Peter, thanks for all the info. You’re the man.
I’m not stressing it, going to use a CPA.
Yes it would have a unique address just like any other wallet. Is that what you are asking?
Yes. I am just trying to figure out how the IRS would know if you had a hardware wallet. It would be a new address which appeared primarily at the exchanges and at your own personal IP address.
I just recently order my ledger Nano s…
I would think it does… there is no other way to send funds to it… so yeah I believe any hardwallet has its own address and it’s own private key which is longer than the address it’s encrypted in it, but you only have to memorize or write on paper the mnemonic phrases…
I hope I answer your question…
I think the irs it’s gonna run in to the Walls in some cases… there are no gonna be able to crack in to a lots of addresses identities… that’s why everyone should own a ledger… it’s kinda of cool… it’s like your safe… no one it’s allowed to know your funds…
Its good to be diversify, just like with cash you have cash on your safe at home, and you have a checking account to use daily if you want…
Yeah, I’ve got a Trezor and a Nano S and know the operations not the technical aspects.
I am confused af at how each trade is taxable. How do I keep track of that or even calculate that? I do not plan on converting back to fiat any time soon so how would I even pay?
And how would they even audit a chinese site like binance?
It’s not that each trade is taxable, it’s the accumulation of your trade gains and losses during the year are taxable.
As for how to pay it, brother I feel your pain! No one wants to have to cash out a winning horse but we all find a way to do it.
The IRS will [probably] never get to audit this site but they inform us that they are in the process of developing technology that will eventually sniff out your account. Taxpayers with foreign accounts whose aggregate value exceeds $10,000 any time during the year must file a Form 114, Report of Foreign Bank and Financial Accounts (FBAR) electronically through FinCEN’s BSA E-Filing System. The FBAR is not filed with a federal tax return and must be filed by June 30 each year. If you do not file this you risk some “bigly” penalties.
So I’m required to cash out each year June 30th on profits? wtf I’m not one of these all taxation is bad people but forcing people to exit the market at certain times doesn’t seem like FREEDOM
I think you misunderstood.
You are not required to cash out. You ARE required only to pay the taxes that you owe on realized gains that you have. How you do it is up to you.
@Peter_Rehm: How do you determine the method to use? Since I mosly just buy and hold and the majority of my taxable gains are from the sale of btc for an altcoin, LIFO would be a much lower realized gain.
CoinTracking has both so I guess I will just print out both reports and let my accountant make the decision.
This is only a multiple tax event if there is a price change. If you convert from ALT to BTC at a profit its a taxable event, then immediately convert to fiat, As long as there is no price appreciation its not taxable. Remember you can also have a loss. Subtract your losses from your profits as you are only taxed on net profits. Pay your taxes but NOT a penny more.
How can I report if I lost 2 bitcoins? I put 3 btc in gladiacoin.com in 05/15/17, and I received 1 btc back. Then the website was gone. How can I report the lost? Then 06/15/17 I used that 1 btc and sent it to bittrex to buy ETH.
For the tax:
If I dont have any document from gladiacoin, I can’t report the loss. Am I correct? So I need to use the bitcoin price on 06/15/17 to calculate tax at 1 bitcoin to ETH. Am I correct?
Lordy Lordy, ain’t it getting a mess?
Makes me glad my primary income source skews me into a position that just don’t matter much.
Good or bad I’m not invested enough for this clusterfuck tax reg changing to cause me stress with my majority income is tax free… it balances out a lot of smaller income sources to include so far my crypto holdings, whichever way the IRS settles it’s thoughts into. Later we shall see, of course.
But goddamn in the meantime US tax code is a bitch right now and I use such strong wording as it seems appropriate in how it’s going to be affecting some others here. Wish you the best while going through them working everything out in any full solidity… then change it again, of course.
Hold on tight, my friends.
So sorry to hear about your loss on that exchange. Do you want to PM me with the details? I have a couple of ideas about how to report this.
Also, are you going to use a CPA this year?? It might be advisable.
Thanks Peter, I just PM you.
Since every transaction from coin to coin is taxable, how does that work exactly?
For example, if you buy 1 bitcoin at $10,000 and buy ICX @ 0.0007 ICX/BTC ratio…then you sell ICX for 1 bitcoin while bitcoin price has increased to $15,0000 while the ICX/BTC ratio stayed the same at 0.0007. How would you be taxed? Technically you started with 1 bitcoin and ended with 1 bitcoin since the ICX/BTC ratio didnt change.
The way I understand it, you’d get taxed twice (Taxed to sell back into bitcoin. Then taxed again to sell into fiat).
Youre taxed on the gains.
If you buy 10k worth of icx and sell it at 15k you pay taxes on the 5k when u move it to bitcoin. Your new cost basis is now 15k. So if btc goes to 30k, and you sell, youre taxed on 15k gains. Unless you hold longer than a year your rate is based on short term capital gains tsx vs income tax.
Additionall you can cancel out some gains by tax loss harvesting. I.e. you sold icx at a loss of 5k it can cancel out some of your gains on other coins. That is a very general idea of how it works. Consult your CPA, not tax advice.
Your gain would be $5,000 even if the ratio stayed the same. In that period of time the $ per ICX went from $7.00 (10,000/(1/.0007)) to $10.50 (15000/(1/.0007)) = gain of $3.50 per ICX
You’ll have to compute gain or loss:
- On the initial conversion from BTC to ICX (hint: do it immediately after buying the BTC) - which could be a gain or loss
- On the second conversion from ICX to BTC - which in this case is the BIG gain.
- On the final conversion of BTC to fiat – which could be a gain or loss