US IRS tax reporting for cryptocurrencies


#223

Due to the fact you had to use BTC to buy BCC that is a taxable event as you are lending BCC and not BTC.

Any income you recieve whether it be from staking or investment payouts are income so not sure why they wouldn’t be taxable.


#224

Because reinvestment are not taxable in stocks,
That’s why… is in it?


#225

Jesus, No problem. Ask away.

  1. I was not aware that you had sold anything to get into the Bitconnect investment. That is a separate issue that you may have to report to the IRS.
  2. OK, even if you did buy into Bitconnect with BTC there are some really obscure cases where you have income on the buy in. I’m going to assume that you have none of those obscure situations and in this case your buy in is NOT TAXABLE.
  3. Yeah, I’m certain that you have to pay income taxes on the earnings that you agreed to reinvest. The tax is not on the amount of the reinvestment, it’s on the amount that you earned so that you could reinvest. Yeah, huh? Look at it as though you withdrew your profits (taxable event) and then immediately said you wanted to reinvest it (non-taxable event).

I’ll be glad to continue this discussion if you’d like.


#226
  1. I didn’t really sold bitcoins, I bought bitconnect coins using bitcoin, that’s my case, it that taxable?

  2. Since bitconnect it’s going through some sue trails, why should I pay taxes on the income gains I reinvested?
    when the whole thing fell apart and it’s in court because of it., if it was not a legit or legal lending platform to the US security commission… so therefore I really don’t have any money in it, any more just some worthless tokens…


#227

Every time you respond to Jesus I feel like you’re talking to God.


#228

All my income gains I reinvested it’s vanished, because they close due to the issues they have… so why do I still have to report capital gains on a security that Close and unregistered because it’s not legal and I lost a bulk of money on?


#229

This is a taxable event just like if you bought any other alt coin with BTC. In the transaction above basically the IRS is considering that a two part event even though in reality it is one.
Bitcoin sold for USD
USD used to buy BCC


#230

I’m going to disagree with Nekko’s answer here. (sorry Buddy!) No, that is not taxable. Correct me if I’m wrong but I have been informed that your initial investment is always paid in BTC. Once that BTC transaction leaves your hands whatever Bitconnect chooses to do with those coins is accountable to them, not to you. If they come out the other end to you as BCC those coins would be considered either as a.) non-taxable return of your investment(s) or b.) taxable dividend. You have to put a value on them pretty quickly – as I see you have.

Since bitconnect it’s going through some sue trails, why should I pay taxes on the income gains I reinvested?

The biggest reason that you have to pay taxes for 2017 is that the Bitconnect enterprise fell apart in 2018, not in 2017. It’s the year that you increased the value of your investment by reinvesting your earnings. The timing of the failure is something that you never have control over.


#231

Peter I think what Nekkos answers is the value of BTC when I bought it and the time that I trade my BTC for bcc… it’s taxable… I’m not sure but the irs.gov says something about that is a taxable event… so who it’s right I’m confused now?


#232

Jesus, Can you give me the whole chronology of your BTC acquisition and then it’s investment in Bitconnect. I do not want to confuse you.


#233

Well a brief one, I’ve been buying since 2013, so the price was well below 1k so of course any sell or trade I made money on bitcoin… that’s why I know for a fact I have to file capital gain specially coinbase now has everything recorded and a tax report on buys and sells at the times… they made it easy and convient to those who want to file their gains or loss easy… I don’t know if I’m 100% right, but I read the IRS rules on tax in crypto, so I assume I have to…
I’m just really concern about the bitconnect lending, I’m gonna think about reporting my profit that I reinvested, but I gotta do a little bit of more research… however if I do reported, I’m gonna report next year my 2018 all my 95% loss then…

If you want to correct me on any of this that be great…


#234

I read the BitConnect web pages and did not realize that, AS YOU SAID, you had to buy BCC with BTC to get into the program. I had thought it was just a non-taxable transfer of the BTC coins to a custodian. I’ve not seen that kind of structure before.

Yes, you would recognize a gain/loss right there. That is one of the stupidest structures I’ve ever seen – making your shareholders take a gain/ loss on their investments in order to get into the program. Plain out and out stupid.

On top of that you will recognize ordinary income on your lending income.

Best of luck explaining this to your accountant.


#235

It be alright their documentation with in the bitconnect platform, and coinbase… I’ll be doing the homework… lol I’ll make it easy for my accountant… thanks peter, I assume next year tax will be better filing the losses…oh well we live and learn some faster other slower, and some really don’t… lol :joy: :+1:thank you again Peter I appreciate


#236

Peter, FYI the bitconnect buying with bitcoins to lend your bitconnect, that’s the same way people trade in binance, and in most popular exchanges, you simply trade your bitcoin for any altcoins… and back and forth, the taxation between these altcoins so called properties it’s very silly for us, but very profiting the IRS, which a lot of people are against., oh well unfortunately that’s the way uncle same wants to deal at this moment, hopefully it will change in the future, but it’s not gonna happen most likely… thanks again


#237

Yeah, I know about that. These exchanges didn’t want to run afoul of currency regulations so that’s the only way remaining to trade for these assets.

I’ve only gone fiat to crypto on Coinbase.


#238

Peter I just talk to an experience stock trader and he said he doesn’t pay taxes on his dividends reinvestment… Bitconnect’s lending payout works the exactly the same way, because it the payout stays in bitconnect and not into bitcoins, so therefore theirs no withdrawal or convertion happening… I’m just telling you this, because I know you haven’t been inside bitconnect platform using their system…
I know if I ever exchange my bitconnect coins for bitcoin then I’ll pay all my gains on that transaction, other wise people would have to pay twice their reinvestment money and the converting transfer, there is no other way to pull out the money cash of Bitconnect’s platform, the only way it’s exchanging it to bitcoin and sending your bitcoins to coinbase and then finally selling your bitcoins then in dollars into your bank account, it’s a hustle to get your payouts that’s why it was better to build up the investment by reinvesting in it… I hope you understand…
I’m not trying to get away from paying the reinvesting, I can pay it easily, but not if it’s not proven or necessary,

If you can send me a link about the IRS backing up your statement?

I’ll be more than sure and happily to pay my taxes with a smile and secure it’s right…


#239

[hands on ears] Jingle Bells! Jingle Bells! Jingle all the Way! [hands off ears]. Ha!

Let me research this a bit further.

There are no IRS links specifically to BitCoinnect type of transactions that I currently know of. I’ll try to do some research on this though.


#240

Thanks I’ll apreciated I’m just treating it with logic at this point…


#241

Thanks for your advice! But it looks like Korea has restricted foreigners from using its exchanges so it looks like I’ll have to cash out in the US. I actually went to the Coinone offices earlier in the day and they said that they’re working with the government to open the restrictions but they didn’t seem very confident and told me that it would be safer to move my coins to another exchange :frowning:


#242

Sorry about the Jingle Bells thing. You are of course free to take advice from anyone.

I actually also have had second thoughts on the issue of paying taxes on gains-making transactions that may not have ever actually occurred at BitConnect. But here’s the solution I’ve come up with at this point:

I know if I ever exchange my bitconnect coins for bitcoin then I’ll pay all my gains on that transaction,

I’d actually encourage you to do that in 2018. It sets a stake in the ground as to what your loss actually is.

I respectfully don’t agree that you’ll pay twice. Rationale: The [1.] reinvestment of earnings portion is for the accumulation of 2017 earnings activity while the [2.] converting transfer from equity in the lending platform to equity in BCC coins a.) is not taxable and b.) it did not occur until 2018. Instead of being paid FROM the lending platform you are being paid from the exchange platform. It does not matter where you are being paid from, just how much you get paid.

The good news is that I am presuming that you will get an opportunity with your 2018 tax return to make some amends. Yes it’s delayed a year but once you cash out of those BCC you should be able to recognize a capital loss on that sale. Sorry.

Yes, I do.