Does the wash sale rule apply to btc?

bitcointaxes

jr. member

Activity: 57

Merit: 10

Quote from: birr on April 11, 2015, 07:10:48 PM

According to the IRS,
"A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you...
Buy substantially identical stock or securities..."

Most tax professionals don't think so, since "A wash sale occurs when you sell or trade stock or securities...". Bitcoin are neither.

Should they? Maybe, but according to the tax code, they don't.

If you want an opinion from a tax lawyer:

http://www.bitcointaxsolutions.com/bitcoin-wash-sales/

The00Dustin

hero member

Activity: 807

Merit: 500

You really need to talk to an accountant, and I am not one. While the following should NOT be construed as financial advice, here is what I believe I know:

For starters, I believe wash sale losses are disallowed for that transaction, but not permanently. IOW, the loss counts against future gains. However, even if I am correct, it isn't as simple as subtracting the losses from the gains, the cost basis of the future transactions must to be adjusted appropriately, and for all I know, that could lead to transactions you are calling gains being additional wash sales.

Beyond that, RE: property, you can't claim losses on personal property, so unless you are investing, the losses don't count regardless, but the gains do. Presumably that would put you in the predicament you believe you are in for real. However, if you are investing, then there may be other rules similar to wash sale rules that apply elsewhere (if the wash sale rules themselves don't).

So, to reiterate, the above should NOT be construed as financial advice, and you really need to find an accountant.

SebastianJu

legendary

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You dont want to play on this topic. If the amount it big enough that you can be concerned then you really should contact a tax lawyer or similar. There are one for bitcoin in every developed country nowadays.

Ask in specialized forums too. Its always better to have different opinions because it happens that you get the wrong advice too unfortunately.

birr

hero member

Activity: 868

Merit: 584

According to the IRS,
"A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you...
Buy substantially identical stock or securities..."

I did a lot of trading last year. I had a net loss. And as I was going back through the records of my trades, I realized that if the wash sale rule applies to my trading, most of my trades with losses will be disallowed. The gains will remain, and be taxed. I would go from having a pretty substantial net loss to having huge gains on the Schedule D. So not only will I have lost money in real terms in 2014, but I will owe a lot of tax on non-existent gains.

The IRS defines bitcoin as property, not as a "stock or security."
By closely applying the letter of the IRS publications, I would say that the wash rule doesn't apply to bitcoin trading.

Opinions? Maybe someone even has direct experience of dealing with this.

Topic: Does the wash sale rule apply to btc? (Read 2470 times)