• the ongoing consolidation of defining crypto as property by regulatory authorities
• the emergence of the new Google for cryptocurrency networks, known as "Cointracker" and the algos it uses calculate tax. (It was in fact built by ex-Google engineers)
• the market movements of the last year - in particular the huge alt ratios that encouraged intense coin-to-coin trading at the precise moment when the bitcoin/fiat valuations were at an all time high
What is the significance of defining crypto as "property" (say, as opposed to "currency"). Basically is means that any exit from an address is considered a disposal rather than an expenditure. This is profoundbecause in the event of a cryptocurrency audit (either on an individual or organisation), "partial" information always favours the regulatory authority. For example, lets say:
• you have a partial trading history which you provide during an audit.....
When that's analysed, a bottom line for your portfolio holdings will emerge (which will be wrong). If that "calculated" portfolio says we have more bitcoin than you actually have, then we'll simply be taxed on the "disposal". i.e. they've got you either way - either you can account for the location of funds or you simply end up with a huge tax bill.
• off-exchange trading/expenditure
Same thing here. It ends up in the interest of holders to disclose all incidental exchanges of crypto for other crypto or for anything in fact, because any address that's identified as being owned by a certain party at any point in time, if later found to be "emptied" is a juicy candidate for taxation.
Nor are "obfuscated chains" any use. They will simply be regarded as "disposals". (i.e. any purchase of a "privacy coin" will be seen as a disposal and taxed accordingly).
This is already happening. The UK for example just issued unambiguous guidelines 1 month prior to this years filing deadline, so everybody that's short has to liquidate at the bottom of the market to pay tax on Jan 2018 prices. Pretty deadly !
'Deadly' is an understatement. I just spent 3 days carefully pumping years of data into Cointracker and it has left me in horror. Apparently I am liable for more than I took out by a large amount of money, as it says I made such huge 'profits' from trading in the 17/18 tax year that if I use this software to declare it, it will render me effectively destitute.
Every trade between those old Bitcoins and a certain alt that I bought for pennies show up in trades in late 2017 as huge (yet never actually realised) profits which were calculated AT THAT TIME. What I took out was life changing, but the tax amount I now appear to owe (so this software says) exceeds both my actual real fiat gains AND most of my remaining now 'lower-valued' stash.
I really was content to pay my dues on the gains, now I am forced to re-think. If you're about to submit a tax return: seriously - take care? It's the value at the time of the trade they're after, not what you have made in fiat. Which is patently unfair - since if it was just trading between BTC and frothy alts and not cash, it was quite genuinely not realised and has of course gone down in value hugely since December.
Trading Hodlers: BEWARE if your jurisdiction accounts like this.
Once again Virgin Dumb Money Roach you illustrate why Bitcoin is the best money ever and headed to 100k while primitive metals are dead money investments.
