Tricking the tax man

No you would lose because property to property trades in the US are taxed on the fair market value at the time of trade measured in dollars minus cost basis. The only way around this legally is to defer the taxes through a complicated request and approval process known as like-kind exchanges. In 2018 they made it clear that they would not even accept requests for like-kind deferral for crypto. Even if you attempt to defer your 2017 trades, they most likely won't approve it. And if you didn't file anything at all, you certainly would be guilty of underreporting.

Oh sweety, those are fud posts. What are they trying to get you to do? They are trying to get you to not cashout. Why? Because you CANT CASHOUT, the fud is to make sure as little people find out as possible that you cant cashout by scaring people into not cashing out under the guise that they're saving money / making money through putting off taxes.

And yeah OP, your strategy is called Tax Loss Harvesting. It's a thing.

No. Losses aren't countable for deduction. You're taxed on both losses and gains.

>Loose
>All your money
Top zozzle even after this bloodbath I'm still 2x, and I bought in near the ATH in December.

Just admit you don't know how crypto works and we'll help you. We want everyone to make it.

You only need to pay CGT when whatever asset is liquidised so if you trade at a loss that can be written off, if you trade at a profit you owe tax, hold and no tax is due until liquid

That's not true.

Shouldn't you be only taxed on your profit, just like the stock market?

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

>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.

That disproves "taxes are only when cashed out" theory right there.

and here you degenerate crackers are trying to avoid taxes after getting onto that DACA coiner that just wanted to cash out in peace

There's no stock to stock pairs in the stock market. But yeah it pretty much works the same way. The issue many people are having is that because of calculating in FMV at time of trade in December of last year, their short term gains are really high. And then they didn't cash out enough money to cover the tax, then they rode the January crash down, which can only be written off for future years.

see the biggest fuck up in your cuck logic is you have to self identify and give the IRS your wallet in the first place

So you're saying the IRS didn't subpoena Coinbase records in order to catch people not reporting tax? You think that's as far as they'll go?

this is asinine and is not the case
the IRS can't tax you into the negatives unless you try to defraud them and owe interest or something

It is the case though. That's an edge case that will happen due to the nature of taxing on FMV.

Damn, how do I mitigate that?

By cashing out the amount you owe in taxes before the end of the year and practicing "Tax Loss Harvesting" as OP mentioned before the year end also.

> 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.
> for other property

seems ambiguous and doesn't necessarily seem to imply for other virtual currencies

also the value at the time of the trade is always equal obviously

This seems to be describing paying $500 in ETH for a $500,000 house, not trading ETH for LINK

So how much do you need to withdraw for the tax man to decide to tax your ass?
I just withdrew about 10k Euros in December and didn't get any notice.

All virtual currencies are classified as property. And the like-kind exchange argument is pretty destroyed already. No accountants will do it.

The Fair market value of the trade is equal to the value of the other property, but what matter is, is it equal to the COST BASIS of the coin you're trading? If it's greater, than you owe taxes.

>loose all your cash

You're the fucking stupid retarded faggot

yeah that's fucking retarded and not what it says in the official doc, you're just trolling or dumb
I don't think you actually know what you're talking about

You're really fucking stupid. Trust me.

I've been researching this topic for 6 months and contacted 8 different tax specialists because I have a million dollar capital gain in 2017. I started off arguing this as a "devils advocate" because I wanted someone to disprove me so I don't have to pay massive amounts of taxes. No one ever could.

Just sell on local bitcoins ffs

Go back to plebbit dummy

Correct

it is specifically known as a 'wash sale'...not allowed for securities, but crypto isn't defined as a security, so while this isn't legal/tax advice, yes, it appears this could allow you to take a loss and hold for a year to avoid short term cap gains rates. talk with a tax attorney

What do you think they mean by "adjusted basis of the virtual currency?"

They're talking about cost basis. They say it over and over throughout the document that it's FMV - Cost Basis.

It means if you bought 1 Bitcoin for $1,000.
Then traded it for $10,000 worth of ETH / land / gold / shitcoins / services.
Then the cost basis = $1,000. FMV = $10,000. You have a $9,000 capital gain.

It doesn't matter what kind of property the transaction was in.

Depends on your tax laws. 12m holding is tax free, so yes. A quick trade would reset the time frame

Talk to some tax experts and you will find a smooth solution

The worst case scenario would be the following:

2017: You buy $1000 of bitcoin early in the year. By the end of the year it's worth $1 million. In December, feeling that ether has more potential, you buy ether with your bitcoin. The irs considers this transaction as selling your bitcoin for $ and then buying ether with $, even though you swapped it directly. So you're selling x bitcoin for $1 million, incurring a gain of $999000, and getting y ether with a cost basis of $1 million. You owe taxes on the gain.

2018: Ether crashes and you sell at, for arguments sake, $1000. You're back to where you started. Selling it for fiat, you incur a capital loss of $990000.

So the two balance out, right? No, because you need to pay the gains in 2017 and you can't deduct the losses until 2018. Furthermore, you can only deduct $3k a year in capital losses beyond your capital gains, the excess rolls over but with $990000 in gains it'll take a while! You can't uses the losses to offset the gains from 2017, those taxes are due (and are likely in default because you don't have the fiat to pay em).

Fun,right?

So with your interpretation, the absolute worst case scenario is that you're taxed at the difference between whatever they believe the fair market value for the alt is (which generally does not have a USD pair, so it'd be the USD value of the BTC measure din sats) for a single trade and nothing more, because from that point on everything is just measured in sats essentially

So the above edge case scenario is still not believable

>alot

>because from that point on everything is just measured in sats essentially

No, everything is measured in US DOLLARS, forever and ever.

This guy gets it.

>loose

he said exactly what I said but with an example

I even made an example scenario of that in bitcoin.tax

Man buys 10 bitcoins and just trades it back and forth with ETH, never cashing out. He unfortunately traded at peak prices in December. The software gets the API data from exchanges finding out the exact USD value of BTC at the time of trade to compute the FMV.

This is his tax bill. In USD.

Even if he loses it ALL in January 2018 he still owes the $371,789. His net loss only gets carried forward in years, and he can only deduct $3,000 a year from his other income.

Wow. You're really retarded.

>hurr look at what this man said
>he's right and you're wrong
>also you're stupid hurr
>it's literally the same fucking thing
I think you are the dumbass and you're emotionally invested in this internet argument

I'm just here for information

Yes, selling and immediately re-buying is indeed deductible if you made losses. I've been doing this for years. But that doesn't mean you won't have to pay taxes afterwards. The cost basis after that is the new price you bought at of course. But if you hold for at least a year afterwards you might be able to get away with paying long-term capital gains (which would actually be 0% in some countries like Germany). So yeah, you'd basically trick the tax man.

cant you only deduct 3k in loses or something stupid like that?

If that's really how your tax laws work and then again you are a random pajeet in Veeky Forums. Why the fuck would you still live in that country? That's theft and nothing else.

You don't get it at all. At all. What he said doesn't match the retarded shit you said about how it's only measured in USD for one trade. His point was the same as mine, that losses from 2018 doesn't cancel out gains in FMV from BTC / ETH pair trading so the edge case is completely possible.

Holy fuck you are stupid and/or just pretending for the sake of continuing the argument

>that yerba mate taragüi in the first shopping cart

You're so lost.

This IS how tax law works in most countries. As soon as 2017 ended your taxes were set. You're taxed on the profit you made in 2017. End of story. NOTHING you do afterwards matters anymore. If you made a million in 2017 you're taxed on the million. If you lose everything you have in 2018, you're fucked. Because you're still taxed on the million. This is how taxes have worked since forever. Which is why you put your tax money on the side at the end of the year.

ok retard

>paying over 100% taxes

Ever heared from 12m hodling equals Tax free? I don't care about pajeet tax laws

In what country?