Tax law is fucking nonsensical

But that's not what the IRS stated. They told you to file the difference in price between what you bought a coin for and what you sold it for, by metric of US dollars.

Is this not a major loophole in the system? What is stopping anyone from claiming "the coin" they traded for another one was actually a purchased at a much higher rate than your "other coins" of the same type?

>be op
>not understand the basics of account because I'm a fucking neet
>capital gains is too hard to understand
>can't grasp cost basis
holy fuck y'all if you're too stupid to do it go hire a fucking accountant

Serious question. Say you bought $1 of silver and traded it for $2 of gold some time later. Would you be subject to US taxes? Because that seems to be more comparable to crypto trades than stocks, which I think is how they're legislating it. But I'm also a brainlet so idk what's really going on.

If you want to see how nonsensical it is try paying them in cryptocurrency and see their response.

it's retarded. they don't mention that.

they also add USD to the equation out of thin air. fucking kikes.

Yeah you're gonna get assreamed if you try and take that to court. The IRS does not fucking play and you will never win on a semantic argument.

They will tell you how much the shitcoin was trading for in BTC the day you made the trade, and how much BTC was worth in USD that day. Then the court will demand you pay the appropriate tax.

Then they will skull fuck you with fees for daring to take them to court.

2

These are the bitcoins I own. Point to the one worth $1500 and the one worth $5

CPA here. Probably use FIFO (first in first out) for calculation of a capital gain. So in your scenario you would have a long term capital gain of $14,996. Then the basis of ShitcoinX is $15,001.

You will file this on Schedule D.

Good luck my friend.

>you will never win on a semantic argument.
no really, prove to me that you can determine the value of a bitcoin at any given time. if you don't have a standard to measure then you can't enforce shit.

there has to be some basis for it, and if I lose a court case trying to at least get something definitive then good

until then fuck that noise, they're not getting any of my transaction record already

just dont file it, irs has no way to tracking any of your crypto to crypto trades on exchanges outside the us

pay your income tax, but that's it

I fully expect US gvt to ban us citizens from using international exchanges by next year, so they can steal from us

You do fifo you fucking retard. If you can't understand simple capital gains taxes exit crypto now.

Can you show me where it states this?

There's already a system for this retard
You can literally specify which one, or you can do average cost, or you can kys. People have been doing this with stocks since before you got your first psychologist consult.

FIFO IS FUCKING STANDARD FOR ALL CAPITAL GAINS YOU RETARD

i think thats' how monero works

This. All these retards ITT think you should be taxed for trading one pokemon card for another pokemon card. You're only taxed if you are selling a coin into USD. They can't tax you for trading a dogecoin for a niggercoin.

>Say you bought $1 of silver and traded it for $2 of gold some time later. Would you be subject to US taxes?
yes

How would forks or aidrops work?

Uh, heres an idea. Write everything off, say you lost it all, cash out silently, don't alert anyone, don't tell anyone anything, use international exchanges, and most importantly MAKE ACTUAL MONEY.

Again, file taxes, and make sure you're filing a loss every year. If Trump did it for 15+ years, i sure as fuck will too bitches.

It's taken as FIFO by default but you pay less % as it's a long-term capital gain. But I think you can opt for LIFO and will have to pay more % as it's short-term.

In your case LIFO would be less heavy on the wallet.

>They can't tax you for trading a dogecoin for a niggercoin.

They can and will. Every trade is a taxable event.

You can choose to sell the one that makes you pay the least in taxes. The purpose of capital gains tax is to scare poor and middle class people away from where the real money is made.

How the fuck can you can out silently when any sizeable amount of money deposited into your bank account will instantly get the IRS on your dick

What happens if I lost the keys / addresses to my old wallets that I don't remember anymore? What about the 2FA seeds I lost on my old phone so I can't login to certain exchanges anymore to access transaction records?

>say you lost it all

literal nigger tier evasion strategy

jail

That's fucking bullshit though, I legit don't remember 90% of the shit I've done over the last 6 months since I didn't even learn about this cocksucking change in law till a month ago.

what a cuck. IRS is way smarter than you dumbtard. you gotta pay taxes for all crypto transaction be it fiat or for another crypto.

For IRS, it's USD-crypto, crypto-USD-crypto and crypto-usd.

Then you better start liking the idea of getting a dick up your ass now.

Uhhh honey. Every trade to USD is. These coins aren't even accepted as currency yet, they're just "crypto assets". Like trading a pokemon card for another.

Friendly reminder that in Italy you pay taxes on crypto only if you trade more than 56.000 euros in 7 days. If you trade more you pay 26%

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

The IRS is still trying to come up with guidance. The way I told you to report is the safest option until further guidance is released. You can always amend the return if they come out with rules later that would benefit you.

>I buy 1 bitcoin for $15,000 in 2018 and 1 bitcoin for $5 in 2011. I now own two bitcoins. I want to trade one bitcoin for ShitcoinX worth $15,001 at the cost of 1 bitcoin.
You put in $15,005 and you now hold assets equivalent to $30,001. A capital gain of $14,996. Ignoring the fact that this took place over 5 years instead of within a single year, you'd have to pay taxes over $14,996 of capital gains.

Nope. You're some kind of an all-around crypto FUD who is trying to scare people away from getting into crypto, or you are a marketer for one of those "Crypto tax" sites. I think you are the latter, most likely, because I am investigating a number of these sites for fraud. Have a good night.

I ain't paying shit, their law is retarded.

I would suggest you account it as selling the $5 Bitcoin and getting $14,995 long term capital gains. Then when you sell the second Bitcoin in 2019 you can also get long term capital gains treatment.

If your total income is below $37,500 your long term capital rate is 0% which means you pay nothing until your total income reaches that amount and 15% thereafter

Let's say your income for the year is $30,000 - then you'd pay nothing on the $7,500 and 15% on the $7,495

What I don't know if you have to pay taxes on Bitcoin Cash because that's weird, yo

Use logic to screw the IRS. What you just did would back up any tax claims you file. If you get in trouble, use that logic. It’s called a loophole and you can legally use them to your advantage.

You were required by law to properly record every trade user, I've been shilling this to you cucks for the entire of last year. Stop being a fucking pussy and get started on it.
This is fucking bullshit

Realize what you are buying and how much of it you're buying. Capital gains is on an amount higher than 20k. Cash out WITH CASH. Craigslist, LocalBitcoins, meet people face to face make an ACTUAL transaction into cash and live life normally. You bitches are just a bunch of fucks that forget what you're buying and are afraid of the IRS and dumb shit. It is literally OKAY to file a loss, trump did it for 15+ years, literally!!!!! wtf??!!?! Buy some shit, invest the money, start a new company, its only up from here, make some K's and fuckin start something real.

It doesnt matter. Every crypto-to-crypto trade is a taxable event...honey. It's been like that for years.

Meh, I'll file a loss and get it over with. Fuck them. Oh, and fuck you too.

Bitcoin cash should probably be reported as ordinary income at the fair market value of what is was worth when received unfortunately. It’s kinda like a dividend in sense that you obtained it from holding Bitcoin.

AHHHHHHHHH IT’S PLUMMETING!!!!!!

is the income tax filed when you cash out to fiat (except localbitcoins) because if you just keep decide to hold crypto, is that income or no?

how do you keep track of all the penny gains you make daytrading

Its nothing, don't cash out with an exchange. MEET SOMEONE and sell it to them, holy fuck.

what the fuck are you talking about file a loss? if you can't provide your cost basis your cost basis will be zero

>Write everything off

It won't get dividend treatment from the IRS, but if it's short term capital gain (ordinary income rate) then that's bullshit since it's more like a stock split than anything (I didn't sell anything yet)

Besides, does that mean I have to report Bitcoin Gold, Diamond, etc. even the forks I don't even fucking know about? That's ridiculous.

OK, so if it's only forks I'm aware of (Bitcoin Cash), does that mean if I know about it, then it's taxed? What the fuck kind of quantum taxation is this bullshit?

>what the fuck are you talking about
¯\_(ツ)_/¯

yes, so on the off chance you do make it you instantly go to jail because you won't be able cash out your gains fast enough to pay the taxes you owe
So you basically would have spent all that time, efffort to pay the government taxes in installments and if they coins crash and you already reported them, enjoy jail for not paying up those taxes on the gains you reported

Step 1: write a trade bot that looks for cases where it can trade for a loss in fiat, but a gain in sat/gwei
Step 2: run trade bot, acquiring BTC/ETH, but always trading for a loss in fiat
Step 3: file taxes showing all losses
Step 4: get tax credit on losses + sit on now tax free BTC/ETH

Why is Veeky Forums so dumb. The answer is obvious.

File your losses, and fud the numbers. No one will check ANYTHING unless you literally take out over 20k in one transaction to a bank account.

Meet people and sell it to them, we shill gay coins on here, do it in real life like a real bizness man, fuckin ell

This is how the 13 colonies started

>This is fucking bullshit

Go to any number of crypto pump discords. They all have GROUPS of guys shilling their "crypto tax filing sites" which promote this "coin for coin" BS. If you trade silver for gold and make gains a few years later, the IRS isn't going to knock your door saying "Sir, that gold you bought has appreciated in value. Gibs." They'll only go asking for taxes when you SELL that gold into Fiat. You are all fucking brainlets. Cucklets, even. I wouldn't be surprised if the IRS themselves were shilling in these threads to get people to overstate their gains so they can take in more money from you than they should. If you overstate how much you owe the government---guess what, they're not going to so "Ohh poor puppy, you gave us WAY too much money"! That money is gone. Bye bye. Donezo.

Cash out. Subtract your initial investment from your new cash total: that is your gains which you can be taxed from. The IRS update did NOT actually explicitly say "crypto to crpyto, coin to coin". This is a meme that is being shilled.

Yes it’s income out of thin air.

Maybe you could argue with an agent that it’s more like a stock split and your cost basis is $0 and you wouldn’t have to report cap gain until sold. But that is risky and I wouldn’t advise a client on that unless the IRS gave further guidance. (Which the AICPA has asked for)

Not quite. Every trade from one security (shitcoin) to another security (shitcoin) should be recorded with its USD equivalent. You are disposing of one asset and gaining another. This is a taxable event.

You can also offset with losses from when you bought high and sold low.

it makes zero sense and it wont be enforced. Its impossible.

Pay when you cash out and laugh at them if they try to come after you for more because they will be completely fucked.

Well, that implies I should know about every single Bitcoin fork in existence just so I can file more taxes

What kind of a logic is that?

Shitcoins are not securities.

No, they tax if you made gains while trading one coin for another.

if you trade $100 BTC for ETH and if ETH price goes up for an equivalent of $110, you pay tax on that $10 gain.

oh & I'm heavily invested in crypto.

I literally think they're going to have to have a quantum computer to figure out how to tax me lol

>If you trade silver for gold and make gains a few years later, the IRS isn't going to knock your door saying "Sir, that gold you bought has appreciated in value. Gibs." They'll only go asking for taxes when you SELL that gold into Fiat. You are all fucking brainlets.
You're the brainlet here.

Scenario 1:
Buy $100 of silver. It doesn't appreciate.
Trade it for $100 worth of gold. It appreciates 2x.
Trade it for $200.

In that case, you pay a percentage of the $100 in capital gains you made after you trade gold for fiat.

Scenario 2:
Buy $100 of silver. It appreciates 2x.
Trade it for $200 worth of gold. It doesn't appreciate.
Trade it for $200.

In that case, you owe the IRS the percentage on the $100 after the silver-to-gold trade, but BEFORE the gold-to-fiat trade. If you don't have any fiat on hand to pay for the capital gains, tough shit, you better sell part of your gold to cover the gap.

No i would say forks that you are credited with in whatever exchange you use. If it hits your account and your fiat total rises, then I would report it.

Shit I didn’t get any other forks besides Bitcoin Cash.

>if you trade $100 BTC for ETH and if ETH price goes up for an equivalent of $110, you pay tax on that $10 gain.
>price goes up for an equivalent of $110, you

What the fuck do you mean "if ETH goes up $10". I'm holding fucking ETH, I haven't traded it to USD yet. You act like you owe the ATH that any coin reaches any time you hold it.

or buy low, the non-Veeky Forums way.

I don't use an exchange, I keep my coins in a wallet. I'm "credited" with all of them if I actually decide to sell.

You didn't get anything but Bitcoin Cash, but I have forks I don't even KNOW I have. It seems like it's bullshit to require me to file for things I don't know I received.

>This is a taxable event.

Its not a taxable event in the realm of reality with tangibly goals and possible outcomes. The IRS does not posses MAGIC.

Report when you cash out and leave it at that. IRS shills posting on here nee to STFU you worthless piles of shit who have no fucking idea what you are talking about and have no means to enforce it.

There number of problems and possible exploits and scenarios that you bring to the table doing this coin for coin shit is astronomical.

The letter of the law is completely fucking stupid and it will not be enforced. AT FUCKING ALL.

>Its not a taxable event in the realm of reality with tangibly goals and possible outcomes. The IRS does not posses MAGIC.
Do you exclusively invest in private blockchain coins? Did you use a fake ID on whatever exchange you're using? If the answer is not 'Yes' to both, it's very easy for the IRS to discover fraud.

This. I’ll gladly pay when I cash out (some), but not a penny until then.

You're missing the point in my argument. Holding altcoins is like buying silver, then trading it for gold which you HODL and then, eventually, sell into FIAT. You are not taxed until you sell gold or silver into FIAT, as you yourself even noted in your scenarios, which all end in transfer to FIAT.

People claiming you are traded on crypto to crypto trades are basically saying the IRS is going to knock on your door saying "Gib me dats for dat gold sitting in your house. You didn't sell that gold yet, but its price increased by $50, give us a percent of dats!"

More likely the cost should be split between the initial purchase (or cost to mine) of the bitcoin that it came from at a ratio of the market value of the two coins at the start of trade post fork.

1 bitcoin purchased for $100 pre-fork

at start of trade post fork the market value in USD is
- BTC $1000
- BCH $500

BTC: 1000/1500 = 66.6%.
BCH: 500/1500 = 33.3%

Cost Base
BTC: 100*0.666= $66.60
BCH: 100*0.333= $33.30

If either fork again it gets converted from its new cost base.

It was never a meme and as expected was clarified by IRS last year in preparation for an ass holocaust of crypto cucks.

IRS thinks you sold BTC for $100 and bought ETH with that $100.

No, you missed my point and are now clearly illiterate as well. Read my scenario #2 again, closely. In that scenario, you are taxed when you sell silver for gold. Doesn't matter if you never sell that gold for fiat, you're still taxed on the 100% profit you made. Doesn't matter if the gold appreciates 10000% either, as long as you don't realize that gain (e.g. trade it for something else).

You pay the tax from what you bought in with fiat to what you cashed out in fiat. Everything else is conjecture. If the IRS wants to sort out each individual trade they can go ahead and do so, but good look figuring out the value of X shitcoin at X time and measuring that in dollars and figuring out how much Y it was worth at Y time, fucking retarded

But we literally didn’t so that’s their fault for assuming. It wouldn’t hold in court.

You are literally a retard. The price of BTC is tied to the exact price you traded to ETH at that exact moment, not when it goes up $10 a few hours later. Holy fuck. By your logic, I have to be taxed on every gain and loss by ETH every single nano second. I'll need a trillion dollar quantum computer to do that.

I am 100% convinced right now that the IRS is going to be constantly hit with lawsuits where they lose the majority of every single court case.

For one if you force someone to cash out the IRS is double dipping which right there is against the rules and it would be thrown out. Then you have countless examples where the letter of the law should apply to things like collectible trading cards or video game items or literally anything you can think of.

Then we will also encourage devs to make it so coins can avoid tax situations or completely hobble the IRS in ways that have yet to be concieved yet. And tax avoidance is perfectly fucking legal. And if you think that people wont open the flood gates on tons of super creative ways to fuck the IRS in new and interesting ways you are a fucking retard or an IRS shill.

Report what you cash out. Its the only fucking possible scenario.

Open a bank account in Guatemala and tell the irs to fuck themselves

that's the stock split basis

but it doesn't make sense either, since BTC didn't go down when BCH was created, BTC went up (???)

the split is something around 10% BCH @ 250 and 90% BTC @ 2500

and again, now I have to lower my cost basis for BTC based on forks I don't know about (???)

Of course, I'd rather do this than take short term capital gains, but shit doesn't make sense

This. BTC is extremely volatile, which is traded for extremely volatile alts. Calculating all of this would be pure insanity for those who do hundreds or thousands of trades in alts each day.

I'm not saying that the IRS can or will enforce it. I'm explaining how they view the process and when they expect you to pay tax/when the taxable event is.

I'm not talking tax minimization strategies here. The reality of crypto is that it is easier to hide profits than most other sectors. But if the IRS decide that they hate you, they might decide to invest some time in you and break it all down..

Exactly this.

>Do you exclusively invest in private blockchain coins? Did you use a fake ID on whatever exchange you're using? If the answer is not 'Yes' to both, it's very easy for the IRS to discover fraud.

They will be hit with COUNTLESS FUCKING PROBLEMS with this. You fucking IRS shitbag fucking shill. You are fucked and you cannot enforce this shit at all from ANY POSSIBLE scenario.

There is no outcome where you fucking morons are going to be able to realistically tax every coin trade. You are all fucked and you will LOSE this fight so hard it will make the war on drugs look like a damn picnic.

Report what you cash out. They are 100% powerless to do ANYTHING beyond that.

>What I don't know if you have to pay taxes on Bitcoin Cash because that's weird, yo lol
I'd guess youd report the Cash as a cost basis of zero and you pay capital gains on it when you sell.

In Canada we have simple tax laws.

Capital gains is basically like 20%.
Not that bad.

It's also incredibly difficult to get thrown in jail for tax evasion here.
CRA just wants their money

>I am 100% convinced right now that the IRS is going to be constantly hit with lawsuits where they lose the majority of every single court case.
The IRS almost never loses, nice dream though.
>For one if you force someone to cash out the IRS is double dipping which right there is against the rules and it would be thrown out.
It's not double-dipping. You're taxed on each gain once. Whether you pay a percentage on two $50 gains or one $100 gain when you fully cash out makes no difference.
>Then you have countless examples where the letter of the law should apply to things like collectible trading cards or video game items or literally anything you can think of.
The IRS is allowed discretion in which cases they pursue, as long as it isn't politically motivated/biased.
>Then we will also encourage devs to make it so coins can avoid tax situations or completely hobble the IRS in ways that have yet to be concieved yet.
Yeahno that's pretty much impossible. If it has value and gains value in your custody before selling, the IRS can define that as a capital gain no matter what it is.

That's what makes the most sense, but I wish IRS would issue guidance on this

Anything else is batshit insane, since it requires me to know about forks of EVERY crypto I own. Any new ETH forks out there? I don't know!

>I'm not saying that the IRS can or will enforce it. I'm explaining how they view the process and when they expect you to pay tax/when the taxable event is.

If the IRS claims that mermaids and unicorns are taxable events thats cool and all but they wont be taxing that either.

This is a situation where they have no power. The only place the have power is fiat. And if they FUCK with this space they will get fucked right back so hard they will lose. And if they double down they will lose twice as much.

Report on cash out only. End of fucking story.

You shills need to quit your fucking jobs.