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Taxes on Cryptocurrency questions (U.S.A.)

Discussion in 'Investing/Trading/Cryptocurrency/Altcoins' started by Mr.Brandtastic, Jan 11, 2018.

  1. Mr.Brandtastic
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    Mr.Brandtastic Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    Yes I know, it's that time again. Tax season. Time to open your wallet and give Uncle Sam his cut for "keeping you safe" or whatever mystical bs they come up with. They want to vacuum every single nickel and dime that they are owned.

    Now I know that many of us have crypto gains and I want to ask questions to serious people who either are accountants, tax lawyers, or people with a lot of experience in the field.

    I know that crypto counts as property and over one year counts as long-term capital gains.

    But what if I transferred one alt-currency to another alt-currency and realized gains this year? Do I pay taxes on the gains or only when I exchange it back into fiat? I've heard so many conflicting sides and I wanted a clear answer. I assume the former.
     
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  2. LeoistheSun
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    LeoistheSun Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    You could... use btc-e (different name now) and wire to a offshore account...? Or sell the BTC in person...for cash...? Idk.

    Some things I've thought about.
     
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  3. CareCPA
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    CareCPA Silver Contributor FASTLANE INSIDER Speedway Pass

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    The technical answer is: whenever you trade from one currency to another (whether from fiat to alt, or alt to alt), you must recognize a gain or loss on that transaction. Depending on your level of activity, this could be tricky (to say the least). The IRS of course has not put out too much guidance on this.

    How you ultimately end up reporting it is a discussion between you and whomever signs your return, and the level of risk the two of you are comfortable with.
     
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  4. CareCPA
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    CareCPA Silver Contributor FASTLANE INSIDER Speedway Pass

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    This is called tax evasion. I'd be careful about posting such thoughts publicly.
     
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  5. LeoistheSun
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    LeoistheSun Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    Sadly I wish I had some...

    Well I did but that was several windows installs ago.
     
  6. JScott
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    JScott Platinum Contributor FASTLANE INSIDER Speedway Pass

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    As CareCPA said, you owe tax on each transaction, whether Fiat-to-Crypto, Crypto-to-Fiat or Crypto-to-Crypto...

    There's a great app called CoinTracking (cointracking.com) that will import trades from each of the major exchanges and calculate your realized and unrealized gains for tax purposes. I couldn't imagine trying to do it by hand...nearly impossible given the complicated changes in basis through the transactions.

    The software isn't cheap, but I found it worthwhile...
     
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  7. powderhound100
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    powderhound100 Contributor Read Millionaire Fastlane FASTLANE INSIDER

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  8. David Goliath
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    David Goliath New Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    And here I am keeping a spreadsheet of each transaction... Thanks for mentioned software
    @JScott
    @powderhound100
     
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  9. mike24601
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    mike24601 Consumption Bear Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    I plan to report it as short or long term capital gains and be done with it. My crypto philosophy is buy and hold, so it should be easy when the time comes. One sale, one time gain. I can see a lot of people getting reamed in the future...LOTS of people day trading crypto that possible don't even know their gains/losses for the year. Don't be that guy.