Posted by
Message
GumboPot
USA Fan
tigerdroppings.com Elite Member
Member since Mar 2009
88143 posts
 Online 

Crypto and taxes.
The SEC does not consider most cryptos a security. I don't know if that matters or not.

Scenario:

Bought one Bitcoin at $30K of U.S. dollars.

Waited one year and that one Bitcoin is now worth $50K of U.S. dollars.

Purchased a truck worth one Bitcoin. Forwarded it to the deanship and the sales transaction was made with Bitcoin currency. The price of the truck is one Bitcoin.

Are federal taxes required to be paid on the $20K of USD appreciation?

Does it matter that the Bitcoin was never converted to USD before the transaction was made with the dealership?



Mingo Was His NameO
LSU Fan
Brooklyn
Member since Mar 2016
18196 posts
 Online 

re: Crypto and taxes.
quote:

Are federal taxes required to be paid on the $20K of USD appreciation?


Yes

quote:

Does it matter that the Bitcoin was never converted to USD before the transaction was made with the dealership?


No


jimbeam
US Army Fan
University of LSU
Member since Oct 2011
72257 posts

re: Crypto and taxes.
Doesn’t matter. Crypto is fake money.


Replies (0)
Replies (0)
315
GumboPot
USA Fan
tigerdroppings.com Elite Member
Member since Mar 2009
88143 posts
 Online 

re: Crypto and taxes.
However to me one year ago the price of the truck was 1.67 Bitcoin. A year later the price has come down to 1 Bitcoin.

We now have to pay gains taxes on all products that reduce in price?

ETA: can I declare losses on purchases on goods that go up in price?
This post was edited on 7/22 at 1:04 pm


el Gaucho
LA-Lafayette Fan
bawcomville
Member since Dec 2010
43792 posts

re: Crypto and taxes.
Nice hypothetical scenario “baw”


We know all you cringeto nerds drive priuses


Replies (0)
Replies (0)
31
meansonny
Georgia Fan
ATL
Member since Sep 2012
14329 posts

re: Crypto and taxes.
quote:

quote:
Are federal taxes required to be paid on the $20K of USD appreciation?


Yes

quote:
Does it matter that the Bitcoin was never converted to USD before the transaction was made with the dealership?


No


If i convert my money to pesos and a year later back to dollars, i would have to pay taxes if there were gains in the currency exchange?


GumboPot
USA Fan
tigerdroppings.com Elite Member
Member since Mar 2009
88143 posts
 Online 

re: Crypto and taxes.
quote:

If i convert my money to pesos and a year later back to dollars, i would have to pay taxes if there were gains in the currency exchange?


If the answer is yes, can you declare losses in Mexico?


meansonny
Georgia Fan
ATL
Member since Sep 2012
14329 posts

re: Crypto and taxes.
quote:



If the answer is yes, can you declare losses in Mexico


My follow up was going to ask why i couldnt be shorting pesos when i converted to dollars (i.e. a separate transaction from the first one).


Replies (0)
Replies (0)
00
TigerTatorTots
LSU Fan
The Safeshore
Member since Jul 2009
77488 posts
 Online 

re: Crypto and taxes.
quote:

Are federal taxes required to be paid on the $20K of USD appreciation?

Yes
quote:

Does it matter that the Bitcoin was never converted to USD before the transaction was made with the dealership?

No


GumboPot
USA Fan
tigerdroppings.com Elite Member
Member since Mar 2009
88143 posts
 Online 

re: Crypto and taxes.
I found the answer on the IRS website:

quote:

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. See Publication 544, Sales and Other Dispositions of Assets, for information about the tax treatment of sales and exchanges, such as whether a loss is deductible.


LINK


Replies (0)
Replies (0)
20
TD SponsorTD Fan
USA
Member since 2001
Thank you for supporting our sponsors
Advertisement
LSUFanHouston
LSU Fan
NOLA
Member since Jul 2009
25643 posts
 Online 

re: Crypto and taxes.
quote:

We now have to pay gains taxes on all products that reduce in price?

ETA: can I declare losses on purchases on goods that go up in price?


It has nothing to do with the goods and their prices.

It has everything to do with the fact that the IRS has classified crypto not as a currency, but as a security.

Does it make sense? Well... most currencies don't fluctuate in value like crypto does.

This could all be changed by changing the law, by the way.


LSUFanHouston
LSU Fan
NOLA
Member since Jul 2009
25643 posts
 Online 

re: Crypto and taxes.
quote:

If i convert my money to pesos and a year later back to dollars, i would have to pay taxes if there were gains in the currency exchange?


Do you even IRC Section 988, baw?


Replies (0)
Replies (0)
00
GumboPot
USA Fan
tigerdroppings.com Elite Member
Member since Mar 2009
88143 posts
 Online 

re: Crypto and taxes.
quote:

It has everything to do with the fact that the IRS has classified crypto not as a currency, but as a security.


But the SEC has not declared the crypto as a security (only for three original owners of Ripple). Why the difference between the IRS and the SEC?

I think you mean the IRS has declared crypto as property, right?


LSUFanHouston
LSU Fan
NOLA
Member since Jul 2009
25643 posts
 Online 

re: Crypto and taxes.
quote:

I think you mean the IRS has declared crypto as property, right?


I think that is what I said?

quote:

But the SEC has not declared the crypto as a security (only for three original owners of Ripple). Why the difference between the IRS and the SEC?



Well... you mean we have inconsistency between government agencies??? Shocker!

One agency is concerned about raising revenue. The other is concerned about the public market for securities.

The IRS wants the revenue by deeming it a security. The SEC probably doesn't want to have to regulate it so they say it's not a security.


GumboPot
USA Fan
tigerdroppings.com Elite Member
Member since Mar 2009
88143 posts
 Online 

re: Crypto and taxes.


Replies (0)
Replies (0)
00
tigercross
Member since Feb 2008
3822 posts

re: Crypto and taxes.
quote:

It has everything to do with the fact that the IRS has classified crypto not as a currency, but as a security.


Is it a security? There's no wash sale rule. I think it's considered property.


mach316
LSU Fan
Jonesboro, AR
Member since Jul 2012
4318 posts

re: Crypto and taxes.
May want to give this guy a listen...

Mark Kohler


Replies (0)
Replies (0)
00
Hand
Army Fan
far side of the moon
Member since Dec 2007
2053 posts

re: Crypto and taxes.
Cryptocurrencies are considered "property" by the IRS. They don't meet the legal or the economic definitions of currency. That's why "cryptocurrency" is a misnomer. They're digital assets.

There are tests to determine if an asset can be deemed a security or not. The biggest part of that test is if the coin/token issuance is dependent on the management/development team completing something to give the underlying asset value (then it would be considered a security).

Some industry players got together and formed a Crypto Rating Council to evaluate the risk of a given token/coin being considered a security or not. On a scale from 1 to 5 with 1 being not likely a security and 5 likely being a security, BTC rated as a 1 (not likely a security) and XRP rates as a 4 (likely a security).

https://www.cryptoratingcouncil.com/asset-ratings


Zilla
LSU Fan
Member since Jul 2005
10516 posts

re: Crypto and taxes.
great post thank you


Replies (0)
Replies (0)
00
OysterPoBoy
USA Fan
City of St. George
Member since Jul 2013
24248 posts
 Online 

re: Crypto and taxes.
You wouldn’t have this problem with Iraqi dinar.


Replies (0)
Replies (0)
00
first pageprev pagePage 1 of 1next pagelast page
refresh

Back to top

logoFollow TigerDroppings for LSU Football News
Follow us on Twitter, Facebook and Instagram to get the latest updates on LSU Football and Recruiting.

FacebookTwitterInstagram