What is the current tax status of crypto-currency in the USA? - page 3.

WalkerIVIV

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Quote from: Pipdips on June 24, 2019, 10:48:27 AM

Is crypto-currency actually taxable in the USA?

It is confusing for me to figure the tax issue out. If a person buys Bitcoin and then sends it all around the place, uses it for trading on multiple exchanges, makes thousands of trades, then buys coins like BNB for trading more, then sends portions of coins to wallets and back and forth.

How can that be traced? Even with block chain ledger, it seems impossible to trace that much activity.
How many people are washing their coins to make them untraceable?
How can the IRS determine and verify who owns coins?

Are they going to tax people who lose money from crypto-currency?

Does anybody else think it is confusing?

Remember when you are doing any activity in the centralized exchange site and as a US civilian and you must do verification with your identity. IRS used the data that collected from the exchange site that followed all of the IRS guidance or become compliance with US regulation.
This article explains more about the status of taxation in the US https://bitcoinist.com/bitcoin-tax-irs-new-crypto-tax-guidelines/

el kaka22

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I think they are not taxing the trades of bitcoin but more like sells of bitcoin like its a product which is horrible and caused many people a lot of pain. I have seen a guy who had as much as 400k at one point in bitcoin and taxed accordingly in dollar value and then the 2018 bear happened so he paid tons of taxes on money he didn't have and he wasn't even sure how he would be capable of paying it, he was literally considering bankruptcy just to get rid of it.

So, the system is still horrible unfortunately and whoever has done this taxing system for bitcoin has no idea of what bitcoin is, for example it should have been the profit you make from selling not just having since you can have a million dollars worth but it could worth 300k in a month whereas if you actually buy and then sell for higher that is real profit you should be taxed for.

Indamuck

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The important factor is intent. If you are investigated by the IRS and it is clear you made honest mistakes and tried your best to pay taxes you won't be punished. If you go and try to hide your source of income and partake in money laundering then they will hit you hard.

Pipdips

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Bitcoin is not private. At All.

o_e_l_e_o

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Quote from: sana54210 on July 01, 2019, 11:53:05 PM

The only way government can track the usage of cryptocurrency down is to use the IP address or track it by the website people visit from an IP location that has to do with cryptocurrency

That's not true. If you have performed KYC procedures on any reputable exchange, chances are that exchange is currently, or will in the future, hand(ing) over details of your deposits, trades, and withdrawals to your national government. This doesn't just mean that all your activity on that exchange is being logged, but also your deposit and withdrawal addresses are being linked to your real identity too, which allows some blockchain analytics to be performed and link other addresses and coins to you.

Quote from: sana54210 on July 01, 2019, 11:53:05 PM

because tracking the transaction itself is absolutely impossible, because everything that goes through the crypto technology is highly encrypted which makes it a decentralized system

This doesn't make sense. It doesn't matter that bitcoin is decentralized, or your wallet is encrypted. The ledger is public. As soon as they have linked an address to your identity, then can absolutely track what happens to your coins.

Kakmakr

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Look at it from a different perspective. If you manage to hide most of your transactions and you are a successful traders, would you be able to explain to the tax authorities, where your income are coming from, if they do a life style audit on you?

People think they can hide things from the IRS, but at one stage your income from trading has to be spend and then your start leaving a paper trail and that normally leads to your downfall.

Why risk going to jail for tax evasion, if you can simply pay the damn taxes and enjoy the proceeds of your labor?

davis196

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Quote

Are they going to tax people who lose money from crypto-currency?

No country in the world has taxes on capital loss.That would be insane.Paying taxes,when you are losing money.WTF? Grin

I'm pretty sure that cryptocurrencies in the USA are a subject to capital gains tax and income taxes.
The US tax legislation is so damn complex. Angry

sana54210

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Quote from: zikzag on June 28, 2019, 01:51:01 AM

I can’t even imagine how to track a person who has a cryptocurrency. If, of course, the person himself came and said all his data or trades large sums, then this may attract attention in transactions from his wallet. But people who trade not large amounts of cryptocurrency are not worth tracking.

The only way government can track the usage of cryptocurrency down is to use the IP address or track it by the website people visit from an IP location that has to do with cryptocurrency, but even at this, there is little to which they can still do, because tracking the transaction itself is absolutely impossible, because everything that goes through the crypto technology is highly encrypted which makes it a decentralized system, except those coins that are centralized coins which can still be tracked, and I see that this may be the reason why the government of united state may back Facebook cryptocurrency up if they are to final agree to regulate and adopt cryptocurrency in the future. The highest they can do for those who would insist to continue with decentralized coin, is just to impose fixed taxes on them.

FanEagle

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The idea is to let people report it themselves instead of actually tracking it. Coinbase or any other USA based place will notify the government and IRS for your transactions but if you remove your money from there and do whatever you want and return back the most knowledge IRS will have is you put in some money to coinbase, then something happened they don't know and you have either less or more money back into your coinbase for cashing out, which means they will ask you what happened in between for this change to happen.

Aside from that they are not tracking it, they are getting reports from both people themselves who do not want to seen as tax evaders and from coinbase like places to notify them of your movement, which means they do not go out and try to find you, they are asking you to go find them instead, makes things easier. You may want to not pay taxes at all and find loopholes but then if you get reported by some person then you will face harsher punishments.

zikzag

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I can’t even imagine how to track a person who has a cryptocurrency. If, of course, the person himself came and said all his data or trades large sums, then this may attract attention in transactions from his wallet. But people who trade not large amounts of cryptocurrency are not worth tracking.

guoyu78

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Quote from: Pipdips on June 24, 2019, 10:48:27 AM

Is crypto-currency actually taxable in the USA?

It is confusing for me to figure the tax issue out. If a person buys Bitcoin and then sends it all around the place, uses it for trading on multiple exchanges, makes thousands of trades, then buys coins like BNB for trading more, then sends portions of coins to wallets and back and forth.

How can that be traced? Even with block chain ledger, it seems impossible to trace that much activity.
How many people are washing their coins to make them untraceable?
How can the IRS determine and verify who owns coins?

Are they going to tax people who lose money from crypto-currency?

Does anybody else think it is confusing?

Haven’t you heard that the decentralized system of cryptocurrency does not permit it to be traced and this is why some government is still having issues with it till date and in particular United State. There is no way some of these funds that has passed through cryptocurrency, especially bitcoin can really be traced, and this is what makes it become not taxable.

The only way government can tax cryptocurrency users is to impose tax on them which will be more on industries that have openly declared to be using blockchain in their operation, so they might just weigh the worth of the company and slam any charge they feel dim feet for such company on a monthly basis or on a yearly bases.

o_e_l_e_o

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As mentioned above, every trade is a taxable event, even if that trade is between two cryptocurrencies and never touches fiat.

Quote from: Pipdips on June 24, 2019, 10:48:27 AM

How can that be traced? Even with block chain ledger, it seems impossible to trace that much activity.

It's very difficult, especially if you are making multiple trades on multiple exchanges, but the expectation from the IRS is that you track it all and report it all

Quote from: Pipdips on June 24, 2019, 10:48:27 AM

How can the IRS determine and verify who owns coins?

A combination of people completing KYC or otherwise linking addresses to their real life identity, blockchain analytics, and exchanges reporting to the IRS.

Quote from: Pipdips on June 24, 2019, 10:48:27 AM

Are they going to tax people who lose money from crypto-currency?

You can use your losses in crypto to offset taxes you pay elsewhere.

Quote from: Pipdips on June 24, 2019, 02:07:45 PM

For my purposes my account is way below $20,000 in value.

Coinbase handing over the details of everyone with assets above $20,000 is only temporary. This cut off was what the IRS won in court, and it included 13,000 users, but they were pushing for the details of half a million users, and will continue to push. Assume if you have completed KYC on any major exchange (US based or not), the government will sooner or later know all your trades on that exchange.

Pipdips

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Quote from: aardvark15 on June 24, 2019, 01:06:23 PM

Supposedly with the new tax laws in effect for 2018, in the US you have to report any sale of a cryptocurrency or any trade from one crypto to another.

This is very cumbersome if you do a lot of trading but not so bad if you just do a few transactions every year.

As far as what the IRS can track, I doubt that they can track much of anything at this point unless you are using US exchanges such as Coinbase.

Coinbase apparently reports to the IRS any customers that have yearly transactions totaling $20,000 or more.

Cumbersome is an understatement! The Bitcoin ecosystem was designed so that it can not be traced for tax purposes, and at the very least not with any clarity. The movement and exchanging of funds, pairs, and proof of ownership is entirely too cryptic. On the same token I really want to report taxes and honor all tax codes.

For my purposes my account is way below $20,000 in value. Does that $20,000 limit only include purchases of fresh coins? Or is that for purchases and then any sales or converting back and forth to fiat? The tax operations of cyrpto-currency is just so vague and confusing. To have the IRS come in and ask for taxes from crypto seems wrong.

aardvark15

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Supposedly with the new tax laws in effect for 2018, in the US you have to report any sale of a cryptocurrency or any trade from one crypto to another.

This is very cumbersome if you do a lot of trading but not so bad if you just do a few transactions every year.

As far as what the IRS can track, I doubt that they can track much of anything at this point unless you are using US exchanges such as Coinbase.

Coinbase apparently reports to the IRS any customers that have yearly transactions totaling $20,000 or more.

Pipdips

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Is crypto-currency actually taxable in the USA?

It is confusing for me to figure the tax issue out. If a person buys Bitcoin and then sends it all around the place, uses it for trading on multiple exchanges, makes thousands of trades, then buys coins like BNB for trading more, then sends portions of coins to wallets and back and forth.

How can that be traced? Even with block chain ledger, it seems impossible to trace that much activity.
How many people are washing their coins to make them untraceable?
How can the IRS determine and verify who owns coins?

Are they going to tax people who lose money from crypto-currency?

Does anybody else think it is confusing?

Topic: What is the current tax status of crypto-currency in the USA? - page 3. (Read 690 times)