Ok, so I actually met up with an accountant who cost $250 an hour to discuss my gains.
I think we all know that in the US each trade is considered a taxable event, etc etc. Not nearly as bad as it sounds, pretty easy to calculate with generated reports (unless you're a faggot who day trades hundreds of times a day), and you'll probably get a lot of slack for not being 100% accurate because the IRS doesn't have the man power to confirm every fucking trade you've made over 10+ exchanges...
HOWEVER, what he said that concerned me, and what I also think is impossible to be true, is that at the end of the year, basically December 31st at midnight, whatever your portfolio is, is what is considered your earnings for that year. Meaning that if your portfolio is worth 1MM at the end of the year, the crashes to 400k on January first, you still owe taxes like your portfolio is worth 1MM.
There is no fucking way this can be true, right? I'm going to meet with another accountant but this sounds like bullshit to me. Let's say some crazy shit happens with buy orders and your portfolio jumps 100,000% for 45 seconds on an exchange, and this just so happens to be when the new year occurs, do you owe the IRS half a billion dollars? Also, how the fuck do you calculate the price of bitcoin? It sells for whatever people buy it at on different exchanges, some exchanges don't even give price since things are traded in bitcoin and not USD.
This is fucking bullshit, that accountant can't be right about this. There are too many factors.
So basically what I'm asking is, is there a "snap shot" of your portfolio worth at the end of the year which is used to considered your income?
>whatever your portfolio is, is what is considered your earnings for that year. Meaning that if your portfolio is worth 1MM at the end of the year, the crashes to 400k on January first, you still owe taxes like your portfolio is worth 1MM.
You know what I realized from reading Veeky Forums? Tax accountants are a fucking joke.
It's simple. You put in $1000 right? It appreciates 500% to $5,000 over a year. You take out the $5000, you pay long term capital gains on $4000.
No "prove you transaction" bullshit. The IRS isn't going to fuck you when it's already uncharted territory.
Easton Turner
You have to declare capital gains when you SELL property or investments for more than you paid.
Jace Hughes
I mean... the snapshot is what's used to assess its value in (unrealized) capital gain... you won't pay tax on it... you will pay tax on the trades you made during the year depending on what basis you're using. It was probably a mix between both you and your accountant being handicapped.
Blake Brooks
I'm not a lawyer OP, but as I understand, you only report taxable events that happened within the year.
For instance, if you buy a coin in June 2017 and don't sell or trade it until sometime in 2018, you do not have to report any "gains" that the coin has made during 2017. Now, on 2018 taxes, you will need to list the buy price, sell/trade price, and profit you made on that coin.
Michael Gray
I think I read something like that for daytraders. I thought that it's done optionally in exchange for some advantage. Just search the Internet about taxation on daytraders.
Owen Jones
this
thank you user
"every trade is a taxable event" is a non-issue and is the IRS simply being wordy and anal. You pay taxes when you convert it to fiat, because they are realized gains. Otherwise they are unrealized gains and you cant be taxed on gains that are not realized.
Luke Reed
fuck taxes on 'every trade'.
i'm only paying tax when i cash out on realized gains. don't care what IRS fanboys say. keep trying to convince, keep telling me i'm going to get ass fucked.
don't care.
the whole system is fucked up and not sustainable. accountants don't have a clue and neither do most crypto hodlers.
give it one to two more financial years and they will change the rules again garranteed.
they don't have the man power and won't even bother chasing you unless you're making 1MM+ figs.
so if I cash out 100k next year how much of that does the gubbermint get?
James Nelson
Also, don't waste your money on an accountant, if you are not illiterate. Just read IRS's instructions yourself. This is a groundbreaking discovery! We must spread the news to investors all over USA. They'll be thrilled to hear that if they trade their real estate and stocks with gold instead of cashing out, then they'll never be taxed! Brilliant!
Liam Gomez
dunno man, I just pay my taxes before I spend any money (e.g., roth IRA). and pretty much always use cash. would never advocate or practice tax fraud. it's probs better to just pay that upfront and not worry about it later
Henry Nguyen
The absolute STATE of seppoland when you need to hire a $250/hr accountant to even attempt to pay your taxes
Charles Scott
>accountant that charges 250$ an hour
Looks like you got yourself a cheap accountant user
Joshua Harris
yeah bud lol, once the clock hits 2018, your taxes for 2018 start and 2017 end
Adam Ross
mines your initial investman times by the long temr or either the short term hold percentage is what you pay on it soo intial investman is 10k lets say you hold it for a year or more it goes to 100k 100,000-10,000- 90,000 say the long term tax is 15% then you pad 0.15*90,000= 13,500
David Smith
seriously. the tax form is 1 page of basic arithmetic unless you fucked up along the line. the U.S. should just pull a japan and send the tax forms already completed, and accept corrections from citizens when necessary. not this backwards shit, look up yr braket, subtract this from that, skip to line faggot, blah blah blah
Mason Baker
some gov. agency does have determined prices for gold, no? is there any gov. determined/accepted price for BTC?
Kevin Peterson
the price of gold is a privately negotiated % over spot, paid in cash. fuck off jew
Nicholas Evans
He said that you can no longer write off capital loss between years, it was a new rule this year apparently...
This is what I thought too, so I guess you own taxes on the gains of whatever coin you sold to get into the coin you're holding into the new year I suppose?
Each time you trade it's considered a "sell"
This is what I'm hoping for, it makes the most sense, how the fuck could you be forced to owe on shit that isn't in US dollars? You never traded back to USD, so what the fuck.
He was saying that people will get seriously fucked by crypto taxes.
$250 is pretty high end, the best of the best only charge around $400.
Jason Harris
is there really any practical way of trading stocks for anything but FIAT?
Aaron Miller
That's what I mean, I think the accountant is using stocks as an example for crypto, which isn't right.
When you sell stock to buy other stock, you are selling into USD, then using that USD to buy other stock. This isn't the case with crypto, though the IRS is claiming it is? Who the fuck determines the price of bitcoin?
Jaxon Jones
I was a little curious myself, so I looked this up. Took only a few minutes of searching and reading on my phone(SEE HOW EASY IT IS TO DYOR!). Let me spoon-feed you infants, so open wide. >Taxation of Dealers, Investors, and Traders. Under the mark-to-market rules, dealers and eligible traders are treated as having sold all their securities on the last day of the tax year at their fair market value (FMV), causing gain or loss to be taken into account for the year. thetaxadviser.com/issues/2010/feb/sec475mark-to-marketelection.html irs.gov/taxtopics/tc429 So my question to YOU is, when it comes to taxes, why do the Veeky Forumsraeli act like the Internet was never invented, and instead act like illiterate drooling mental retards?
Luke Green
that accountant is full of shit. Every trade is considered a taxable even and you are taxed on the amount of profit made on each trade. Say you bought $5,000 of bitcoin and then sold it months later for $20,000 you would pay whatever you tax rate is based on your income on the $15,000 profit you made. If say you bought $500,000 in bitcoin and at the end of the year it was now worth $1,000,000 but that entire time you just held it and never made a trade with it, you own no taxes on it until you do sell it. So no there is no snapshot he is a retard your income is determined by adding up the profits you made on all your trades for the year.
Luis Walker
the IRS hasn't claimed anything imo, have they? it's just however people want to interpret it.
and there are few tax advisors in crypto, they generally store their wealth in gold/stocks which both are getting rekt, and will be getting much more rekt in the future by crypto, so don't expect them to try and interpret it in a way where you come off better
David Reed
That's what I think, but it is the case that every crypto trade is a taxable event. Even though I think it's wrong, I think you technically do owe at the end of the year what you sold your previous coin for in order to buy the coin you're holding into 2018 (for example if I bought bitcoin in 2017, then traded that bitcoin for ethereum in December 2017, and continued to hold my ethereum into 2018, I would owe 2017 taxes on the gains I made from buying bitcoin and "selling" it to buy Ethereum)
But that doesn't make any fucking sense since I never went into USD and all coin prices fluctuate wildly on different exchanges at the same times, so how would you even calculate that bullshit.
Luke James
You technically have to report every trade even if it is crypto to crypto. Convert the coin to USD using fair market value. If you didn't write current USD value down at time of trade, you can use the historic OLHC values.
Carter Torres
lol, you link the IRS site, but quote from some random tax advisor on the internet.
the quota is not from the IRS's site.
if that quote was true, real estate investors would also be forced to pay taxes after their properties' "fair market value" but they aren't.
>This approach isn't unique to crypto - it works the same way if you trade stock for something
but you literally never trade stock 'for something' beside fiat.
where is a the IRS official stance on this? that's not just the interpretaion of some random person on the internet?
Bentley Gray
Barter is taxed. LOOK IT UP. >the IRS hasn't claimed anything imo, have they? Yes they have. LOOK IT UP. Read . Are the real estate investors that you have in mind "dealers and eligible traders"? >But you're not quoting directly from IRS! I'm not going to listen! Get out of here.
Grayson Peterson
>where is a the IRS official stance on this? that's not just the interpretaion of some random person on the internet? Good question... WHY DON'T YOU LOOK IT UP?
So if I buy an umbrella for $5 then trade it for a used broom then I'm taxed on that transaction? That's fucking retarded
Also, WHO determines the price of bitcoin? What the fuck is fair market value? exchanges differ by 20% at any given time.
Dominic Johnson
> I actually met up with an accountant who cost $250
lel
>Meeting with an accountant instead of a tax attorney
Jace Taylor
>So if I buy an umbrella for $5 then trade it for a used broom then I'm taxed on that transaction? Did the umbrella appreciate in value while in your possession? IRS probably won't care, unless it was an antique that was valued at $30 million. >Also, WHO determines the price of bitcoin? What the fuck is fair market value? exchanges differ by 20% at any given time. Use a consistent method (i.e. pick one exchange). Do your best. Be prepared to show your method and paperwork if you get audited. If you're not satisfied with this answer, DYOR!
Elijah Harris
My bot is trading a 100-200 times a day...How fucked am I?
Elijah Rodriguez
Best choice would be an hero m8
Bentley Sanchez
so Chris Larsen of ripple owes like 15 billion usd in taxes this year? I don't think so
Christian Brown
I've done alot of thinking about this topic, and have come to the conclusion that the best and most honorable way is the way that looks normie to the tax dept. Don't file anything and pretend to be a clueless normie crypto enthusiast.
The tax dept will be told by your bank if there is any out-of-character activity on your bank account. Like wiring in 150K from overseas. The tax dept knows if you signed up with any local bitcoin exchange.
So make transactions that won't draw any attention - do the legwork - get to know people in your city who are also into crypto, and spread the word educating interested yet intelligent noobs - take steps to secure your money yourself in a private deposit box and a home safe and on paper ZENcash wallets. Be open and enthusiastic about in talking about crypto but vastly understate how many coins you have.
The rule of thumb is you can cash out up to 80% of what you make in your normie job wageslaving before the Tax dept opens their eyes. So say I make 60K per year, I can cash out 50K in the year before the tax dept will likely start to care, even if i leave a paper trail. So I do that via localbitcoins, localZEN, and through my contacts I have met at bitcoin meetups and come to trust.
I still pay for a day-to-day groceries from my bank account, but any toys: headphones, games, computers - I buy exclusively with crypto. Same with any travel or holidays. I ask every place if they accept crypto, and i keep looking till i find a place that does provide the good/service I desire for crypto.
At the same time, I start acquiring assets with crypto - a nice 2nd hand car - paid with ZEN. A super rare Magic the Gathering card - gave that nerd Monero. Gold bullion - I deposited privacy-enabled Bcash and received it via secure courier.
Andrew Torres
Last but not least, after a year of building up like this, and greatly strengthening the crypto economy in the process, I request a 200K fiat loan from my parents, all signed by lawyers, no trouble. I pay the lawyer buy doing a transaction with a local crypto buddy I can trust and giving the him the lawyers bank account to deposit fiat to.
I find a house for private sale, carefully feel out the owner, and if he seems smart, and offer to pay 5% extra if he is willing to take bitcoin for part of the payment. The house has a market value of 325K but If he will sell it to me for 250K I pay him the 75K balance in bitcoin plus 5% on the side, unrecorded in the sale and title document the sale is recorded as being for 250K fiat.
I'll pay parents back by selling on LocalEtherium every month and having the people buying ETH from me deposit the bank wire directly to my parents account - it never hits my account so it will never raise a red flag to the bank/tax dept. And to parents Bank it just looks like I am repaying the loan at a slightly above normal rate.
And just like that, by pretending to be a perfect enthusiastic Crypto normie numale for a year, biding my time, I am sitting on a tidy pile of useful assets and toys, I have paid no tax, and I have contributed to making the world a better place where more private crypto transactions are done so people can keep the sweat of their brow. And not give it to the tyrrany of excess tax. i still feel good because I am paying same tax as everyone else on my wageslaving. Taxman sees me as just another drone, and I encourage this by not filing any tax return or making any large cashouts.
The only thing, the ONE thing that could undo all of this is a salty friend. So always complain with the other normies how poor you are. Say you still have a HUGE mortgage. And NEVER tell any women how much you are worth. If you can keep your mouth shut, you can enjoy all of your gains. if you can't... you will pay dearly to the jealous state.
Thomas Reed
I’m tired of constantly arguing with you faggots about this shit and how you are wrong. One last time though. DYOR about how every time you trade it is considered as realizing gains. Will they care/realize till you go to fiat? Probably not. But as soon as you do they will want to know how the money you put in on 2016 and pulled out in 2018 went from 5k to 200k. That’s when they will want the trade to trade numbers and taxes/penalties on unpaid amounts. You can probably fuck around and make it so you held a coin until the current year to avoid paying late penalties. But you risk fucking it up and getting ass raped, so either be a cpa or damn good at manipulating numbers if you want to try that. And never admit or tell any person that you did.
Mason Phillips
This plan is basically the "never sell" plan, you cash out slowly to obtain the real-world items you need. Basically don't do any transaction you couldn't realistically have done in your normie life. $150K bankwire from overseas? nope, instant flag for tax and probably terrorist financing investigation. Buying a lambo with bitcoin and parking it in your diveway? no, normies will get jealous and report you for tax audit. (In which case you immediately comply and avoid the harsest penalties)
No legal consequences in selling for cash. Unless you immediately go and deposit the cash over the counter to your bank, there is no way for any government agent to know that the transaction took place. Banks are obligated to report around 10K or more of cash being deposited. If you use the cash to buy things from the grocery store instead then you are good.
To avoid losing nearly half your gains to tax, you have to adopt the attitude of the revolutionary: banks are the enemy, you may work with them for now, but the goal of crypto is to be your own bank.
Another thing you can do in the never-sell strat is to hire people with crypto for short term jobs - like designing you a slick website, or painting your garage, or converting your car to electric. in this way adding value to your assets "for free" and potentially creating new legit website revenue streams that you DO pay tax on "for free". All plausibly deniable - you can say you did the work yourself.
Sebastian Myers
True about not trying to catch you till you cash out massive amounts. But they will want records of every trade no matter what you cash out, they just may never spare much time to actually investigate it unless you are over x amount.
Jason Brooks
So the best strategy now is to buy and hold, no more day trading?
Gavin Harris
its absolutely 100% true burgers need to suffer
Owen James
This is some solid info. How do you recommend selling btc for cash? local bitcoins? paypal?
Charles Gomez
$10,000 leaves bank account
$30,000 enters bank account in 6 months
Pay tax on 20k. How hard is that to understand
Your accountant clearly knew you were an idiot when he charged you $250 an hour. Accountants do the first consult free as you'd be with them for life after
Alexander Murphy
This is correct. Also: fuck you IRS
Benjamin Sanchez
>forced From >Traders can choose to use the mark-to-market rules, investors can't. It's something that daytraders (as classified by the IRS) have option to do, if they deem it more advantageous.
Jaxon Mitchell
Yep, You can do for cash, or local bitcoins, or paypal, however your trusted individual trading partner is happy to trade. The main thing is to stay away from big amounts with exchanges that might get audited and give up your name to the tax dept. Or doing a large volume with a single localbitcoins buyer. If you've cashed out a large amount from one place, e.g. 80k from one big dude on local bitcoins who also has the best rating and transacts with 100s of other people, then that is bad because when they get audited your bank account will come up as a big crypto player and will draw the attention of the tax departments bloodhounds.
If however you have fun spreading the word of crypto, and do a lot of small transactions with a lot of people in alot of diffeent mediums, you will be safe. This also happens to be incredibly good for the crypto economy and adoption and driving the price of the coins you are holding to ever higher highs.
Elijah Morales
The downside is that it does require hard work, and does require being smart about who you deal with, interviewing partners, managing your own money, being able to value goods and services. Basically you have to become good at business to go this route. It forces you to go outside and become a better Veeky Forumsiness man, and a better person in general.
but it can be fun, socializing, doing activities, making deals. What do you think all the business men are talking about after that round of golf? You will be the next - crypto/biz/inessman
Nolan Richardson
More info on this topic- This article discusses the pros and cons of making the mark-to-market election: journalofaccountancy.com/issues/2014/jul/sec-475-election-20149537.html. Lol! You want to jump through all sorts of hoops and risk fines, just to avoid tax? At that point, it's not worth it.
Gavin Smith
'scuse me? You really think there isn't a normal stock market price for gold? How did you even get here?
Christopher Bennett
Not just to avoid tax - to develop your strength as a man, feel alive through danger, and have your self respect. If you want to lick the boot of the dino-tyrant go right ahead - they will probably mess with you anyway for making one tiny mistake.
Chase Phillips
how about FBAR? lots of you about to get fucked and you dont even know it lol
Chase Walker
Fuck that foreign financial shit. I’ll dyor eventually.
Thomas Gutierrez
Just get a Cayman Islands account and call it a day.
Anthony James
Just spent a massive 10 minutes looking into this, and for my poor ass self at least, fuck you I’m good. Less then 10k.
