Cryto tax thread for US retards

alright, I know I'm going to get a lot of shitters, but it's the season of giving, so I'm going to narrow the scope of this thread to anons seeking advice to file using, conservative, low risk methods that will stand up to audit. there's still a lot of room for interpretation, so if you want to do one of the low cost high risk methods (like 1031 like kind exchanges or using LIFO), I suggest you hire a professional so they sign off on it for you. if you're a regular user just trying to stay legal, this thread is for you.

IRS memo on virtual currencies (read this before asking retarded questions):
irs.gov/pub/irs-drop/n-14-21.pdf

so here is the low risk interpretation advice:
1) all trades (coin to coin and coin to fiat) and coin purchases are taxable.
1b) the act of the sale itself is the taxable part, it doesn't fucking matter where the coins or money were when the sale took place, or if you were wearing a skirt when you clicked "sell," you can't rationalize your way out of the sale if you give an exchange coins and they are sold for other crypto or fiat. the exchange is a money transmitter, they are your sales.

2) you need to track the cost basis (in USD), the acquired/buy date, and net gain/loss (in USD) with sale date for all transactions. this determines the tax rate of short or long term.
2b) the IRS doesn't give a fuck if you don't have the liquid cash to pay tax, you still owe it

3) the easiest way to do this on your own is to enter all trades into accounting software like quicken, you can also use services like bitcoin.tax to do it for you. I recommend FIFO for the lowest risk. you basically have no excuse not to be doing all this since there's tools to make it easy for you.

tips:
>make sure you are calculating USD values for altcoins in a consistent manner (don't cherry pick exchange disparities)
>update your records after every trade or else you will hate your life at the end of year

so, ask away. bullshit will be ignored

Purely hypothetical questions for research purposes.

1. What if someone did trades on EtherDelta and has no record of them or their underlying USD equivalency? What is the best way to find the historical USD value of a coin?

2. If a crypto is recognized as a security by the SEC, is it illegal to trade it? And is admitting that someone traded it to the IRS going to incriminate them to the SEC?

>paying taxes

number 2 I can't answer, but for the time being the IRS is treating it as property even though the SEC might look at some tokens being securities, so tax wise you should report everything as property until the IRS determines they are securities.

number 1 is easier, everything on ED has a pairing in ETH correct? ETH does have a USD value, so you'll have a price of a token in ETH when you buy. so if you buy a token that costs 0.0001 ETH that will convert to 7.5 cents per token, and that'll be the cost basis for the token you just bought.

part two of that, the historic part will be getting the ETH price in USD. just make sure you pull all the data consistently like coinmarketcap graph data or a ETH/USD market that you can access historic data for.

erm, nothings has changed, crypto to crypto trades arent realized gains. You only pay tax to cash out, then you pay your gains. The "new changes" are just there to fuck with you and discourage people to stay away from crypto.

Of course, the whole point of crypto is to break away from the tax system...

please make sure a professional signs off on that before you file user.

also, some common situations:
>I lost/didn't keep track of anything and any records are long gone now
hire a professional, you'll likely end up paying tax on the full amount of your coins instead of the net gain/loss
>I mined coins or got airdropped coins
the free coins will count as income at USD fair market value the time you acquired them, then you can sell them subtracting the cost basis (which you already paid income tax on) for the capital gain or loss. the market value may be zero on some of those coins when they are acquired, if that's the case.

does bitcoin.tax track the price of each shitcoin I buy/sell at the time of the transaction? Cuz aint no way i kept track of that shit while trading.

I've seen the following excuse thrown around here and there:

"I lost my BTC because I accidentally sent it to a non-BTC address."

In your professional opinion, what do you think about this?

I don't know how they calculate prices, which is why I do it myself. I have looked on their site and couldn't figure it out either, so you could contact them about it, trust them on it, or do it yourself.

I think if you can prove the paper trail you should be fine. if it's a big loss I would make sure a CPA signs off on it.

If your mom gives me a free blowjob, do I have to calculate the market value of her service and report it as income?

KEK

MEGA-underrated.

Is Iceland accepting expat refugees?

I wonder, are regular stocks/currency/property/assets/securities treated the same way?

If I purchased $2000 of GE would that be taxable?

If I went to Europe and bought euros do I have to claim that on taxes?

If I purchased land is that taxable (federal level)?

If I purchase a US savings bond or a trade security is that taxable?

I think the case law is going to show up where this is being treated not as income tax (which federal taxes are) and instead being treated as a consumption/sales tax. I really doubt you're going to have to show your purchases/trades from altcoin to altcoin.

Just going to post it for the sake of it. I made a tiny investment to BTC and LTC on coinbase for $57/$50. I then transfered it into cold storage because coin base is shit. I got raped by transfer fee and have little bitcoin. I did not cash out. So I still have to pay anything for captain gain/loss?
Pretty much this

Richfag here with expensive tax lawyer. He advised me like-kind is ok for 2017 but not in 2018

Taxman dips his dick in your wallet no matter what.

>I wonder, are regular stocks/currency/property/assets/securities treated the same way?
as of now cryptos are property so the only big difference with securities is you don't have to worry about wash sales, this is a crypto tax thread though so i don't care about the other stuff.

>Just going to post it for the sake of it. I made a tiny investment to BTC and LTC on coinbase for $57/$50. I then transfered it into cold storage because coin base is shit. I got raped by transfer fee and have little bitcoin. I did not cash out. So I still have to pay anything for captain gain/loss?
if it were me I would claim the transfer fees as sales/purchases, but I am meticulous about my records, but no, what you didn't sell isn't taxable yet

this is good to know but I would not attempt it without a good tax lawyer behind those like-kind records

>what you didn't sell isn't taxable yet

So in 2018 if I simply buy crypto and hodl I don't get taxed on that?

Legit question: trading has it's costs:

- massive amounts of time (research and trading)
- sleep, health risk, mental issue risks
- equipment, books, courses
- etc.

Can you somehow deduct that from expenses? Through business or otherwise?

Say if I bought some DGB bags with bitcoin, and when I sell dgb to btc I get taxed. Do I get taxed again when I convert BTC to fiat?

rolling to kill the taxmaster

I'm pretty sure 2018 eliminates deductions almost entirely doesn't it? Except for kids and up to a certain amount on mortgage interest.

ROLLING

the only taxable events are selling crypto or making purchases, in any year.

maybe if you are a miner and can prove you are a business, regular trading most likely not.

yes, using the low risk approach, so you should either cash out immediately (so the gain/loss ends up being $0 on the trade to fiat), or you could hold the BTC and hope you make another gain on that. a gain is a gain.

this. i wanna know that too, also is it considered income if you cum on her face as opposed of if she swallows as usual?

For anons currently day tradig with below 10k of capital wuld you recommend stopping? Also what is the minimum in ur opinion on what the its cares about for example me only having made around 8k but ive sold on coinbase to paypal then my bank and each time its anywhere from 100-400 bucks 900 one time. Do they care about people like me? Or is this all to stop interest in the growing market?

>Needing a thread to explain taxes
Laughing Australians.png

>calculating all that

Brainlet here. I cashed out everything. If I took the withdrawn cash value - my initial investment and multiplied the profit by whatever my tax rate is, would the taxes be the same as if I picked through my records trade for trade? I've got hundreds of trades.

don't ask these irs shills anything, you just giving them ideas

if everything was short term it might be close but it won't be the same.

the problem you will have is when you go to list all your buys and sells for the amounts of coins will not tie out, forcing you to fudge the numbers (and commit tax fraud) to make them match, or just omit the amounts you bought and sold, which technically won't be lying but will probably be a fast track to audit.

I bought $10k worth BTC. Not cashing out this year. Do I need to file taxes this year to say I bought the $10k in BTC ?

I am a student with no income so I was not going to file this year

The IRS workers will be up to their fucking necks in audits this year, seeing as how big crypto has exploded.

>tfw hundreds of shitcoin trades throughout the year
>across several different exchanges
>didnt even consider keeping records

We're all fucked, honestly.

thanks buddy

software they're purchasing from startups will do most of the heavy lifting for them, so we're more fucked than they are

no, but you need to maintain records for what you bought and for how much. you would then report the sale in the year it happens and be taxed on your sell value minus the $10k cost basis.

Answer this please. I made about $6k and don’t plan on reporting shit under $50k

Taxcuck: the thread. Ain't nobody have time for this bullshit lol go die grandpa

what if you lost 1000 eth in a margin trade

but technically you bought eth at 50 and sold at 75 so gain in usd but lost the 1000 eth as collateral because you were trading eth/btc not eth/usd. this is not a net gain on your end you lost.

i'll seriously pay someone 50k if they can figure this out

my reasoning during 2013-2015 when I was losing money was that, if I made it one day I would have a giant mess on my hands if I didn't have proper records going back previous years. now I have a couple hundred thousand and all my records are in perfect order so I can sell at any time with ease. so even if you are at a level where they won't come after you, my recommendation is to file properly. I also stopped day trading and using bots after the first year because it created to much records, but that's my personal preference.

that's above my paygrade, hire a professional.

as much as I dont like paying taxes, I put my money into a legit exchange asking for my passport, residence, pee pee size and weird boners so I am kind of stuck.

Does anyone know any free as in freedom TM / Open Source finance software that helps me calculate gains (First in First Out on all those dumb coin for coin trades I did, am eurofag)

>enter all your trades into accounting software
>just go ahead and enter 100,000 trades spread out over hundreds of ETH addresses which traded on Etherdelta, the decentralized exchange, even though you've lost half the addresses you made those trades with

But seriously how the fuck do you do this with decentralized exchange trades if you aren't reusing ETH addresses?

how can i find someone who legit knows this

no one does ill pay up to 100k usd

I'm not paying taxes on anything I purchased crypto and never cash out to my bank, fuck you trump

OP:

What about my case where I invested hundreds of thousands for my family?

What about my case where I have made thousands of trades on addresses which I no longer have or remember and cannot mathematically be recalled (i.e. what do I do if I've lost all records) ??

The Korean exchange I traded on (I'm a US citizen though) also lost all my records. Seriously.

TRX PUMP INCOMING
FINAL WARNING !

yes it's daunting, I am a developer so I was able to write scripts to compile a lot of my records, but I have been filing all my trades since 2013 so you all have had plenty of time to prepare for it.

you need to hire a professional, you are far beyond internet help. this is why I'd also never invest for someone else. at the end of the day you'll probably end up assuming $0 cost basis and paying tax on the full sales with the records you can prove and probably some penalties in between.

really?

Sieg Heil!

yuropoor dropping by, you know why, pic related

Man i cant believe the US is really gonna cuck a bunch of kids on taxes owed over fucking crypto, and the wealthier ones will get cucked on every single trade... best of luck american anons.

Tax professional here. This thread is funny. Some of these are absolutely wrong or weird questions. I am also not going to responsible for anything here / give advice because of that.

So i initially invested 5k total. At one point I had 120LTC. Innow have 1BTC due to retarded trading. I've made 3x my investment but ive lost like 70LTC, can i write this off?

Brainlet here.

So it makes sense to me that trading of coins is a taxable event - I get that and I know that on bigger exchanges you can download a file that lists all of your activity...

But will they be taxing trades for individuals who use large exchanges like Bittrex, or would Bittrex itself pay the taxes on trades? I was under the impression that when I put crypto into Bittrex that I was more or less loaning my crypto to their corporation in a no-interest way. When you put money on an exchange is it even yours anymore, under legal terms? Is it not considered an investment in their corporation? Isn't that how they get around outrageous fees on moving the numbers around, because everything on the exchange already belongs to their corporation and they are just shifting numbers more than doing actual trading in accordance to legal terms and conditions?

See what I do is receive my family's money from abroad in Korea (which I have told the bank is a gift from family), then buy with that money in the US and send it to their exchanges in Korea, and then they withdraw in their own country under their own name. But I take 20% of their profits while doing so.

How is that taxed? It's sold under somebody else's name in a foreign country but 20% stays with me.

But... But I bought $200 of monero spent some of it on a vpn then I had my drive fail on me. Am I fucked boi?

Legit question. If I find a wallet password, do I have to pay taxes for it?

Also, what is I just reallocate money to another wallet which belongs to me?

please correct me if I'm saying anything glaringly wrong, in respect to the low risk methodology of FIFO/no like-kind exchanges.

your losses offset your gains, when you actually walk through each sale the numbers work themselves out.

bittrex is a money transmitter for all intents and purposes, they are your trades

I have 12 ELIX genesis addresses right now, which generate about $20 per day passively for me and were airdropped to me for free back earlier this year. They're worth about $192,000 right now if i liquidate and sell them, but as soon as I liquidate them they stop generating passive income.

If I wait a year and sell them, is that now a long term capital gain?

You can report it as a loss since it was a "principal loss from an exchange investment".

You need to file with a tax-mane.

0x6973aea1266b0b2f25581142b2bd1a9b4d930c54

They're all short term. Consider the following and correct me where I'm wrong. Assume this is all short term:

1. I buy $10k worth of crypto and sell it all for $20k. My tax rate we'll say is 20%. I owe $2k in taxes on my $10k profit.

2. I buy 10 coins for $1k each, making my initial investment $10k. I sell at $1250, profiting $2500 and now owe $500 in taxes. I then buy 20 coins when the price drops to $625. I sell those 20 coins at $1k. My profit on the seond trade is $7.5k and I owe $1.5k in taxes.

Either way I break it down, I owe $2k in this hypothetical so what would cause the calculated taxes to come out differently irl?

How believable is saying you "lost" your addresses on the last day of the year?

What about people who really did? Are they screwed?

Heres my tip to you tax slaves

Dont cash out

You report the investment gain the year of post sale.

This is why I cash my coins in UST (usd tether).

Why should I pay taxes if I never cash out to fiat, and just keep all my money in crypto?

because on that day you make it and have 2 million in crypto and need to cash out, you'll want complete records leading up to that point

you got contact info let's talk

If you become worth millions you'll never be able to make any big purchases.

How are staking gains reported?

I love those threads, remind me to come here often in a few weeks/months to laugh at autistic neets trying to figure all this shit out with their gazillion cryptopia trades HAHAHAHA

Land of the free, AHAHAHAHAHAHAHA

Lol, I'm sure a service will come out that will let me spend my crypto as if it was fiat in the next few years.

You can fight taxes by encouraging more retailers to accept cryptocurrencies as payment.

>b-but then the IRS will catch on and make new tax laws
BTC is inherently untraceable
>muh public ledger IRS has bitcoin tracking software blah blah blah
If you don't know to wash your BTC 100% anonymously by now and get around that, then you're too fucking new to this market, but it takes barely a few minutes and isn't hard.
BTC is by itself inherently able to evade taxes, and the more retailers start accepting them the more the IRS can go fuck itself.

What if I use my profits in crypto to buy stuff WITH bitcoin? Would they ever be able to track that? I’ve made about $4k of profit on binance so far. If I buy a laptop on overstock with btc (or even monero), how would they know to tax me on that “profit realization”?

You can fight taxes by encouraging more retailers to accept cryptocurrencies as payment.

>b-but then the IRS will catch on and make new tax laws
BTC is inherently untraceable
>muh public ledger IRS has bitcoin tracking software blah blah blah
If you don't know to wash your BTC 100% anonymously by now and get around that, then you're too fucking new to this market, but it takes barely a few minutes and isn't hard.
BTC is by itself inherently able to evade taxes, and the more retailers start accepting them the more the IRS can go fuck itself.

What's more likely to happen is the IRS will either ban exchange of BTC altogether or ban all retailers from using them for payment.

It's supposed to be taxed but assuming you know how to wash your coins, it really is untraceable.

I've made all my transactions using Coinbase, Binance, and Cryptopia. If I were to collect all the data of all the transactions that have transpired on all of these exchange mediums, and brought them to an accountant, would I be fine long term? Should I be in contact with an accountant right away or I can contact them in a year?

I plan on finalizing my blockfolio before NYE then HODL for at least one year.
>pic related

>your losses offset your gains, when you actually walk through each sale the numbers work themselves out.

Sorry, care to expand on that?

IRS only cares about USD value, they don't care how much LTC you lost. If you came out 3x ahead in terms of USD value that's all that matters. that's a gain not a loss. that's why you need to know the USD values at every trade.

Aware me on this. Is it as simple as trading all my shitcoins (that I want to take profit on) for monero, sending that to private monero wallet, then using that private wallet to buy stuff from retailers that take monero?

What's the go with BCH then? Anyone who had btc got them for free when the blockchain forked.

Made like 5k in crypto this summer and cashed it out in August. Are they really going to come after niggas during tax season with this shit so many people got into it this year

according to the 2014 memo, those will be taxable at the fair market USD value as income when it's acquired. that will be your cost basis for future sales of the assets. so it's up to you what the best way to determine what fair market value was for BCH when it happened. the safe thing to do is probably record it as $0/free because technically markets can't exist before a coin exists, then pay tax on the whole gain when you sell it, and avoid income tax on the fair market value when it was acquired. to contrast, if you're mining a coin, odds are it already has a fair market value when you mine a batch for example, so that wouldn't be $0. Q-8 in the IRS memo.

>forks
>transaction fees
>between-wallet transfers
>airdrops
>lost records

HAHAHAHAHAHAHAHAHA
good luck burgers
good luck irs
HAHAHAHAHAHAHA

Srs irs is in shambles right now they dont know how the fuck to tax crypto just put capital gains as your +$ out call it a day

they will probably start allowing exclusion of low value transactions after the clusterfuck of this year, $600 was a number being thrown around

Fuck off cuck

Let's say I've sold a grand total of $50 in Crypto to cash. Does the government care? What's the cutoff point?

well this will certainly be fun. I've made trades on 12 exchanges (that I can remember)
many of my orders were split into pieces..
I've probably made 10,000 trades in the last 2 months

if you plan on making it one day, you should start doing proper records now

What about shit like masternodes that give you tokens?

life sentence for even thinking about it
t. George Washington

I had read that the tax law will come into effect 2018, so 2017 tax returns will not be affected, is this the case?

>1) all trades (coin to coin and coin to fiat) and coin purchases are taxable.
Under the prevailing interpretation of the law (crypto is property) this is correct, however I don't expect the IRS will want to chase the proverbial rabbit down this hole when the much more obvious problem facing them is the number of Americans that aren't reporting actual fiat-crypto sales as income from sites like Coinbase.

Why? For one, it's a lot of work, and two there is no guarantee that many anons that didn't report on these trades (assuming they made money on them) didn't end up actually with a net loss, potentially reducing their tax exposure. The third reason is that many of the exchanges are either decentralized or offshore. So while exchanges like Bittrex, Poloniex, and GDAX for example could be subjected to a subpoena for their users' identifications, places like Binance and Cryptopia could just tell the IRS to fuck off.

No, the new tax laws have zero effect on crypto tax implications. The sale or trade of crypto has always technically been a taxable event.

pls be true even though it won't be

Thanks OP
Upvoted

I have like hundreds of senseless trades on like six exchanges. Are they going to go through all of them or will they only care about the net gains / losses? Wouldn't it be enough then for me to just list my investment (let's say 10.000 USD) and my current portfolio value (let's say 100.000 USD) within one year?

>Step 1: gain of price X times 1000 - 50,000 (starting cost) when you "sold" your 1000 ETH to the exchange as collateral for your margin position
>Step 2: loss of Price X times 1000 when you lost your ETH margin trading
Subtract gains in step 1 from losses in step 2, and that's how much capital loss you can claim against the capital gain you incurred in step 1.

I'm sorry, maybe I worded that poorly. The difference between steps 1 and 2 is your total capital losses.

Not posting an address because I don't want to have to figure out taxes on a 50K crypto "gift;" this one's for free.

Am I correct in assuming that a crypto to crypto (BTC to LTC) transaction is supposed to be taxed as a short term capital gains?
This the only thing i'm a little confused on.

You would actual file for capital loss to account for your sperm count depleted inside that hog.