The IRS Is Coming For Your Cryptocurrency Gains

a reply to: worldstarcountry

I suspect you are talking about state sales tax.

Capital gains is federal.

IRS should be careful here. If they want to tax this as capital gains, they better be prepared for folks deducting any losses.

Most people realize that the IRS is a rogue conglomerate that has their own agenda just like the federal reserve. They want a piece of every dollar no matter where it is located here or abroad. a reply to: worldstarcountry

originally posted by: [post=22912633]trollz
originally posted by: [post=22912609]rshackleford

You are correct that you only pay taxes when you sell or exchange it. That means using a bitcoin debit card will result in each transaction being a sell for tax purposes and any profit on the spent bitcoins will be taxable. I am not sure if it is taxed as a collectible similar to physical gold which results in a higher rate because the long term capital gains tax lower rate does not apply.

originally posted by: hopenotfeariswhatweneed
What a scam, you have to gamble buying crypto currency if you lose money bad luck but if you make money you get taxed on it....

Um - how is that different from any other investment?

It isn't.

a reply to: proximo

In its conception what was it marketed as?

Sucks for coinbase, while they are making millions, this isn't good publicity for the miners to want to use them.

Traders will still use them, for the exchange they have Gdax, but maybe just to buy a few and transfer off to another exchange to trade.

At the sametime, the IRS, will either need to learn to mine, or face a future of not being needed, because, this is their deathnail, who needs an IRS when everything is publicly visible, traceable and automated on all levels to the point taxes do themselves.

But still, I saw this happening back when I traded at Cryptsy, then it died, but IRS sent letters out back then too, screaming about capital gains...glad I made my money then, the tax rate on this is not going to be pretty, BECAUSE it's not regulated and understood.

by the way, there isn't a need to transfer your profits to USD, can buy a giftcard for just about anything with BTC, LTC, ETHER and not to mention the other adoption of BTC elsewhere, problem is, you're either overpaying for something or underpaying for something based of the volatility issue.

originally posted by: hopenotfeariswhatweneed
a reply to: ChaoticOrder

No the government always gets their cut, they are like the mafia.

Gambling should not really be on their radar, but we peasants don't have say....

You pay your taxes on the stake of the gamble, the return is not taxable income in uk, like the lottery.

Crypto currency nerds will find a solution, plenty of of shore ways to avoid tax which if anything will push people and companies more in crypto.

However, I do find tax avoidance a bit out of order when you still expect to dial 911 or whatever and begrudge taxes.

I think it's probably because the little gets smashed whilst large corporation can pay for lawyer and tax and financial experts to scam it.

However, I sold a house at a profit, due to it not being my primary residence, I moved in with my to be wife and rented it out, when we sold both to buy a family house they wanted to tax me on the capital gains, new house price crashed in the bubble burst, by the time we got the tax bill I was in negative equity and couldn't raise the cash to pay them. Thing is, that bubble had nothing to do with me and probably nothing to do with UK gov, yet they taxed all the gains and did nothing to help us with the losses.

originally posted by: hopenotfeariswhatweneed
What a scam, you have to gamble buying crypto currency if you lose money bad luck but if you make money you get taxed on it....

no actually i think you can claim losses as well.

a reply to: Forensick

That really sux, I hope things have improved for you since then.

originally posted by: booyakasha

originally posted by: hopenotfeariswhatweneed
What a scam, you have to gamble buying crypto currency if you lose money bad luck but if you make money you get taxed on it....

no actually i think you can claim losses as well.

Can anyone confirm this, it doesn't sound right to me.

So, what if you use a non-US based exchange.....???

a reply to: Gazrok

How do you get that money in a non-US based exchange back to the states?

How do you get that money in a non-US based exchange back to the states?

Use it to buy a gift card. (or lots of gift cards).

Still though, money made is money made, taxed or not, it's something I didn't have before.

IRS should be careful here. If they want to tax this as capital gains, they better be prepared for folks deducting any losses.

Still a valid point.

Of course, currently, there's really no legislation covering this one way or the other, so that's the first step for them....I'd think.

originally posted by: Gazrok

So, what if you use a non-US based exchange.....???

If you are a United States citizen you are still liable for Federal income tax regardless the manner of profit. If I sell shares of foreign companies on the London or Hong Kong Exchange I still need to pay taxes here on those gains.

My point being though, as a fairly anonymous entity, begs the question, how would they know (about profits on foreign crypto exchanges)....???

a reply to: Gazrok


They may not but it is still tax evasion and they tend to prosecute/penalize tax evaders.

Guess one can worry about it once there are laws in place to govern it....

a reply to: Gazrok


There are already laws to govern cap gains. They are just pushing the exchanges to disclose transactions to make tracking those gain more visible. Frankly I wouldn't mess around if I had made a profit on this, the IRS is highly dispassionate and claiming ignorance of tax laws wouldn't get someone off the hook for taxes and penalties.