is going to let speculators off the hook after the year we've had. you can do whatever you want to do, it's up to you. in my opinion though I think if you don't want to be audited, you should report every trade, long term and short term.

you need to record the fiat value of each coin at the time of the transactions. so use the BTC/ETH fiat value converted to the altcoin price. there's no defined method for this given by the IRS, only that it has to be consistent. this is to avoid cherry picking exchange price disparities to minimize or maximize tax gain/loss and game the system.

use software like quicken to trade your trades. if you buy 10 ETH @ $100, that's your starting lot. if you sell 2 ETH for $200, then those 2 are deducted from your first lot and become a new lot, and you have 8 left to sell that still have a cost basis of $100 each in the first lot. then you can trade the ETH to ARK (taxable), trade the ARK to BTC (taxable), and cash out (taxable). this is why it's a good idea to plan out your moves and avoid unnecessary transactions.

> If I traded 2 apples for 3 oranges 1 day and then the next day I trade 3 oranges for 4 apples do I owe the IRS an apple?

If each apple is worth $15 and each orange is worth $10, then you didn't make any profit when you went 2 apples to 3 oranges: the starting 2 apples = $30, and the three oranges = $30.

but then you trade the 3 oranges for 4 apples. there are two ways to look at this:

possibility 1:
since you traded the 3 oranges for 4 apples, and apples are worth $15 each, your oranges were clearly worth $60 at the time you got rid of your apples. your cost basis for those oranges was $30. so you have realized a gain of $30. since you only held for a day, this is a short term capital gain, so it gets taxed at the same rate as ordinary income. by the feds, the state (depending on state), and by the city (depending on city). in my case, nyc, it apparently gets taxed by all three for a total effective tax rate of between 40 and 42%.

this is why i cringe at the thought of chasing pumps or daytrading. buying and holding lets me keep and earn appreciation on that extra 40%

>paying tax on every trade

Plus, where would the money from "every trade" come from if its still crypto?

you have to convert the prices to fiat. coinmarketcap has no problem with that, as you may have noticed. make sure you do it in a consistent manner.

my text box fucking died.

but there seem to be different ways to interpret this and i am not an accountant so they all make equal sense to me, basically. so ASK AN ACCOUNTANT.

the worst case is probably the correct one.

and the IRS doesn't care if you only have 4 apples and no money. the extra apples are income so you either take money out of your bank account to pay them or you sell enough apples to pay the taxes and then pay them or you take out a loan or beg your mom for money. they dont care, they just want their cut of the amount they think you made.

If you've held whatever you've cashed out for less than a year, regardless of the amount, it is taxed as ordinary income.

if you keep the eth for more than a year, it's capital gains tax.

Depending on your deductions, such as student loans, moving expenses, tuition, being disabled, it may be better to declare as ordinary income. Depends on how much you make at your job.

But if that is honestly all you have than forget declaring you $500 the IRS doesnt care about your broke ass

But if you are never converting to fiat, then where does the money come from?

>Cashing out

I'm not paying a damn fucking penny because I never cashed out, and theoretically all my coins could go to zero at any point.

1) cryptos = property
2) property has value
3) you've made gains on exchanging property
4) you now need to pay tax on those property gains
5) pay the tax with your checking account, or sell your property so you have money in your checking account to pay them.

that's not how it fucking works. kys

feel free to explain it to us then.

I have made no gains whatsoever unless I realize them by cashing out. Period. You think people who make money on stocks pay taxes on that if they don't cash out?

roll
Also ODN is king

we gon make it Obsidibro

it was actually my stock trading friend who reminded me to pay estimated taxes this year.

and this is a unique problem with cryptos. the big difference between stocks is that with stocks, you don't trade stock to stock. I can't trade apple shares directly to microsoft shares. you are always going to or from fiat with every transaction. that's not the case with cryptos, most transactions are coin to coin, so people still owe the tax, but they may not have the proceeds in fiat, it might be in another coin. so they need to have the cash to cover the tax, or they need to cash out so they have the cash. you might need to change around what coin markets you use to avoid getting taxed multiple times on the same lot.

So for every fucking trade I do on bittrex I'm supposed to have cash on hand to cover the tax?? it's not happening.

I don't know the first thing about taxes but OP is nuts, this is some kind of taxation FUD. Paying taxes on unrealized gains on extremely volatile assets doesn't is fundamentally nonsensical.

you're probably thinking you owe more than you actually do. that's probably not the case.

say I buy 1 BTC for $1000 on coinbase, transfer it to bittrex, and then buy $1005 worth of OMG because the BTC price went up while I was waiting. yes, I'm getting taxed on every trade, but I'm only paying 25-30% on a $5 gain. not that much.

TAXATION IS THEFT

Tax thread # 473,838 made by butt hurt nocoiner or altcoiner

Do your duty and sage

Along these sorts of lines, and to make it easy for myself as well, couldn't I just put down my original cuckbase eth purchase of about 50 Eth (of which I cucked myself out of much of the profits through trading into other coins but w/e) and say that I am still holding that, simply without reporting all the other bullshit I did with it on other exchanges that lost me some of the profits?

In this way, if I manage to make back my potential profits some other way after about a year, I can just pay taxes on that semi fictitious Ethereum I've been 'holding' for a year (which I think is just 15% at that point).

any time you trade or make a purchase with crypto, it's a realized gain. realized gains are taxed.

It's not happening. If you think I'm going through my entire trade history to calculate what pennies I owe for each fucking transaction. It's NOT happening.

>t. all gains long term and total income < 40k. federal capital gains = $0

you guys can do it however you want. you just need to keep in mind that if you get audited, they are going to find out what really happened.

follow my advice and you'll be safe in an audit. that's all I'm saying.

Oh damn, to bad I exchanged BTC to Mono and left the country with my dual citizenshit. Oh fuck, just renounced my citizenshit.

Woops.

does this apply if i didnt cash out? all of my shit is still in wallets and on the exchanges and i plan to have it there for a year or two

you only get taxed when you make trades or purchases

It's not that fucking hard. There are a couple websites that will do this for you bitcoin.tax and cointracking are among them. You download a transaction log from your exchange and import it onto them. It then calculates your profits and losses on all trades and creates a file that you can import into turbotax or quicken. This takes like 15 minutes and if you've been making pajeet tier trades you won't owe much anyway. You can choose not to do this, but if you ever do get rich and decide to cash out, prepare to get audited and raped by the IRS when they find out you have been evading taxes for years.

fuck i hate this country

what if i go to europe or mexico to cash out? do i have to report shit?

Well ok but so you're saying I could deduct capital losses incurred from following the Veeky Forums strat?

And if it's about 25% or whatever per trade for cg taxes, what can you deduct for capital loss? The entire lost amount?

Also is there anywhere I can get a definitive answer on this such shit rather than just a Loatian cardboard cutout theater meeting place?

You can only deduct $3000.00 USD in capital losses as an individual. Corporations can't deduct shit.

YOU MUST REPORT INTERNATIONAL INCOME. That being said, fly to mexico and lose the USB stick containing Bitcoin. But you may never use another exchange with your social security number again.

you can claim up to $3k in losses per year, but you can carry over losses in future years. if you lost more than $3k, that sucks but you can still carry it over.

for professional advice hire a professional. a CPA or tax attorney. I know most Veeky Forumstards won't be doing that though, so I'm throwing them a bone here.

Dude you're fucking autistic.

Won't I arrive at exactly the same dollar amount if I take my total crypto assets minus my initial buy in times whatever tax rate?

Why does the IRS want me to go through this ballache to give them the same amount of money?

Damn that's a long way to go to cash out,
Where's your dual citizenship from?
I have American-Swiss, but frankly I wouldn't want to renounce my American one ever since everything's expensive af in Switzerland

How many audits have happened because of crypto?

I heard last year only like 800 people reported crypto earnings.

I'm fine with paying taxes but obviously the IRS is still working on the details.

i got dual citizenship too, how can i take advantage from this? mexico btw

I'm not. I'm just someone who wires tens of thousands of dollars into my bank account from gemini, so I need a paper trail to prove where that money comes from.

only if 100% of the trades were executed in under a year, and that's still a big maybe. you can do what you want, just know the risks you are taking. the reason the IRS won't allow "only pay tax when you cash out" is because people will use (abuse) it to claim that all of their gains are at the 15% tax rate, when in reality a lot of it might be at the ordinary income tax rate.

I'm one of those 800, but it's going to change this year given the market growth and ICO fiascos.

come and audit my $1000 dollar "investment" in shitcoins then. track all five thousand of my tiny ass trades back and forth between coins while calculating what the profit/loss would be in USD.

yeah. not happening.

I thought OP was an autist but he may be on to something. This article by a CPA seems to align more or less with what he is saying. The IRS rules just don't seem very clear yet, and like many anons are saying complying with the maximalist interpretation of the requirements is completely impractical.

Ah so the real mess comes next year when i have trades being taxed at two different rates. I'd better be rich enough to hire an accountant by then.

Thanks for answering stupid questions user.

Forgot the link.
forbes.com/sites/greatspeculations/2017/08/15/cryptocurrency-traders-risk-irs-trouble-with-like-kind-exchanges/#41382da626a8

Feels good to understand economics and not be a shitty leech on society.

TAXATION IS THEFT
REEEEEEEEEEEEE

thanks for hearing me out. I've been filing like this since 2013 with no trouble at all. as long as you keep track of USD price every time you make a trade, and then you enter it all into software like quicken to track the tax portion, it's not actually that bad unless you are a day trader making hundreds of trades a week, or more.

Thanks user. This is good intel. I will follow your advice while wanting to burn the establishment to the ground. Fuck the system.

On the other hand user, it looks like almost no one is even declaring taxes on this shit. So what are they gonna do, audit all the hundreds upon thousands of coiners?

fortune.com/2017/03/19/irs-bitcoin-lawsuit/

Pay tax on every trade? That is literally the most retarded thing I've ever heard. Many people would end up owing money even if they had been profitable.

Let's say you start with $1000 dollars

You make a bunch of trades and wind up with $10k.

Then you shit coin loses 90% of it's value and you're back to $1k. Yet, if you had to pay tax on every trade you profited from, you'd owe let's say $5k.

So now you have $1k, and you owe the IRS $5k. Does that sound fucking right to you? Idiot.

We know

Yea... How about no... My gainz go into Monero when I "cash out". The IRS is getting 0 for all I care.

If they ask any questions I " forgot" my key. Which is a constitutional right. They can't do shit.

I think that 800-900 number is bogus, and is just the result of a poorly trained DBA. there's a lot of ways to "describe bitcoin" in the tax forms. they've already started trying to get data out of coinbase, and are probably hitting all the other big exchanges privately too.

but yes, it might be a few years until they get a handle on it. if you plan on getting rich though (and we all do), then everything needs to be in order when that happens, or else it's going to be very difficult to cash out.

>taxes
>on unrealized gains
nice try tax man

You can't pay taxes when the IRS themselves has yet to define shit.
Yes, I know trades are going to be reported in the future, but until then, why the fuck would anyone?
That's just opening a can of worms for yourself and they'll be monitoring your ever move.
Wait until they actually pass laws and figure everything out. It's their job, not ours.

no, it doesn't sound right. you'd never owe $5k if that happened to you. you'd know that if you've ever made money in cryptos.

no idea what you're talking about man. you only pay taxes when you make a trade or purchase.

a valid strategy. I just want people to know the risks.

Are they really gonna mind that much if I just give them their 15% cut?

But how will you ultimately get it into USD?
Especially if you have a large amount?
Unless you want to wait for Bitcoin or smthg to become the 'dominant currency'

what would happen if you never rpeorted the crypto earnings from each individual trade, then just started some shitty subscription comic website where you drew bad rule 34 porn and claimed to be getting paid through bitcoin donations by mega perverts when you were really sending coins from other wallets to your main wallet, so it all looked like ordinary income

i think you'd get arrested and then everybody would know about your reboot fetish but its a fun thought experiment

this, i'm fine with giving them their cut

so not even reporting like blockfolio to give them this cut?

>so you should report everything if you don't want to be audited
how would they know its me though. you can make a basic account on bittrex with a name and address with a 3 BTC per day withdraw limit.
unrealized gains means you haven't cashed out to USD yet, therefore you cant be taxed and as long as my trades are crypto to crypto trades no taxes for me

Let's say this is the case,
But until the rules are created, what do you do?
Do you pay any taxes at all on the mysterious meme money coming into your bank account?
That seems kinda sketchy to me and something they'd bone you for.

Why would you "never owe 5k"? I'm literally using your own set of rules to explain that scenario to you.

-Start with $1000 BTC
-It rises to $2000 BTC
-Use all your BTC to buy DGB
>you owe taxes on $1000
-DGB moons 10x and now you have $20k worth of DGB
-Trade all of that for ANS
>you now owe taxes on $18k gains
-ANS moons 10x and now you have $200k worth of ANS
-Trade all your ANS for SIA coin
>you now owe tax on $180k gains
-Sia crashes 95% and you sell it back to fiat for 8k.

You have gone from $1000 dollars to $8000 dollars, yet you OWE TAXES on $199k "gains" which is like 40%.

So now you owe the IRS $80k but you've only made $7k in gains?

fucking idiot.

this is what i'm stuck on as I started this year
I wanna give them their cut cause I don't wanna get chased after
i mean as long as I report my gain and only cash out enough to pay the %

>unrealized gains means you haven't cashed out to USD yet

you should hire a professional before you go this route.

Just pay taxes on your total earnings.

>-Sia crashes 95% and you sell it back to fiat for 8k.
you just realized almost 200k in capital losses. congrats, you owe almost no taxes now. fucking idiot.

heres a scenario. I buy 1 BCH at $300 and sell it for BTC when it hits $600. I do not pay tax on this trade
I hold on to that $600 of BTC and over years it goes 100X to $60,000. If the IRS were to audit me, would they make me pay 25% or whatever of that original $300 gain, and then 15% or whatever when I cash out my BTC? Or are there additional penalties for not reporting? basically if I get audited how fucked am I in this scenario

>paying taxes
>on cryptos

Nice meme had a good chuckle

>DGB moons 10x and now you have $20k worth of DGB

nice try pajeet

OK EVERYONE

THE TRUTH IS, its too early to see how serious this shit is

we will be fine for now,

but who knows in 4-5 years if they get anal about this shit

If you literally hand over cold hard USD to the IRS on crypto gains that could disappear any moment, you're cucked beyond belief.
Think for yourself. Don't pay real money for hypothetical gains.

There is a limit to capital loses. If you could offset capital gains with capital losses then there would be no need to calculate the profit from every single transaction because it would all balance out at the end by paying the tax on the amount of profit you made... since infinite capital loses and capital gains are both realized... but that's not the case, is it? fucking idiot.