Burger crypto taxes

hello biz. I'm in a generous mood so I'm going to offer some crypto tax guidance for US citizens. all non-burgers or "taxation is theft" folks can kindly fuck off. I know this thread will quickly devolve with people spinning their own, bad tax advice so I won't be sticking around either. I've been filing all my crypto gains and losses with zero issues since 2013.

>the facts
while the IRS guidance is vague, the most correct methodology for crypto taxes is ALL TRADES and PURCHASES are taxable, coffee/gift cards/coin to coin trades/coin to fiat trades.

some people are attempting to do like-kind exchanges to carry over an original cost basis and acquired date for their coin-to-coin trades, but you still have to report them all, and that will very likely not be acceptable by the IRS either.

>what you need to do immediately if you aren't doing it already
keep track of the USD value ("in a consistent manner" per IRS memo) the value of every coin in USD that you buy or sell, and the date of the transaction. this is how you get your cost basis and acquired date for reporting.

>record keeping and reporting
use accounting software that handles investments - this is key. I use quicken and enter in all my trades when I make them with dates and price in USD. quicken will then track the cost basis and short vs. long term gain for each lot in FIFO (first in first out), and you can export your gains into a tax file at the end of the year to import into tax software. remember the IRS only cares about USD value - they don't give a fuck how many satoshis a coin was.

that's it folks. just track all your trades in excel then enter them into accounting software like quicken. it's really simple once you get it down, but it can be a pain if you've gone a long time without tracking everything. happy gains anons.

Other urls found in this thread:

irs.gov/pub/irs-drop/n-14-21.pdf
twitter.com/NSFWRedditGif

how is crypto, concretely, different than regular currency for trading purposes? what reason, other than professional conservatism and not wanting to get raped by the taxman, do you have for not advocating this perspective?

What if I have not cashed anything out?

Lets say you buy bitcoin when it was 500 dollars then you trade it for eth when it worth $10k. So now you ow taxes and you didnt even make any money?

Any trade in btc you have to pay taxes on.

Basically just export all your trades from each exchange and declare profits / losses. its not that hard.

If you're only trading a couple thousand, it probably won't matter, the more income you have from trading, the more risk you have of getting audited. If you make $10k buys or high you should probably report them.

Yes, you have to cash out to pay the tax, but you can declare loss in the future if it goes back down.

He's not saying its right or wrong, he's just giving you free info.
If you make a trade you owe tax (or are entitled to deduction) depending on if you gained or lost
You did make money if you held BTC from 500 to 10k. When you trade it to ETH, the IRS counts it as trade from BTC to USD to ETH.

It shouldn't be this complicated I agree, but until our government gets the fuck out of the 1900's, we're stuck with this shitty system.

same system in the UK btw.
Only difference is you don't have to declare anything below 11.3k and the tax above is only 20% (or 10% for poorfags)

cryptos are treated as property, not securities or currency, which has both pros and cons. the pros are you don't have to follow some of the established rules like tracking wash sales, and I know currencies are really convoluted, but the cons is record keeping and reporting is quite tedious.

coin to coin trades are still taxable if you haven't cashed out. this is why you need to be careful with your trades because you can expose yourself to large gains without any cash on hand. if you make a huge gain on an altcoin, you should immediately move enough to cover the tax into fiat before the prices move or else you might have to pay taxes twice on the same set of money

you made $9500 usd equivalent in value of property and you owe tax on that, move enough to fiat immediately to cover tax before the price moves and avoid getting taxed on more price movements from that set of money

the good news is they might exclude transactions less than $600. that ease the burden greatly.

>they might exclude transactions less than $600
This would make my entire trading history excluded.
I love being a poorfag!

Another question. How can the IRS know someone traded? Cant someone just buy in coinbase and cash out in coinbase a year later and pay long term capital gains.

And do they have to account for each btc or just the total cost they paid then the total they cashed out?

Arent most people not even reporting trades anyway so if you pay long term capital gains wont you be good?

Yeah you can lie, just depends if they audit you. Thing is can just check your wallet and see if you really did just send from coinbase to a personal wallet or w/e and hold, so its hard to lie about what you did with it if they do audit you. But if they don't then you can get away with a lot of stuff.

it's really no different than the current system. it's your responsibility to report income to the IRS and it's always been that way, it's just usually your employer does it for you.

it's a risk/reward decision, and the consequences get worse the more money you are moving. also you can't exactly list out "bought 1 BTC" and "sold 10 BTC" on the tax form without raising suspicion, the numbers won't add up even when you try to fudge them. plus the IRS knows people will try to do this to avoid the short term rates of ~25-33%.

the banks will report large deposits, that's already standard policy, and the IRS is getting records from exchanges (they just beat coinbase in court), and localbitcoins is filled to the brim with narc sellers. just paying your taxes is way easier.

most common reasons of constituting an audit are?

2017 it's going to be "cryptos"

having a bank transfer from / to a crypto exchange :^)

The IRS requested a "John Doe" from Coinbase and won the case. Good luck user!

>Yes, you have to cash out to pay the tax
that's absolutely retarded and nobody is going to do it, there's no way to enforce it and just pay your taxes when you cash out because there simply is no consistency to the market and if you play by these rules you will end up having to pay taxes on assets you don't even hold on assets that change value 200% daily

you talk like someone who has never moved more than a few thousand, so you're probably not at risk. if that's not the case though, good luck user.

OP lets theorize for a second here

what action would you think the US would take if most if not all crypto users used transactions with monero to ghost themselves from the IRS after claiming their assets or stolen or destroyed?

What about fees? And how can we confirm you're doing what is the correct way? Do you think there is no auditing when we just report the total short-term capital gains we made as a whole within a year?
How am I going to get the USD value of a coin once a trade was made if it was done months ago and fluctuations were made?

There are no specific tax guidelines. Please let me know where it says I have to keep track of alt coin trades and USD. I understand why we would have to do BTC/ETH/ETC to USD / USDT but not BTC to OMG to BTC to USD. The IRS cannot audit these trades with 100% validity if 100s of trades are made.

I guarantee you I will be safe if I take my total USD value of all trades up to the last one made and report short term capital gains unless I've made hundreds of thousands of dollars. You are using the trades to cover your ass as a preventative measure. It's not a fact. It's just a general rule to not get slapped by the IRS.

assuming IRS has very little resources to investigate these claims, it seems impossible to target every individual who claim losses.

You will be considered a criminal by the feds. The IRS can develop software if exchanges comply. It's not hard.

You'd probably be fine until you try to exchange your monero back into btc. Then they get you through the exchange and see that you tried to avoid them.
You could use a vpn, but you never really know for sure if they're onto you. I'd rather just pay off the mob, peace of mind is worth it to me.

if literally everyone did it and also used decentralized exchanges, then yeah it would work in theory. but that's not real life now is it.

>Basically just export all your trades from each exchange and declare profits / losses. its not that hard.

It's pretty hard. Even when you use software like bitcoin.tax most of the actual tax software won't let you import the appropriate forms.
Eg. Turbotax online you can't import the form, had to use taxact or the turbotax physical copy. Even those limit you to like

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

>Q-5: How is the fair market value of virtual currency determined?

>A-5: For U.S. tax purposes, transactions using virtual currency must be reported in U.S. dollars. Therefore, taxpayers will be required to determine the fair market value of virtual currency in U.S. dollars as of the date of payment or receipt. If a virtual currency is listed on an exchange and the exchange rate is established by market supply and demand, the fair market value of the virtual currency is determined by converting the virtual currency into U.S. dollars (or into another real currency which in turn can be converted into U.S. dollars) at the exchange rate, in a reasonable manner that is consistently applied.

can you offset crypto gains by harvesting losses from stocks?

KILL TAX

also, if i throw up my hands due to the complexity here (my total balance is

check em tax master i aint payin no tax

this is why I use quicken. that sorts out each sale lot using the accounting method of your choice (ie: FIFO), and is easily exportable to turbotax.

pretty much every executed trade is a individual sale lot, but at the end of the day what really matters is that the cost basis is correct for the amount of coins in the lot. so if an exchange lists out both the 25 actual trades that happened, and the 1 order that was submitted for them, then I will report the 1 order in my records, not list out all 25.

Fuck off faggot apple pays nothing in taxes

But it's not BTC that's gaining value, it is USD through mass printing that's losing value. Therefore there is no wealth gain and no need to pay taxes on crypto.

Is it hard to shape the CSVs for quicken import? And does it handle large floating points well?
bitcoin.tax can export as a turbotax file, but the online version of turbo tax doesn't support importing it. I'm really bitching about the turbotax type software isn't good at handling this. I don't expect them to work with coinbase automatically, but at least let me import the turbotax file type or csv.

If it weren't for bitcoin.tax I would have given up, but even that has pretty limited exchange support. I have a bunch of scripts to shape the csv data for import. No way the majority of even the crypto population is going to be able to or bother doing this. YoBit doesn't even have a csv export and the api was returning incorrectly, I had scrape the website for all my trades.

Anyway my problem isn't even US taxes, but how difficult it is to pay what you owe. As it stands it's an enormous burden to do the tax paperwork.

Let's say I didn't keep any of my thousands of trades and can only remember the main ones, like ICOs I participated and shit. Would I get away with listing them and trying to fit my numbers around it, considering all the other small trades are probably less than 1k all together.

This IRS is not audting poliniex and you dont even need to put your real name there. How can they even know you traded? They seem far behind on crypto. Do they really even know and have the man power to track all these people down?

Still need to know how the fuck I am supposed to calculate the USD value of each trade during it's time

Only cucks throw away money on taxes.

i only have 1 bitcoin, i'm going to pay the taxman his due when i cash out. My family runs a tax accounting firm and knows their way around taxes.

no it's pretty easy to craft text files if you can write your own scripts. quicken rounds to 6 decimal places only which is a sacrifice I was willing to make. when going to USD everything gets rounded to 2 decimals anyways.

I didn't want to mention it to confuse people, but I'm a developer and also have a master database with a front end form that I enter all my trades into, so that is my master record. it auto calcs the USD prices/cost basis for altcoins using SQL queries to tables with ticker data that I store, then I use the output from that to enter the trades into quicken.

yea especially since i have no idea when or how or what price almost any of my trades were. again there's no way for them to know or to care about that, pay on first in first out principle, unless you are dealing with hundreds of thousands of dollars

if you're in a pinch, just export everything from the exchanges to excel, line up the dates, and manually look at the usd price chart line on the coinmarketcap detail pages by hovering over the graph and matching up the dates/times for each trade. this would fulfill the "calculate market value in a consistent manner" IRS rule too. it's very manual and tedious but if you plan on making it big one day and cashing out 250-500k or more, you'll need complete records.

the idea of paying taxes on unrealized gains that fluctuate in value every week is a completely untenable system and it's simply not going to happen in a large enough scale. i'm not arguing about paying taxes, i'm going to do it, but if you're at the point where you are dotting your i's on those types of funds, you might as well hire an accountant or specialist.

you don't have to pay taxes on unrealized gains, you know need to know the value of each coin you bought, that's it.

and I've seen accountants telling people they don't need to report coin to coin trades, just because they're an accountant doesn't mean they know what they're doing.

lol americans

Ha we've spoken before.

Hopefully exchanges will just provide a report the way brokerage accounts do. (Well second to eliminating capital gains tax).

>just because they're an accountant doesn't mean they know what they're doing
But it does make them liable you dumb fuck.
The whole point of being rich is so someone else is always liable.

>you don't have to pay taxes on unrealized gains, you know need to know the value of each coin you bought, that's it.
okay i see what you're saying now, but again that just makes me confused why wouldn't it be simpler for everyone involved to just take my realized gains and give them a flat 30% or whatever the tax is. The odds of them wanting to audit every one of your transactions to end up with roughly the same amount of money just won't make sense especially.

I think someone who withdraws 10-25k at once and then just conveniently doesn't ever report it is what they're going to be going after, not if my ark was exactly .70 cents when i bought it 6 months ago

he's not a dumb fuck he knows what he's talking about. don't bully

easy for you to say poorfag. Try having a high income and net worth, you’re then an easy target for the IRS.

Amerifaggots and their CRYPTO TAXES

GET JEWD LMAO

So op what happens if I've done plenty of trades, I've made about 25k profit, but it's all reinvested into other coins?

I fall into the 15% tax bracket for capital gains but don't have 3750 in my checking account to pay to the tax man.

How do taxes on this work if I'm still fully invested? Will they force me to sell some crypto to pay the taxes? Will they force me to mail the IRS a check for 3750?

Good idea with SQL. I am going to do this, especially since APIs are on board across each exchange

Etherdelta can suck a fucking fat one though. I have no idea how it's going to work

the IRS can kiss my ass, I make like 30 trades per day and no way I'm recording shit

They won't "force you to sell crypto" but they will bill you for the 3.75K - it's up to you how to pay it

Oh alright. What is the time limit I have to pay the tax, April 15th? Or is that just when the filing is due?

>but they will bill you for the 3.75K
but it hasn't been realized yet, they don't even know this money exists and it could all disappear tomorrow in a crash.

I have "realized" about 20k because I've sold some eth and reinvested it.

But ya that was going to be my next question. This year I pay 3.75k in taxes because bitcoin is going up, what if next year bitcoin crashes to 0, I lose all my money, and can only claim 3k capital loss. That's not fair

Exactly why you shouldn't pay taxes on trades unless it's from crypto to fiat.

I don't really understand the question. I know I should pay tax I'm just not sure how to do it. If I had bought bitcoin and was holding it for several months then that is unrealized gains, but I've bought and sold various times so I have realized gains. It's just that all those gains are reinvested.

If your mother gives me a blowjob, is that taxable as payment in services? What is the market value? What tax form do I report it on?

Is it theoretically possible to own crypto through a corporation and base it somewhere like the Cayman Islands? How feasible or beneficial could this be?

You have to pay taxes on all of it. It just ends up that mathematically you end up with the same amount of profit whether you exit once or exit a bunch of times in a wash. Like if you started with 5k, made 95k, sold out and rebought in, and now it's worth 120k, assuming you don't cash out again, you owe taxes on 95k.

>then enter them into accounting software like quicken.
Ok, just let me fire up my Windows 95, one second.

What are the statue of limitations if I didnt know what i was doing? 3 years right? 3 years then they cant tax you

yeah 3 years I think, but I just sent your ip to the irs