re: Official CryptoTalk Thread

Do they give a shite if you lose or gain? Its just taxes on however much is being moved at that point, correct?

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This may be self-explanatory once I've actually done it once, but how do you determine what you've "gained" and owe taxes on if you just trade ETH for ICX? I feel like the gains are still very much fluid until you move it back to ETH and cash it out.

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It’s not self explanatory at all. The exchanges provide no statements or even ad hoc reports to assist in tax compliance.

Many are clinging to the like-kind exchange rule for trades of crypto to crypto, where there’s no fiat out. That is likely a poor interpretation, but one that could at least be argued for 2017. Under the 2018 tax reform it is not even in question since only real estate property can qualify for this treatment.

The IRS summoned Coinbase to hand over transaction data of larger ($20K+ in buy/sell/send/receive) over the years 2013-2015 already. It’s almost a certainty they will receive this same information for subsequent years at some point.

If you don’t use Coinbase and/or have very limited crypto transaction volume, and are unlikely to be audited (take standard deduction rather than itemize and have an overall straightforward return) then the risk of incorrect tax treatment is quite low. I, personally, have well into 5digits worth of 2017 crypto to fiat out and am a licensed CPA so I will be playing it by the conservative side of the inadequate guidance.

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I plan on paying capital gains off my coinbase in vs out. If I get a letter saying thats not enough, I'll handle it as it comes. Main thing is to show intent to be compliant.

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I’ve thought about this but still not sure how I want to go about it..

Let’s say you buy 1 BTC when it was at $10k. You trade alts and make some profits and your total portfolio is now worth $20k. You then decide to cash out, so you convert everything back to BTC. BTC has appreciated to $12k.

So you’re saying you would ignore whatever dollar value BTC happens to be, and just show a total $10k in capital gains in this scenario?

Let’s say you only wanted to cash out $5k. Would you consider $2500 of that to be initial principal and the other $2500 capital gains? Or would you consider all $5k to be initial principal and only begin paying capital gains when you have cashed out over $10k?

ETH sends "temporarily unavailable" according to Coinbase this morning. What gives?

It’s pretty damn hard to even keep track of what you’re keeping track of.

In your scenario, I believe you have the option of taking the average value of all of your ETH.. or designating which ETH you are cashing out (ie you decide you are cashing out the ETH you bought at $20 at $45, and you are keeping the ETH bought at $5 and $10 to be cashed out later at $75 or $100).

So it’s a lot more straightforward if you don’t get into the alts. You either take the average at the time if cashing out or you designate.

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It’s pretty damn hard to even keep track of what you’re keeping track of.

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The problem is that it's constantly changing until you pull your cash out. I put $1,020 in on Monday. By mid-year, it might be worth $2,000. By end-of-year, it could be down to $1,100.....and it will hit many points above and below in between. So at what point are you determining your gain (or loss)? It's kinda nuts. But since I generally fall under the standard deduction these days and won't have five figures in it anytime soon, I'm not too worried.

Thats how it used to be. But now that coins for coins is no longer like-kind, each trade is a taxable event.



ETA: i think the focus is on money laundering. So IRS will be more nosey if you put 10k in and end up with 10 million in 1-2 years. Situations like that, id suggest having as complete of a record as possible, cause the audit will likely be coming soon(TM)

Exactly. In 2 months, I’m pretty sure I’m well over 50 trades and currently own 16 coins. I’m on 5 exchanges. That number will be a lot higher by the end of the year. You’re supposed to keep track of the dollar value of each coin trade at the time you trade it. frick that.

I have not yet taken any profits, but I plan to start cashing out until I am just playing with house money. I won’t pay any taxes until I fully recoup my initial investment.

Once I start cashing out the “house money,” I’ll pay either short or long term capital gains taxes on that. If the irs doesn’t like it, I will deal with it when the time comes. But I feel like that will be within the spirit of the law.