Topic: Do I pay taxes when I sell an alt coin for bitcoin? - page 5. (Read 19314 times)

The platform we are using is already paying taxes depends on the country they are operating that is the reason why other platform has a high transaction fee than the other platform. If you convert your cryptocurrency into fiat they will automatically deduct it together with tax depends on the country you are residing. That is why buying and selling bitcoin has a wide gap.

Yes, to our regret, we have to pay a commission for various services provided, because otherwise nothing will work, neither the exchanges nor other exchange offices, nor transactions, everywhere we pay a small commission for the work of these services

I would like to fill several thousand 8824 transactions under the section 1031. Since each form 8824 is about 3 pages, it would take me about 10x  - 100x longer to fill out the paperwork than it took me to do transactions themselves. Are there any practical suggestions on how to accomplish this for many transactions/like-kind exchanges? US only.

In fact, our digital coins currency is subject to transaction costs for every transaction, and in my opinion only the data currency should be taxed in accordance with the regulations when it is converted to the official currency.

I think taxe is only for fiat operations

There is no taxes in tx in exchanges but there are some fees that is being deducted with your holdings for the exchange.

This part means that Altcoin to Bitcoin does not need to be reported to taxes, just cryptocurrency to fiat. Is that correct? If this is true, it's going to save me from needing to input hundreds of transactions on my schedule D.

People have said that this is true several times in this thread, but they've never backed it up by quoting anything of substance.

intra crypto currency trade what you normally pay is the transaction fee and i dont think that qualify as taxes but if you want to convert from cryptocurrency to fiat currency, lets say bitcoin to dollars, etherum to euro, all any altcoin like Wi coin to waves and then to pound sterling then you will pay taxes just like the Forex bearer does in the inter fiat currency conversion, because it is a currency trade and it needs deductions

I hope that also but it is possible because I think for my opinion only government will make it to have tax because they can get a lot of it they will make some study to have it.

Gov doesn't monitor exchanges.  They're not gonna snoop your bank account either.  They'll only know if you tell them.

You don't need to pay taxes when you sell an altcoin for bitcoin , you only need to pay the trading fees , for the services of exchanges , you maybe need to pay taxes if you change to fiat money it is depends on your country laws.

If we talking about trading exchanges that we can trade altcoins like buying and selling of altcoins there's a tax or trading fee for every buying transaction i think it's just about 0.01% - 0.1% but if we talk about government getting tax from bitcoin buyers and sellers i think there's not a rules that you need to pay tax on the gov it depends on the exchanges or wallet sites if they will put a tax on every transaction in our wallet website here in my country they didn't getting taxes when you buying bitcoin they'll only getting taxes when you selling your bitcoins and it depends on the remittance center and they'll change the buy and sell rate.

When exchanging coins for bitcoin, only the commission fee paid to miners for the maintenance of transactions is paid. The tax fee is not paid. If the state in the place of your residence establishes a tax charge on profits from the crypto currency, it will have to be paid separately.

On this day, no taxes given to altcoins and bitcoin because until now crypto currency is not connected to the government of each country. Otherwise bitcoin and altcoins to different part of the world is independent so there's no reasons to put taxes our income into crypto currency. However, if in case digital currency will become part of the government, hopefully that our income on crypto currency was not become taxable.

no. crypto is decentralised.

I can't really tell that for sure, but it would make a lot of sense to me, so I guess I would go with that.

As far as i know converting a cryptocurrency to another coin will not be charged with any tax since there is still no goverment around the world that has made a law with regards to charging tax on cryptocurrencies.  But whenever you will try to convert your coins into fiat then you will surely be charged with tax,  only if you have done it with legal exchanger though since im sure they are paying taxes to government.

I am sure i will be charged with transaction fees when selling an alt coin for bitcoins, but not sure if we are still taxed. In my region, we are not yet allowed to use bitcoins. I usually exchange the bitcoins into my fiat and do the basic transactions. These transactions are taxed. So still, some or the other way one is charged with tax.

IRS Official Declaration
This Regulation is for US there are different regulation Depending upon your Country
IR-2014-36, March. 25, 2014

WASHINGTON — The Internal Revenue Service today issued a notice providing answers to frequently asked questions (FAQs) on virtual currency, such as bitcoin. These FAQs provide basic information on the U.S. federal tax implications of transactions in, or transactions that use, virtual currency.

In some environments, virtual currency operates like “real” currency -- i.e., the coin and paper money of the United States or of any other country that is designated as legal tender, circulates, and is customarily used and accepted as a medium of exchange in the country of issuance -- but it does not have legal tender status in any jurisdiction.

The notice provides that virtual currency is treated as property for U.S. federal tax purposes.  General tax principles that apply to property transactions apply to transactions using virtual currency.  Among other things, this means that:

Wages paid to employees using virtual currency are taxable to the employee, must be reported by an employer on a Form W-2, and are subject to federal income tax withholding and payroll taxes.
Payments using virtual currency made to independent contractors and other service providers are taxable and self-employment tax rules generally apply.  Normally, payers must issue Form 1099.
The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer.
A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property.

More Information
Q-1: How is virtual currency treated for federal tax purposes?
A-1: For federal tax purposes, virtual currency is treated as property. General tax
principles applicable to property transactions apply to transactions using virtual
currency.
Q-2: Is virtual currency treated as currency for purposes of determining whether
a transaction results in foreign currency gain or loss under U.S. federal tax laws?
A-2: No. Under currently applicable law, virtual currency is not treated as currency that
could generate foreign currency gain or loss for U.S. federal tax purposes.
Q-3: Must a taxpayer who receives virtual currency as payment for goods or
services include in computing gross income the fair market value of the virtual
currency?
A-3: Yes. A taxpayer who receives virtual currency as payment for goods or services
must, in computing gross income, include the fair market value of the virtual currency,
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measured in U.S. dollars, as of the date that the virtual currency was received. See
Publication 525, Taxable and Nontaxable Income, for more information on
miscellaneous income from exchanges involving property or services.
Q-4: What is the basis of virtual currency received as payment for goods or
services in Q&A-3?
A-4: The basis of virtual currency that a taxpayer receives as payment for goods or
services in Q&A-3 is the fair market value of the virtual currency in U.S. dollars as of the
date of receipt. See Publication 551, Basis of Assets, for more information on the
computation of basis when property is received for goods or services.
Q-5: How is the fair market value of virtual currency determined?
A-5: For U.S. tax purposes, transactions using virtual currency must be reported in
U.S. dollars. Therefore, taxpayers will be required to determine the fair market value of
virtual currency in U.S. dollars as of the date of payment or receipt. If a virtual currency
is listed on an exchange and the exchange rate is established by market supply and
demand, the fair market value of the virtual currency is determined by converting the
virtual currency into U.S. dollars (or into another real currency which in turn can be
converted into U.S. dollars) at the exchange rate, in a reasonable manner that is
consistently applied.
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.
Q-7: What type of gain or loss does a taxpayer realize on the sale or exchange of
virtual currency?
A-7: The character of the gain or loss generally depends on whether the virtual
currency is a capital asset in the hands of the taxpayer. A taxpayer generally realizes
capital gain or loss on the sale or exchange of virtual currency that is a capital asset in
the hands of the taxpayer. For example, stocks, bonds, and other investment property
are generally capital assets. A taxpayer generally realizes ordinary gain or loss on the
sale or exchange of virtual currency that is not a capital asset in the hands of the
taxpayer. Inventory and other property held mainly for sale to customers in a trade or
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business are examples of property that is not a capital asset. See Publication 544 for
more information about capital assets and the character of gain or loss.
Q-8: Does a taxpayer who “mines” virtual currency (for example, uses computer
resources to validate Bitcoin transactions and maintain the public Bitcoin
transaction ledger) realize gross income upon receipt of the virtual currency
resulting from those activities?
A-8: Yes, when a taxpayer successfully “mines” virtual currency, the fair market value
of the virtual currency as of the date of receipt is includible in gross income. See
Publication 525, Taxable and Nontaxable Income, for more information on taxable
income.
Q-9: Is an individual who “mines” virtual currency as a trade or business subject
to self-employment tax on the income derived from those activities?
A-9: If a taxpayer’s “mining” of virtual currency constitutes a trade or business, and the
“mining” activity is not undertaken by the taxpayer as an employee, the net earnings
from self-employment (generally, gross income derived from carrying on a trade or
business less allowable deductions) resulting from those activities constitute selfemployment
income and are subject to the self-employment tax. See Chapter 10 of
Publication 334, Tax Guide for Small Business, for more information on selfemployment
tax and Publication 535, Business Expenses, for more information on
determining whether expenses are from a business activity carried on to make a profit.
Q-10: Does virtual currency received by an independent contractor for
performing services constitute self-employment income?
A-10: Yes. Generally, self-employment income includes all gross income derived by
an individual from any trade or business carried on by the individual as other than an
employee. Consequently, the fair market value of virtual currency received for services
performed as an independent contractor, measured in U.S. dollars as of the date of
receipt, constitutes self-employment income and is subject to the self-employment tax.
See FS-2007-18, April 2007, Business or Hobby? Answer Has Implications for
Deductions, for information on determining whether an activity is a business or a hobby.
Q-11: Does virtual currency paid by an employer as remuneration for services
constitute wages for employment tax purposes?
A-11: Yes. Generally, the medium in which remuneration for services is paid is
immaterial to the determination of whether the remuneration constitutes wages for
employment tax purposes. Consequently, the fair market value of virtual currency paid
as wages is subject to federal income tax withholding, Federal Insurance Contributions
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Act (FICA) tax, and Federal Unemployment Tax Act (FUTA) tax and must be reported
on Form W-2, Wage and Tax Statement. See Publication 15 (Circular E), Employer’s
Tax Guide, for information on the withholding, depositing, reporting, and paying of
employment taxes.
Q-12: Is a payment made using virtual currency subject to information reporting?
A-12: A payment made using virtual currency is subject to information reporting to the
same extent as any other payment made in property. For example, a person who in the
course of a trade or business makes a payment of fixed and determinable income using
virtual currency with a value of $600 or more to a U.S. non-exempt recipient in a taxable
year is required to report the payment to the IRS and to the payee. Examples of
payments of fixed and determinable income include rent, salaries, wages, premiums,
annuities, and compensation.
Q-13: Is a person who in the course of a trade or business makes a payment
using virtual currency worth $600 or more to an independent contractor for
performing services required to file an information return with the IRS?
A-13: Generally, a person who in the course of a trade or business makes a payment
of $600 or more in a taxable year to an independent contractor for the performance of
services is required to report that payment to the IRS and to the payee on Form 1099-
MISC, Miscellaneous Income. Payments of virtual currency required to be reported on
Form 1099-MISC should be reported using the fair market value of the virtual currency
in U.S. dollars as of the date of payment. The payment recipient may have income
even if the recipient does not receive a Form 1099-MISC. See the Instructions to Form
1099-MISC and the General Instructions for Certain Information Returns for more
information. For payments to non-U.S. persons, see Publication 515, Withholding of
Tax on Nonresident Aliens and Foreign Entities.
Q-14: Are payments made using virtual currency subject to backup withholding?
A-14: Payments made using virtual currency are subject to backup withholding to the
same extent as other payments made in property. Therefore, payors making reportable
payments using virtual currency must solicit a taxpayer identification number (TIN) from
the payee. The payor must backup withhold from the payment if a TIN is not obtained
prior to payment or if the payor receives notification from the IRS that backup
withholding is required. See Publication 1281, Backup Withholding for Missing and
Incorrect Name/TINs, for more information.
Q-15: Are there IRS information reporting requirements for a person who settles
payments made in virtual currency on behalf of merchants that accept virtual
currency from their customers?
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A-15: Yes, if certain requirements are met. In general, a third party that contracts with
a substantial number of unrelated merchants to settle payments between the merchants
and their customers is a third party settlement organization (TPSO). A TPSO is
required to report payments made to a merchant on a Form 1099-K, Payment Card and
Third Party Network Transactions, if, for the calendar year, both (1) the number of
transactions settled for the merchant exceeds 200, and (2) the gross amount of
payments made to the merchant exceeds $20,000. When completing Boxes 1, 3, and
5a-1 on the Form 1099-K, transactions where the TPSO settles payments made with
virtual currency are aggregated with transactions where the TPSO settles payments
made with real currency to determine the total amounts to be reported in those boxes.
When determining whether the transactions are reportable, the value of the virtual
currency is the fair market value of the virtual currency in U.S. dollars on the date of
payment.
See The Third Party Information Reporting Center, http://www.irs.gov/TaxProfessionals/Third-Party-Reporting-Information-Center,
for more information on
reporting transactions on Form 1099-K.
Q-16: Will taxpayers be subject to penalties for having treated a virtual currency
transaction in a manner that is inconsistent with this notice prior to March 25,
2014?
A-16: Taxpayers may be subject to penalties for failure to comply with tax laws. For
example, underpayments attributable to virtual currency transactions may be subject to
penalties, such as accuracy-related penalties under section 6662. In addition, failure to
timely or correctly report virtual currency transactions when required to do so may be
subject to information reporting penalties under section 6721 and 6722. However,
penalty relief may be available to taxpayers and persons required to file an information
return who are able to establish that the underpayment or failure to properly file
information returns is due to reasonable cause.

does your country accept bitcoin? If they dont accept it and dont do anything to protect your bitcoin why we must pay them tax?