Topic: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion - page 18130. (Read 26609430 times)

you'd really need to consult an accountant...

it could be every time you press the F'ing sell button ( never mind cashing to your bank ) capital gains tax may apply.

but i would assume the rules are profoundly complex and if you simply declare part of your income as coming from "hobbyist trading" your off the hook for some it(untill you actually "cash out for real"). or some loop hole like that...

You are saying something that kind of supports my inclinations,  yet on the other hand, we cannot really wish away the potential that there are actual gains "on paper" that end up being folded back into bitcoin.

Accordingly, let's say for example I bought and sold $100k of BTC over the course of the year for an average price of $500 (that is from coins more than a year old) and sold them for an average price of $700.  That would be 133.3 BTC sold and $26,666 of gain (on paper) ($200 x 133.3). 

That's also why I was suggesting, in one of my earlier posts, that if the amount of BTC traded were of a fiat value of less than $10k, then maybe it would not matter as much if you failed to report $2,666 in gains (on paper) versus $26,666 in gains (on paper)?

  Currently, my trading numbers for 2016 seem to be somewhere between these two (more than $10k but less than $100k), but if BTC prices appreciate more, we could imagine scenarios in which the gains on paper numbers become a lot larger, too.

If I traded all of those BTC on one exchange, then I would have never been considered to have realized any of the gain, but as soon as I cashed them out to my bank and then move them to another exchange, then I would have been considered to realize a gain (from the cashing out). 

On one exchange versus between exchanges kind of seems like a distinction without a difference (except maybe  it becomes more of a policing issue for the IRS to be able to verify what you are doing versus if they were to allow arbitraging).

For tax purposes, if I have "on paper" $26,666 in capital gains income, then that would be $4k in taxes for money that I never had used in any kind of way because I reinvested it within a substantially short period of time.

I may be confused. But if the IRS just does a blanket hit on coinbase and states it sees you have moved say 8k of BTC to cash. Can they not just ask what the heck you are doing anyway
even if it is just a wash sending money to and from like a bank. Seems to me they can 'fish' on the assumption of guilt ..just for the fact you have traded BTC for cash at whatever point
in time you moved such to cash. Coinbase already has a system in place where they ask you WHAT you are moving BTC for. Multiple Choice. At least at the 8k level. (I put Mining). So it seems to me they are setup to blanket tell the IRS whatever they want already...fishing for BTC guilt or not.

i think your right...
you only incur capital gains tax if you have MOFO capital gains!
buying and selling, and sending money to and from your bank account, is not subject to taxation.
what i did one year when i was trading more heavily and doing some arbitrage, is i outlined all the cash in and outs to and from my bank, add up all the in's and the out's subtracted the totals and this gave me my capital gains for the year.
 
i've since given up that practice in favor of simply forever holding BTC  

Yes, I am considering this matter under USA tax laws, and yes, based on your response and some of the other responses, including information in poolminor's responses, I may have to consider ways to change some of my accounting. 

I do have until about April 2017 before I file taxes on 2016, so I might be able to come to some resolution on the topic that I feel is reasonable and acceptable and would not necessarily trigger either an audit or some kind of IRS penalty.

^

In that case you might want to argue that the exchanges holding your btc are not much more then a bank account.

Nevertheless i would be quite interested in the outcome - would be very nice if you could tell us afterwards (how the irs wanted to tax you).

O.k.  Your assertion, more or less, that the wash section does not apply to individuals could be accurate.

But I question your attempt to further clarify this matter by apparent discounting of personal abilities to buy back in order to not realize a gain.

For example, if I were to put all of my at-issue bitcoins on coinbase (more accurately GDAX), there is no taxable event of the various trades of coins that I make; however, when I go to withdraw the coins, then there is a taxable event.  

I am suggesting that if I sell the coins on GDAX and buy them back on Gemini, then there should be no taxable event because I am buying them back.  You are suggesting that such an ability to not count that as a taxable event only applies to businesses.  This year, I am going to make some accounting in my taxes, and I doubt that I am going to account the matter in the way that you are suggesting unless the authority seems to be abundantly clear that I have to count every cashing out as a gain, even though I bought back more than I sold.  Sounds like made up nonsense to me that I would want to cause my taxes to be higher than justifiable when there seems to be a reasonable accounting that allows me to continue to count the whole matter as an investment portfolio that has been continued to be held by me throughout the year and continuing to increase in the total amount of fiat that is invested in such portfolio, even though the portfolio covers more than 10 locations (including at least 6 exchanges) in which they are held.

 

There are a variety of scenarios that could play out, and any of us could still proclaim that we were correct regarding the various resistance points and at what point we can relax because FOMO and additional upward momentum is kicking in.

Sometimes my thinking can evolve about the topic too, but it still seems that $750 is too low to get excited and also $780 is too low to get excited, so we have to break sufficiently beyond those areas in order to experience some of the contagion of upward momentum, FOMO etc - also, even though we could experience considerable upward pushes at any time by some bullwhale, any such upward push seems that it could end up being a bit premature because between the rise from lower $600s to mid $700s, we have really only experienced one significant downward correction from $740s to $670-ish, and really that is only about 10% correction on about a 25% rise (which also could be considered less than a 30% retrace of gains) . 

Sure, there is no requirement that any kind of meaningful downward correction has to take place, but I would be surprised if BTC prices get passed mid $800s without at least one more significant correction, that could occur at anytime whether that is in this $750 arena, or upper $700s or lower $800s.  We also should keep in mind that there are a lot more ways to short bitcoin, as compared with late 2013.


Sure there seems to be ongoing upwards price pressures that seems to including relatively low trade volume levels, so there has not really been any real and meaningful price battle (yet) of the upwards and onwards price movement, and it is also possible that if bearwhales wait too long to attempt to wage such battle to bring prices back down, they may lose their ability to push prices downward and to interfere with the ongoing upwards movement that pretty much has been happening for a year now. 

That's my tentative thinking, yet you won't find me complaining if I turn out to be 100% wrong and BTC prices just go shooting up without any more meaningful downwards correction attempts.

Wow. Is that BitMEX vol of 10 Mio  real one can see here?

https://coinmarketcap.com/currencies/bitcoin/#markets

Must be full of buy walls....

You sound American? That's not the way it works. The selling of an asset is a taxable event. You figure out your net profit or loss based upon the price you paid for the assets sold. At the time of the taxable event. You don't get to figure out net based upon what it takes to replace that asset in the future. Sure, there are accounting details such as LIFO or FIFO and whatnot, but the fundamental calculus is what it is.

IANAL, etc.

I posted one that was moderated out of existence as well - it was a reply to T_JJG pointing out that segwit is not activated until it is. To me, the relation between the probability of this event and Bitcoin price should be obvious. But I guess not to our fearless (feckless?) moderator.

Let's see how long this message stays up.

You incur gains and losses through the sale of an asset, not through purchasing more......Each time you sell an asset you subtract the sale price from the purchase price, if there is a profit report it as such; it is a loss due to selling the asset at a lower than purchase price. Note each scenario is due to the selling of an asset. If you are a small business it is not considered a capital gain but income for your business which is taxed differently.

Note the above in red is erroneous. You cannot simply purchase more to offset your gains as a person, as a business: yes.

"You can't deduct losses from wash
sales unless the loss was incurred in the
ordinary course of your business as a
dealer in stock or securities. "

It seems that you are missing the thrust of my question regarding whether or not to report when there is no gain because you have purchased more during the year.  I am not suggesting or implying that buying more during the year is a loss; however, if a person is moving bitcoins around multiple exchanges, then some exchanges there may be multiple sales that are bought back on another exchange.  One exchange may think that you have realized a gain, but if you look at other exchanges and transactions, then those coins were largely bought back.

So, the question is how to report or if to report in order to clarify that no actual realized gain was experienced because those coins were bought back.

I am not sure if the section on wash in the instructions to form D adequately address the issue.

https://www.irs.gov/pub/irs-pdf/i1040sd.pdf

The wash section seems to suggest that if you buy back substantially similar assets within 30 days, then you can treat such buy backs as a wash, but such situation does not really seem to address record keeping very well or whether any reporting requirements exist.  In any event, it could be reasonable to just keep records of the various buy backs, and only provide information regarding such if the IRS asks, otherwise there is no need to report as long as there is no gain and you are buying back more than you are selling.

You do realize that your purchasing of more bitcoin is not the same as a capital loss?

https://www.irs.gov/uac/ten-facts-that-you-should-know-about-capital-gains-and-losses

You are acting as if stopping trading is better for bitcoin.

There are all kinds of interpersonal strategies that people adopt for justifying trading and their trading costs... also trading costs vary quite a bit, so when you say .8% you seem to be exaggerating considerably.

Furthermore, sure it could be good for bitcoin prices to shoot from $750 to $7,500, but the reality of the matter is that people have all kinds of perspectives about bitcoin and some of them attempt to trade on their perspectives or maybe otherwise attempt to push the market in a direction that is contrary to the perspectives of others in order to profit off of their ability to attempt to manipulate the market.  Besides various arbitrage opportunities and even manipulation between on exhcnage and off exchange BTC trading or even intracryptocoin dynamics, there are also a whole hell-of-a lot more ways to short bitcoin these days, as compared with late 2013 (and earlier BTC price spiking days).

So, yeah, even if some folks think that it would be much better for everyone to ride out the bull run and to HODL, there are other folks that make a whole-hell-of-lot of profit if they can shake up some of the weaker hands by causing some unanticipated moves in the price or a delaying of the rocket to such an extent that it causes some folks to buy high and sell lower than the price that they bought or to sell with only a 10% premium rather than a 1,000% premium that may come way far into the indefinite  and maybe  future.

There are all kinds of games with walls, and questions about which exchanges are following which, and walls get put up as bluffs, too.  Some of the bigger players may have better ideas about the ability to which resistance or support is effective and sometimes testing out in one direction or another before attempting to play that direction with more conviction and to see if others are going to follow.

And, sure it can become a bit more convincing if there are simultaneous walls on several exchanges, but even those simultaneous walls could be a bit of a game, with the bigger players who likely have a better sense about the apparent effectiveness of their coins in one direction or another - even though they may not know for sure until they take the risk of dumping 1000k in coins, for example (which some may not be willing to do unless they have decent signals from others that they are likely to follow).

I am still pondering the question, somewhat, regarding what to report to the IRS, when overall, I am in a very similar situation to you, Elwar, at least in regards to my purchasing of bitcoin continues to be greater than my selling of bitcoin (meaning each year I continue to accumulate bitcoin); however, those buying and selling BTC transactions occur over a large number of exchanges and even through private exchanges - but the net effect is that over the year, 2016 included, my quantity of BTC bought remains 1 to 2%, or even a bit more, greater than the amount sold.  I have a personal accounting accros several exchanges, and in years passed, I did not say anything - though my BTC activity has increased quite a bit over this past year.

What do other folks do?  Do you not report the transactions if the buying of BTC ends up being more than the selling?  I can see if the buying and selling is less than $10k, then maybe it may not matter as much, but what if the  buying and selling of BTC is $20k or more ?  For example, you buy $23k but you sell $20k (i know that it about 15% difference), but you could also buy $53k and sell $50k, and that would be a 6% difference but ultimately not taxable because you have bought more than you sold and therefore no realizable gain in fiat.

Bitcoin's been in a slow motion climb. Every step of this cycle has run slower than the 2013 one. I guess a pump above the ATH will take longer than most of us expect. Everyone's cautious after being battered by the long bear market so there are long periods of sideways, or little ups and downs. Maybe Bitcoin needs the slow motion collapse of Italy's banks to result in a bail in before it starts exponentially climbing quickly.

It's the week-end.
All walls are stuck in air ... (or in the wall ).

Are we stuck around the 750 mark? Seems it pushes up and is pushed back again.

And repeat