Topic: Has anyone sold BTC won here in sig campaigns? how does tax work? - page 2. (Read 688 times)

If you are afraid that your account will be frozen you can gradually sell your coins and keep the Fiat home. Why should you keep money in the Bank? You certainly can not earn due to the growth of prices for real money but you should choose the safe option. Then you take the mortgage and will extinguish the debt with their savings.

It is possible that it will not always be this way. You have to keep
in mind that the whole industry is still in its infancy and regulators
are still playing catch-up to keep up with the latest developments
in the cryptocurrency scene.

Nowadays, most ICOs require you to complete a KYC procedure. If you buy
tokens in an ICO where you are KYC verified it is entirely possible that one
day the tax agency of your country will come after the people, who participated
in the token sale and didn´t pay their taxes.

Bitcoin is not an ordinary income because you're unable to directly cash it out from your wallet. If I could pay my taxes in Bitcoin I'd gladly do so directly, but if i'm forced to use an exchange to convert to fiat and pay fees along the way, no thank you. Nobody will make me pay taxes from tokens that are lying on some address without my name on it and that I can't spend on anything in my country but have to use an exchange first. Next thing they'll make us pay taxes for tokens earned in computer games just because theoretically we can exchange them to money on ebay.

Everything I said still applies, I don't know where you are @squatter but in countries from Europe which is where I am from, basically you are a criminal by default if you can't clearly prove the origin of the funds.

So no, you can't put any relevant amount worth of cash into a bank account without receipts that prove it was earned legally. You are delusional if you think you could get away with putting 5 figures worth of cash inside a bank account and not have the IRS equivalent here knocking on your door asking where that came from, and "I just made this from playing in the casino" without any receipts and clear trace back to the origin will not cut it.

You can't also put crypto earnings of any kind in an account without having full history of your earnings and being able to trace and report every satoshi movement including the movements inside exchanges.

About dead exchanges, unless you made a daily backup of your trades, chances are you would be unlucky and not have an updated trading history saved because exchanges die randomly.

It is only fair to be cautious and ask for precedents, and see what authorities would demand if you tried to cash out amounts that come from mixed origin, dead exchange origin, or signature campaign origin. The only clear and easy way is the usual one: buying them in an exchange where you are verified and selling them again: capital gains tax and you present the trades which are done in your name. Everything else is a grey area which im not willing to cross without having clear precedents because I don't want to get my bitcoins counterfeited.


In theory yes, but the problem is, if you've been doing this for years and never reported anything... once you do want to cash out to buy a house, what can one expect?

Bitcoins earned from signature campaigns and bounties count as ordinary income and they don't qualify for lower tax rates as capital gains. But then, the most important question is whether we should pay tax on those coins which are still in our wallet or not. Ideally, I would pay taxes only on those coins which I sold for fiat. But if Bitcoin is ordinary income, then we need to pay tax on all our coins, right?

Tbh i never heard that news about locked a bank account that have a transaction with bitcoin. Luckly the government here is never do that, i always sold my bitcoins from the campaign smoothly and never had a problem.

Wow 8k upvoted, that's why i never do transaction for more than $5k on bitcoin. It's to risky if you do it all on 1 transaction.

What does that have to do with anything? Someone wired GDAX money and they didn't credit it properly. They are apparently wiring the money back to the customer. So what?


The point was that tax authorities want your income taxes, regardless of where it is derived. You are the one making the assumption that laundering is necessary. If you feel the need to launder it, you can. You've done nothing illegal; you are merely assuming that you are automatically tied to crime with no basis. And then you refuse to do anything about it. If you are so terrified of your bitcoins, sell them to me at a steep discount. If you've got enough, I'll travel internationally and pay you in your local currency (cash).

Or are you terrified of cash, too?


As I said, I've been withdrawing considerable income from cryptocurrency trading for several years. That includes dead exchanges. I've earned from signature campaigns as well, although that's peanuts in comparison.


I gave you an answer about mixed coins and dead exchanges, too.

Blockchain analysis companies (and therefore governments) acknowledge that even the vast majority of mixed coins are not illicit in nature. You, transparently, are not tied to illicit activity. If you're so paranoid, though, you really should probably stay away from Bitcoin. This kind of paranoia isn't good for your health.

You're basically taking the position that your government will seize your assets regardless of anything you do. If that's the case, you should consider changing your country of residence.


Maybe you should provide cases where any of these circumstances led to asset seizure or prison, on their own? I've done all of these things over the course of years without issue. So have countless other people around here.


Says who? Goods and services paid in bitcoins = illegal? Cash transactions are illegal? P2P transactions are illegal? Altcoin trading is illegal? If so, your country of residence is the problem. Consider moving.


Who cares? What possible evidence do you have that paying the appropriate taxes on what you owe isn't sufficient? You're basically saying that if you withdrew 5 BTC and eventually sold it, and paid the appropriate taxes on all fiat money that moved through the banking system, that you would have all your assets taken and maybe thrown in prison. What possible evidence do you have for that?


That's ridiculous. That means cash transactions are completely illegal where you live. I doubt that's true.

And FYI, when I go to the casino and play cash games, there are no tax forms. I've pulled out 5 figures from the cage (cash) without the casino reporting anything to the IRS. It is my responsibility to pay taxes on my winnings. It is not illegal to transact in cash.

If it is illegal to interact with cash where you live, you should move.


That sucks, but you should have saved your trading history years ago. I paid taxes on everything from Mintpal and Cryptsy several years ago. If your tax argument is that altcoin trading = like-kind transactions, then you could hypothetically just fabricate records to explain how 1 BTC became 5 BTC. Under that tax theory, it literally doesn't matter anyway. And there is no way in hell that anybody is going to be parsing through Mintpal/Cryptsy transactions to decipher tax evasion at this point.

More cases of frozen funds, this time a $40000 transaction:


https://www.reddit.com/r/Bitcoin/comments/7rfwec/warning_do_not_send_any_large_sums_to_coinbase/?utm_content=title&utm_medium=browse&utm_source=reddit&utm_name=Bitcoin


We are not Al Capone, and I suppose we are not trying to launder money because I would rather sleep at night than getting caught trying to launder bitcoins into a bank account. We are talking about keeping it legal once you decide to cash out.


Precisely because of the lack of precedents, it's safe to be paranoid. Have you or do you know anyone that has cashed out a decent amount of BTC earned in bitcointalk? How did it go? until we have this info, we are just speculating.



I asked about mixed coins and dead exchanges too. And like I said, we have no precedents, we don't know what we are dealing with. Maybe you think pointing to this forum is enough and they decide to fuck you up and decide it's not enough evidence, the government is totally clueless about bitcoin and they will take the cautious stance, meaning, at any doubt, they will declare that it's not enough proof.

Again, point me to a real case of people:

1) Selling coins that came from a mixed transaction
2) Selling coins that came from a dead exchange
3) Selling coins that came from signature campaign earnings




It doesn't matter what they "couldn't", what matters is what evidence you present. And if they are legitimately bought, you have the bank transaction into Coinbase with your name and ID and whatever. Now if you made some coins on a signature campaign and put them on Mintpal and trade for LTC or something then back to your wallet.. there are no traits of that, because the exchange is dead, and back then exchanges were completely anonymous, even in Poloniex I entered some fake name and location to trade because no one cared back then, you can look in this forum and everyone used fake names. This has now became a problem if I intend to sell these coins.


Yes, unless you can clearly prove that the gains come from gambling on a casino, you have a problem. Also there would be the bank transactions with your name on it and the destination to this former company, with crypto to crypto there's nothing.





How do you trade the coins back to Mintpal?

It's a mess of transactions, different altcoins, different wallets. I even did a bunch of micro trades worth satoshis. And I don't even have my trades that I did on Mintpal, I was going to save the trading history but when I went to the site the next day it was already dead, same goes for Cryptsy, how the fuck do I even report that.

Actually, I gave a historical example: Al Capone. Read his Wikipedia section regarding tax evasion. He never got busted for racketeering; only for tax evasion. Money can be laundered; that includes cryptocurrency if necessary.

What kind of answer did you expect besides "make a good faith effort to pay your taxes?" There is no such thing as "proof" here given the lack of cryptocurrency-specific precedents, virtually everywhere in the world. I mention the IRS because I live in the US and am most familiar with US laws. The prevailing legal expectation is usually a standard of good faith. What countries are you even referring to? You never said.

And what "proof" do you have that "you aren't going to get away with it?" You asked about a question about taxes on signature campaigns, and even though all of this activity is perfectly traceable and legitimate, you continue with paranoia about "you aren't going to get away with it." Bitcoin is extremely transparent. If you are so paranoid about being associated with perfectly legal activities because they use Bitcoin.....maybe you should stop using Bitcoin.


Your logic is simply wrong. Your tax authorities are extremely unlikely to ever see the internal databases of any exchange, especially if you aren't in the US. And very few exchanges don't allow generation of new addresses at this point. How exactly are your newly withdrawn coins going to be traced back to your original coins? And more importantly, who is tracing your mixed coins anyway? Why couldn't they have been legitimately bought, as they were?


I've never come across such bizarre logic. "An exchange shut down, so now any BTC I withdrew from there makes me a criminal!" If you win cash from a casino, and that casino later shuts down, are you this terrified to claim your gambling winnings?

Gamblers and traders keep books. Those are your tax records. There are literally no other tax records in this situation. You can either make a good faith effort to pay your taxes, or you can continue wallowing and complaining about how your are so paranoid and worried. You want experience? I've been paying taxes on altcoin trading for 4 years now. I traded on Mintpal. I paid taxes on it. Every trade is a taxable event; every position has a cost basis. Your books should line up your BTC/fiat trades and fiat withdrawals. It's really not that difficult.

If law enforcement agencies look into you for it, your coins are even clearly traceable to Mintpal, etc. You're simply being paranoid and treating your coins as worthless for no reason. If you really think those coins are simply non-fungible, then I'm happy to buy them from you for a fraction of the spot price. PM me.

Of course. You guys really have some serious problems... NOT.
I wish I had millions in BTC and the only thing to worry about was whether they'll ask where the money came from. I could say that it came from gambling, whoring myself out, being a slave to a wealthy woman whose hobby was mining cryptocurrency in 2011... You could even claim you got it from your parent who mined it years ago and then gave you as a gift.
That said I heard of cases where people were questioned for the origin of money. These things are rare, but happen from time to time. When it comes to cryptocurrencies they're easy to deal with since regulations don't exist. Addresses aren't assigned to IDs and there are no such requirements. if you say that you've mined the coins long time ago, or bought them for a few bucks, they won't be able to prove otherwise. There are no laws saying that you need to have access to all your old addresses to be able to prove that you owned them.

I don't see why the IRS would give a shit about where the money came from as long as it's taxed. There are other institutions that will be out to get you for illegal activities though.

You are making big claims with no clear proof. I don't know how the IRS is, but in other countries, you aren't going to get away with it. And I doubt you can be selling drugs on the street for cash, then put it all on the bank and buy a house, c'mon don't be delusional.


If you mix the coins, when you receive them back, you receive them from an huge mix of outputs... at this point, you can't prove how you acquired them. You sell them to an exchange.. so what, it can still be traced back into your wallet. Exchanges generate one deposit address, so it could be traced and then reach the point in which you cannot prove how these coins came into your wallet because you receive them through the mixed address originally. This is the problem that now I face with a decent amount of BTCs and I don't know what to do...


The only coins I could clearly prove that I received are from the signature campaigns. 

And the coins that I deposited then withdrew in now dead exchanges are also a problem, since the exchanges are dead...

I don't know what the taxman will request specifically so I hope that if someone goes along with this posts their experience.

Maybe cashing them out in portions would be helpful if you know there is a chance of your bank account getting freezed because of the amount received. You should keep cashing them out over time and putting them in your bank, and when your target amount is reached, invest them wherever you want. Now you will surely have to sacrifice the extra profits you might get if the funds stay in Bitcoin for a longer time, but I think it is better than being marked a criminal, isn't it?

Whatever you earn is taxed as income, and the change in exchange rate would be taxed as capital gains depending on your holding period. I recommend keeping very close tabs on your earning and trades if you ever want to cash out into fiat without being heavily fined or even worse.


You basically have to pay your taxes at the end of every year for whatever you've earned for signature campaigns.

And then capital gains once you trade your Bitcoin for another altcoin or fiat.

I think we are safe until we pay enough taxes for the government.I think US government has separate taxation system for crypto usage so you need to follow all of them to uase your bitcoin which is earned of made from signature campaigns.
But my country don't have any specific rules and regulation yet for bitcoin earnings so we are enough to pay the income taxes yearly to avoid these kind of situations.

Yes it is true if we successfully transmit btc sales results that we give taxes to the government because the rules are the rules that must be enforced as good citizens we must comply with absolute government regulations. But now how to make the sale btc can be made a valid tax?

Now our government has not intervened or managed so they taxed, but the future is how to wait

There is no legislation as well in my country so whenever I sell my btc for our local currency, I do not pay any taxes except for the fees in the exchange. Since income tax should apply regardless of what currency it is, once declared there may be some taxes imposed for btc that is exchanged. As long as it's part of your income, you would have to pay taxes as well.

It's best to find out first what is the legislation in your country regarding bitcoin and cryptocurrency and whether regulations are made for it.

Honestly, tax authorities don't care where it was derived from. They care that income taxes are being paid. The IRS is happy to see drug traffickers paying their taxes; consider Al Capone. The IRS's position was (and is) that illegally earned income is subject to income tax. Therefore, if you are cashing out Bitcoin, show a blockchain and paper trail back to your original purchase. Pay the appropriate capital gains. If you paid with cash, you paid with cash; it's not as if that's illegal.

If you received coins from a mixer, they are fungible. Swap them for some new outputs (from an exchange, for example) if you are so paranoid about criminality. You can still show the timeline of your possession to tax authorities. You sent coins you owned to the mixer, you received coins back. So what? Pay the taxes you owe when you realize the gains.....

If you buy Bitcoin with cash, you can no longer put it into the banking system, because if you do and you get caught, they will ask you where the money comes from, and as far as I know, if you can't prove it (if there is no receipt of any kind that would prove it was a transaction for legal money) then who knows what will happen, from a very high tax to total confiscation of funds, this is why I was worried about selling some of the coins which I mixed one time to test a mixer out when it was a new thing and I was curious... now im stuck with these coins and I can't use them to pay a house.. I regret so much mixing these damn coins but BTC was worth a lot less back then.

Just because they can't prove it, it doesn't mean you are ok to go, otherwise anyone sellind drugs for cash could argue the same and put the money in the bank.