Another Internet Bubble Lesson (Pay Your Crypto Taxes)

https://medium.com/@Wuntusk/another-internet-bubble-lesson-pay-your-crypto-taxes-9b237547b3a8

by krambs • 9 years ago

23 11 9 years ago

How is this a top post? "Pay your taxes because, um, you should, I mean talk to a lawyer"

Probably because a lot of people who've gotten into Bitcoin mining don't have any experience with significant taxable income that isn't a wage.

vinniejames2• 9 years ago

If you make thousands or millions trading an asset and think somehow you don't owe taxes, you've got other problems than just the IRS

jsgo2• 9 years ago

to emodendroket's point, I recall reading an article that in the previous year (2016) that the IRS stated that very few people were claiming bitcoins in their taxes. I'm not versed on cryptocurrencies so I don't know how plausible it is that they know this, but it seems like something they're looking at now.

neuronexmachina• 9 years ago

Basically, only 802 people told the IRS about their 2016 profits in CoinBase, one of the more popular exchanges. It's safe to assume that number was a tiny fraction of the actual US users.

http://fortune.com/2017/03/19/irs-bitcoin-lawsuit/

cantrip• 9 years ago

It's not by any argument just saying "pay your taxes".

The article outlines an interesting situation specific to bubble valuations like the dot com boom or (possibly) crypto currency in which you can easily end up owing far more in taxes to the IRS than the current worth of your holdings.

That, to me, is worthy of discussion and a front page place on a tech news site.

feel_the_need• 9 years ago

Does this include someone who buys BTC on coinbase but never sells it?

greenyoda• 9 years ago

If BTC is treated as property (as the IRS says), then no. You'll only owe capital gains tax on it at the point where you sell or exchange it. Your capital gain will be the amount you sold it for minus the amount you bought it for, minus any expenses incurred buying/selling it. (If you sell it for less than you bought it for, you'll have a capital loss.) It's essentially treated like shares of stock.

More details can be found in the IRS guidelines that were linked in the article: https://www.irs.gov/pub/irs-drop/n-14-21.pdf (see questions 1, 6 and 7).

Another Internet Bubble Lesson (Pay Your Crypto Taxes)

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