So I made 400k in crypto in the past 5 months. I'm unemployed and haven't worked in 2 years. If I cash out completely...

Short term capital gains are taxed at the same rate as income. Might as well be the same damn thing.

How much did you invest to make 400k?

I'm a poorfag with like 1k to invest.

it's not short term capital gains if you don't cash out. you stupid fucking retard.

where do you live? fiscal law are not the same in every country...

Only taxed on when you cash out. What if you hold btc because you think it'll go up and instead plummets. Do I still pay taxes on what was earned? No, because that doesn't make fucking sense. US considers btc to be like stocks. Total USD cashed out is taxed. That would be fucking retarded if you got taxed first then sold btc for a loss.

>literally wrong, the sequel: the post

let me tone down the trolling...i'm right, though

cap·i·tal gain
ˌkapədl ˈɡān/
noun
plural noun: capital gains
a profit from the sale of property or of an investment.

This is the dumbest fucking thing I've ever heard. EVERY SINGLE CRYPTO TO CRYPTO TRADE IS TAXED. The IRS does NOT recognize any kind of "in-kind" transfers. Stop being stupid.

...

you're wrong. kys

Post the IRS code which specifies this from their website or their announcement on how Crypto trade is taxed.

Go ahead. Ill wait.

irs.gov/pub/irs-drop/n-14-21.pdf

Specifically read section 6

Here's a Forbes article about it in case you're too stupid to understand how to read the IRS notice: forbes.com/sites/greatspeculations/2017/07/10/what-you-need-to-know-about-cryptocurrencies-and-taxes/#3b78bd281a95

Well good luck because I cash out in gold and gift cards. 21st century cyber punk rebellion.

Thanks for that. It verifies that it's a like-kind exchange. It's treated as property to which like-kind exchanges are applicable.

You have to do a lot of paper-work sure but it's still on the level. It's doubly true because of the recent ruling that some coins and tokens WERE securities which means that others were not subject to the same laws and special scrutiny that exempted a like-kind exchange.

Thanks for proving my point.

Were you going to apologize for being a cancerous dipshit? Or just let me keep reveling in the fact that you got BTFO?

you proved him right, moron

Please explain to this brainlet how you came to the conclusion that you can classify them as a "like-kind" transfer? I'd love to see you explain this to the IRS when you file your taxes.

IT LITERALLYS SAYS:

Q-6: Does a taxpayer have gain or loss upon an exchange of virtual currency for
other property?
A-6: Yes. If the fair market value of property received in exchange for virtual currency
exceeds the taxpayer’s adjusted basis of the virtual currency, the taxpayer has taxable
gain. The taxpayer has a loss if the fair market value of the property received is less
than the adjusted basis of the virtual currency.

"digital currencies" are property. Trading one property for another triggers a taxable event. Please explain. I'm listening.

It specifically says trading virtual currency for other property implying that is isn't also an investment property of the same type.

It's a like-kind exchange because you are exchanging one investment property for another without the intent to sell. If you were to cash out you would realize those capital gains but until then they are not realized.

To copy and paste to make this more understandable for you understand that crypt exchanges meet all of the requirements.

To qualify as a Section 1031 exchange, a deferred exchange must be distinguished from the case of a taxpayer simply selling one property and using the proceeds to purchase another property (which is a taxable transaction). Rather, in a deferred exchange, the disposition of the relinquished property and acquisition of the replacement property must be mutually dependent parts of an integrated transaction constituting an exchange of property. Taxpayers engaging in deferred exchanges generally use exchange facilitators under exchange agreements pursuant to rules provided in the Income Tax Regulations. .

Both the relinquished property you sell and the replacement property you buy must meet certain requirements.

Both properties must be held for use in a trade or business or for investment. Property used primarily for personal use, like a primary residence or a second home or vacation home, does not qualify for like-kind exchange treatment.

Both properties must be similar enough to qualify as "like-kind." Like-kind property is property of the same nature, character or class. Quality or grade does not matter. Most real estate will be like-kind to other real estate. For example, real property that is improved with a residential rental house is like-kind to vacant land. One exception for real estate is that property within the United States is not like-kind to property outside of the United States. Also, improvements that are conveyed without land are not of like kind to land.

What's the best way to go about paying as close to zero taxes you can?

So see as we're both armchair warriors, have you engaged the services of an actual CPA to file taxes and see if your definition of a like-kind transfers holds up to IRS scrutiny? I'd venture to guess that it doesn't.

except the government doesn't know about your short term capital gains because no documents are failed against your name by any exchanges

think it through retard

Sell BTC on localbitcoins or move to a country that doesn't tax their citizens on this stuff.

Don't get me wrong. As much as I think you're wrong, I genuinely hope you're right, because I don't want to have to record and pay taxes on the hundreds of crypto trades I'll be making this year.

The IRS has been tracking BTC since 2015 and is currently looking to obtain customer information from some of the big players in the game (look at their suit vs. Coinbase). I'd venture to guess that while we may be in the clear now, eventually they may find a way to subpoena that information and go after people for this stuff. I get this whole "fuck the man" mentality, but if you've made millions over the past year, I'd be more than happy to pay my cut so that I never have to worry about the IRS coming down on me. They're not ones to be fucked with.

also, imagine you had all your money in crypto. trading btc for shit coins, and back. then you have to pay taxes on those gains at the point of sale. but you have no fiat to pay with! also, which currency exchange rate do you use as well? there's not fucking way you can get taxed on holding crypto gains until you go out to fiat. a judge would never rule against you on this at this point in time.

dawn, how did you make 400 in crypto this year? I have a reasonable capital to invest ive been here for a month and a half and i havent made shit. did you pay for a whale group?

IRS doesn't care if you don't have fiat to pay your taxes. Sell your crypto.

I genuinely hope you're right, but right now I don't think the IRS recognizes "in-kind" transfers for crypto. If you file your taxes and the IRS comes knocking on your door and lets you go after making that argument, then consider me converted. Until then, good luck.

i wonder what you say to the tax man. "well i only invested in this one coin here this year see"
"oh, this is weird, that coin hasn't raised in value as much as your gains have. But you're special, I'll give you a pass." ;)

Listen, this is still the wild west right now. Who knows how things will develop. Can you avoid your taxes pretty easily through crypto? Absolutely. But if the IRS comes asking questions, I don't want to be on the wrong side of that table. Why take the risk when making money is so fucking easy in this game?

you've never cashed out your financial instrument. it's that simple.

I honestly doubt the CPA would know given as the IRS has been asked for years about how it's taxed and they haven't said anything since that vague outline.

While I dislike taxes I don't have a problem paying them to keep the IRS off my ass. I just don't believe that each trade is taxed based on what i've read. It doesn't even make sense within the context of what crypto is for them to be.

There have been no reported cases of the IRS taxing each trade or going after people for not paying on them. We would know if they did because we would not be having this conversation right now.

You can err and on the side of caution and consider each trade taxable but really I doubt we are going to hear anything from the IRS on this for another year or so at least. I don't think they want the headache of dealing with it.

when you sell your crypto to pay for those taxes, you've just created another taxable event. it doesn't make sense and could go on until you actually lose money. the IRS will not ask for unrealized gains in BTC because there is no legal precedent, until there is

how is it so easy? Ive been here 2 months and cant make shit. How do you guys do it?

I hope all of you are correct. I'm going to hire a CPA that views it like you do and let them take the fall if they're wrong.

Last two months have been dogshit compared to the first 7 months of the year. We're ~$150 billion in a ~$70 trillion market. Just wait until we actually gain traction and you'll be able to make money no matter where you go.

Also, DYOR. Take this shit seriously; this is probably the single greatest chance at generating immeasurable wealth that we'll experience in our lifetimes, and we're here on the ground floor of it.

Regardless of whether or not each trade is taxed you will still need a record of all your trades and their values. People who cash out have been giving this to the IRS and not a case of it causing problems yet.

The reason you have to give them your trades regardless is because they want to know it isn't drug money and a record of trades shows when and how the gains were made.

great response. DYOR is do your own research i take? There is so much fucking scam coin and manipulation i just dont get it. Listen I have a good paying job like high net worth job. Should i just leave and day trade? LIke is that how you guys make money here?

CPA's aren't liable for doing your taxes incorrectly.

Which coins are securities and which aren't?
Are waves securities?

Is there some sort of actual form to record all of your trades on to send in?

The real question is how people are going to report icos they weren't supposed to be in.

1031 Exchanges only apply to real estate.

You have to add up all your trades and pay capital gains or loss depending on the short term and long term mix.

If you convert all your bitcoin to cash through localbitcoins, you don't need to pay the government taxes on it. They have no knowledge of those transactions.

Unless you're using a decentralized exchange
>pro-tip: you're not
then your exchange has a record which the IRS will eventually subpoena. Good luck getting reamed by Tyrone.

There must be some ONE here that sold all their gains and had a concrete answer from the IRS on coin to coin trades

Listen I have a good paying job like high net worth job. Should i just leave and day trade? LIke is that how you guys make money here?

Even if they subpoena exchange records, the most they'll see is bitcoin leaving my bitcoin address inside bittrex, and being sent to an outside bitcoin address. At no point do they see it being converted to fiat from the bittrex records.

The trail goes cold there.

I've looked into this quite a bit. Assuming you're from the US, there are 3 options that I know about. Maybe someone can add to this list.
1. Live in puerto rico for at least 6 months a year. They have special laws where US citizens little or no federal income tax.
2. Use a VPN and stick to exchanges that don't require ID like shapeshift and etherdelta. Cash out with amazon giftcards, gold bullion, or high end overstock.com merchandise sent to a PO Box. Illegal and major repercussions if caught.
3. Hold for at least a year so you pay capital gains tax rates instead of income tax. The first $37k is 0% then its 10-15% after that.

>oh all this money that user made must have "just disappeared". I guess we won't throw him in prison after all.

No you idiot just use your income.and.buy BTC

Most of your profits are short term, especially since you probably already sold your positions.

This means you owe 300K+ of income on a mostly 30%+ tax rate. You owe over 100K to the taxman user. By avoiding taxes, prepare for a dicking by the IRS & Jamal.

>>oh all this money that user made must have "just disappeared". I guess we won't throw him in prison after all.

It doesn't matter how much you made on a centralized trading service. When it's transferred out of the service using bitcoin (or another crypto) it becomes out of the IRS's ability to track.

This is only if the centralized trading platform OP is using is reporting to the SEC on every single trade. And then even if they are, the calendar year totals of gains and losses is all that matters if they were all short term trades. People thinking that you have to calculate P+L for each individual trade is a meme. The year end sum is all that matters for tax purposes.

is localbtc rly the only way? most people in my country only do cash deposits which is pretty much just like cashing out of an exchange right? i'm guessing if gov sees someone wire you 100k they will want to ask questions

this sounds legit

Why not just pay the taxes?

Because people are trying to figure out the way to pay the least amount possible and the IRS is isn't explaining shit to people.

Okay...
Curious, if I have over 100k$ in BTC then sell 30k worth of BTC's for USD and put it to my PayPal then to my bank account will I get arrested for money laundering?

If you cash out any btc you need to pay taxes on that so yes.

thats fucking stupid

irs.gov/pub/irs-pdf/f8824.pdf

This is the fucking form for a like-kind exchange. It's quite complicated and it's two pages for ONE exchange. Meaning you'd have to fill out thousands of pages of these things and mail them to the IRS. Then probably get audited because no one has ever actually reported their trades as like-kind.

Well thats what happens when our country decides to be like places and keep making our government bigger and more cancerous

Let's say I have $1M in BTC after selling my incredible shitcoin, but don't want to cash out yet. What is the safest option if I want to hold that BTC? Ledger Nano S? Any hardware drive?

offshore llc / trust / foundation entanglement

bump

Hardware wallet. Why would you ever use anything else?