How tf do taxes work for crypto for burgers

even if you trade something for another coin, you're supposed to report it as a gain.

>accountant
ahahahahahahbahahagagahhagzyegshgsuwyahhahahahahahhahxuhshahahhahahahahahha

USD has to leave Coinbase and hit a bank account correct?

underage spotted

If I cash out 80% of my initial investment and just file it as a loss do you think the IRS will look into it further or just leave it at that?

Or do you think it'd be better to just pay out double my original investment and pay the taxes on that, so they get a little bit of tax money (enough to keep them happy)

Which do you think will work better?

LOL, dude it is just like stocks.

False. There is no "gain" until you cash out.

You know that they throw people in jail for tax fraud, right?

This is completely wrong. Holy fuck, so many of you are going to be ass raped by the IRS. You don't think these exchanges have information sharing?

bwahahaha enjoy your priston stay for tax fraud boys

Yeah whatever

>so many of you are going to be ass raped by the IRS. You don't think these exchanges have information sharing?
this is what LINK is for

moon here we come

Read this: google.com/search?q=Notice 2014-21 - Internal Revenue Service

The IRS has yet to make a definitive statement on how crypto is taxed. It's generally considered to be a like-kind exchanges so capital gain tax is deferred but because it's classified as property some people think each trade is taxed.

What is the answer? Nobody actually knows.
The IRS REFUSES to make a statement on what the case is and there have been zero cases of the IRS going after people for not keeping track of capital gain on every trade.

You can play it conservatively and pay tax on every trade or pay when you cash out. The choice is yours.

But until the IRS actually comes out and makes a statement on what the case with Crypto is you are safe.

>Throw 100 bucks in coin x
>It goes up 500%
>30% taxes mean you owe $150 in taxes
>Move coin x to coin z
>Coin z nosedives and is only 25% of what you bought in at
>You now only have 125 dollars
>IRS apparently takes all of that and demands 25 dollars more

???

>But until the IRS actually comes out and makes a statement on what the case with Crypto is you are safe.

No, they can issue a position and change their position retroactive. A good example is their change in the tax treatment of silver and gold exchanges in the 80's. They charged back taxes and penalties even on people relying on their previous guidance.

You realize a two page 8824 form must be filled out for every like-kind exchange, right? And you think this applies to crypto trades, or that shitcoiners have actually been doing this? lol

For most of you double-digit IQ underage retards, how it works is you hire a CPA for a couple hundred bucks and they'll take care of it for you. They'll probably ask for the csv spreadsheets that any reputable exchange lets you download with one click. No need to half-assedly write down your trades with crayons into a coloring book.

>They charged back taxes and penalties even on people relying on their previous guidance.

Why is this institution allowed to exist, again?

op here. the responses made me more confused desu

Welcome to tax law.

No one fully understands it, which is entirely the point.

Drumfkin better drop crypto taxes
OR ELSE

It doesn't even make sense that you have to pay taxes on trades between coins.. Here is why

You have and XYZ , It's worth $20,000 and you want to cash out.

1) You hold XYZ for and sell it for BTC
Taxable event and you pay taxes on the $20,000 you gained in BTC

2) You IMMEDIATELY sell the BTC for USD (because no way to sell the XYZ for USD)

You have to pay short term gains tax on the BTC.

So you have to pay taxes twice in the same day. Both Short term gain taxes ??

That makes ZERO sense

No, you would only get taxed once at the FMV of the token in USD at the time of the sale. This is how it works if you are treating these as if they were stocks.

So you would be taxed for the XYZ to BTC exchange, NOT the BTC to USD exchange because there was no gain in FMV at the time of your second sale.

(not tax advice retard.png)

I read somewhere that the irs would not subpoena coinbase accounts that had bought/sold less than 19k

NONE OF THIS MAKES SENSE

CAN'T I JUST WITHDRAW FROM COINBASE AND PAY THEM A CUT!?!?!??!!??!?!

No tard, the new instrument carries the fmv. So you owe $150 on the first trade but you claim the loss on the second one to offset.

Lots of people are only paying taxes when they cash out, but that is risky. The IRS hasn't officially said yet. They may come back later and demand past payments plus penalties for all token to token transactions, treating them basically like securities.

If you want real advice you should ask reddit.

Fair Market Value

Are all of you retarded? Do you think you aren't taxed on every stock trade? Why would cryptocurrencies be any different, especially using good goy exchanges like Goybase who gives all your records to the IRS?

but you sell each stock for USD. That's not what is happening in crypto.

Sometimes you are selling NEO for ETH and then to cash out you need to Sell ETH for BTC and BTC for USD..

3 transactions just to get to USD..

also since its considered property wouldn't we pay property tax instead of capital gains?

Same thing happens with forex idiot.

Gains on property sold is taxed as capital gains by the IRS. You're thinking of local property tax which is something else.

None of this makes any sense and we're not getting our money.

Crypto isnt considered a currency idiot

Have fun with Tyrequs the IRS collector at your door.

I'm convinced no one has ever cashed out judging by these replies. Jesus, we're all fucked.

So explain it instead of being a dick.

You think we all have traded Forex ? Saying , dur same things happens in forex means nothing. That's why OP made this thread.

So help or fuck off to your I'm so fucking superior neckbeard corner of the world. Calling people idiots is literally fag-tier.

Even over on Reedit the Bitcoin Tax forum says something COMPLETELY different than what you are saying and there are CPAs and lawyers in there.

You are taxed at every transaction, whether from Cypto to fiat or crypto to crypto.

>Notice 2014–21
>IRS Virtual Currency Guidance
>SECTION 1. PURPOSE
>This notice describes how existing general tax principles apply to transactions using virtual currency.

rut roh

So in your opinion If you sell XYZ to ETH (to get best trade price) then ETH to BTC to USD to cash out..

How many taxable events take place?

>as well as the purchase price of those units.
What if I got paid to post in BTC?

I made 30 BTC in 2011 in bitcointalk in the first sig campaigns and now im just holding until im rich, so i never bought shit. Its similar to mined BTC.. how the fuck does that work tax wise.

because somebody needs to pay for the gibsMeDats and capital gains is an easy target

You are completely fine until you sell it.

Who cares. The IRS isn't going after shitcoiners. Not now not ever.
They refuse to give clear guidance to scare reddit cucks into paying up.

Just pay when you cash out, most people don't even do that so you will be good.

Read the entire notice

How can the government know if you made profit on crypto currency? I thought it was all anonymous

This is what the CPAs on Reddit are saying
They are saying it's a "Like Kind" trade.

"Trading for Alts is a 1031 exchange with presumably no "boot"

Q–3: Must a taxpayer who receives virtual currency as payment for goods or services include in computing gross income the fair market value of the virtual currency?

A–3: Yes. A taxpayer who receives virtual currency as payment for goods or services must, in computing gross income, include the fair market value of the virtual currency, measured in U.S. dollars, as of the date that the virtual currency was received. See Publication 525, Taxable and Nontaxable Income, for more information on miscellaneous income from exchanges involving property or services.

that is not true. read the IRS guidance you fucking morons.

Not true.

Q–1: How is virtual currency treated for federal tax purposes?

A–1: For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency.

Q–2: Is virtual currency treated as currency for purposes of determining whether a transaction results in foreign currency gain or loss under U.S. federal tax laws?

A–2: No. Under currently applicable law, virtual currency is not treated as currency that could generate foreign currency gain or loss for U.S. federal tax purposes.

Hope you're right. Personally I'm going to risk it and treat as like-kind. Just saying sometimes these IRS guys go back on their guidance.

To do a like kind change you have to fill out a tax paper. And its pretty complicated and probably does not apply to crypto. Just don't have your real name or address on exchanges and don't ever say you traded. Just pay when you cash out. No one will every know your trades.

So what is your opinion that people on REddit are saying, if you get paid in BTC you have to pay taxes on those gains..

If you trade BTC for ETH and "nothing more" there is no boot so there is no taxable event. It's a 1031 exchange.

en.wikipedia.org/wiki/Internal_Revenue_Code_section_1031#Section_1031_Like-Kind_Exchanges

>Just don't have your real name or address on exchanges

Ah they didn't say that. Jesus fucking death and taxes.. of course my name is on the bigger Exchanges..

See the problem here is this..
If you say live off of cash in the bank, and you trade and buy everything with BTC and haven't cashed out ever.. Where's the cash to pay for your gains ?

Can't pay the IRS in BTC. I've never made any cash from BTC at this point but I have made lots of GAINS over the year.

Eh...

If it's less than $10k I doubt you would do jail time.

But if you hid over $100k in money in a clear fraud, yes you could do time.

This.

My brother worked for the IRS for 2 years.

He said generally they go after high income individuals and businesses that are clearly committing tax fraud AND the IRS usually gets a tip because the suspect was noticed by other agencies as well.

With all this confusing shit on crypto taxes, it seems like the simplest option is to avoid taxes altogether, cash out using localbitcoins and don't set off any red flags with your moneyz

Use Bitcoin.tax you can import your records from Bittrex, Coinbase, etc. Change the tax rate to the tax bracket you're under and it will give you the amount that will be stole from you by the Gov.

Jesus what happens to the guy who transfers his gains to his home computer and loses his computer. I've seen tons of people lose a shit load of coins.

I saw a guy the other day lose around 11k Waves for real..

HOLY SHIT THIS IS THE LEVEL OF Veeky Forums USERS

thank you kind user, I was wondering about this in another thread earlier tonight

You here to help or toot your superiority horn ?

If people don't know the answer, they don't know. I've seen ALL sorts of advice all over the net, none of it remotely the same.

Reddits take in their Bitcoin, Crypto and Bitcoin tax forums is 100% the opposite to here and there are many real to life bitcoin millionaires there.

Yeah, I agree with them. Based on that IRS guidance I just posted, it says you get taxed on BTC payments for services "at fair market value of the virtual currency, measured in U.S. dollars, as of the date that the virtual currency was received"

No taxes unless you make over 10k

So are you just going to pay taxes on your ultimate BTC>USD transactions ?

Not your XYZ>ETH>BTC>ETH>XYZ>ETH>BTC

>there are people who actually have to pay capital gains (((taxes)))
>mfw non dom UK citizen

So what if you made $0
but 50 BTC ?

Was planning on cashing out when I had enough to buy a house and the equivalent in of the house price in BTC

Based on all I've read, the most reasonable answer is you only pay taxes when you sell BTC in an exchange( or any where else) for USD, just like stocks . You don't pay taxes when you trade stock to stock only when you cash in for USD.

Yeah, it's converting property into USD so it's taxed as capital gains. I'm researching this stuff same as you, I just started this year. Looks like you need to attach a like-kind-exchange schedule as well though which will be a bitch, but no taxes.

That's Reddits collective take on it.
People here are saying that every BTC>ETH , ETH>RLC, BTC>Whatever sale is a taxable event.

so it seems like its either

a.) Pay tax on whatever you cash out into USD

or

B.) Pay taxes on every transaction

the world may never know *twilight zone theme*

Trading BTC to ETH is not a like-kind transaction.

That is incorrect, you get taxed for every trade. For example trading from BTC to ETH back to BTC and finally USD you will get taxed four times. Its complete shit but that is the law
Source: bitcoin.tax/faq

This is true right now, they may want to start goung for the lower amounts if this becomes more common

I've seen this argued on reddit more than the other take.
But really who cares which is true as long as altcoin taxes are unenforceable.

My kingdom for an edit button..

So basically we are all in 100% disagreement on whether to

1) Only Pay when you cashout BTC > USD
2) Two Taxable events on these trades XYZ>ETH>BTC>USD
3)Three Taxable events on these trades XYZ>ETH>BTC>USD

Yeah haven't seen any agreement on any forum on the net over this.. How fucked..

Pretty much yeah, nobody knows. Only thing that is certain is that IRS heebs will come to collect their money, and will try to collect as much as possible.

Yup why be clear when you can just be jewish and fuck people over with vague rules. We are gonna need the supreme court to tell the IRS what is acceptable and what isnt.

i think all the only taxable event is crypto > USD. doesnt make any sense to tax crypto > crypto, the US government doesn't control any crypto

The IRS HAS to clarify this for the upcoming taxseason, or be forced to post pink wojaks due to no one declaring this on their taxes.

I WANT to pay taxes and be squared away, but all the confusion makes it hard.

just reading through this thread I see about a dozen people who fucked up and are now worried BAHAHAHAHAHA

I'm in the same boat. I'm the guy that pays his taxes a day after I get my 1040s and have never taken any deduction that I am not 100% entitled to take.
I too want to pay my taxes but they are making this nuts. ALOT of people have made trillions of profitable trades this year..

You know what ? Just dawned on me..

Ameritrade sends me a 1040 every year.

Is Bittrex and Poloniex going to send me one ?
They have to have some culpability here no ?

Nope, they aren't going to send you shit. They are going to say it's your responsibility to report.

The bottom line is I'm not reporting until I cash out in USD

>bitcoin.tax/faq
>What about if I bought some Ethereum or Dogecoins?
>Potentially another tax event. Think of it as selling Bitcoins back to cash, then buying your other coins with that. That sale might have gains, and so is treated the same way.
>...Potentially...
Notice that word "Potentially." Their source on all this is the IRS guidance I posted earlier, which says to treat virtual currency like property. And like I said, maybe the IRS will treat crypto-to-crypto as a taxable event one day, but there's no evidence of that yet and the guidance seems to indicate it's a like kind exchange. If you want to be extra conservative you can go ahead and treat it all as taxable. I'm going to risk it personally, but I'm giving no tax advice in this thread.

Well there has to be some law that says that Ameritrade has to send you a 1040 no ? Otherwise, why would they bother ?

Do crypto exchanges fall under the same rules ?
If not, where is the list I am supposed to get on my total $ amount of taxable trades like on Ameritrade ?