/biz/ - Business & Finance

>>2978705
Because of the compulsive need for the government to retain complete control over its subjects, the USD will always and forever be the only legal tender in the United States. Cryptocurrency is considered property by the IRS, and therefore capital gains taxes apply. Ironically, the IRS would make more money taxing crypto as income, but normies would start to realize that all of the pillars of life created by the government that they have considered unassailable their entire lives are built on lies and a lust for power. But I digress.
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The first and most important thing to understand about capital gains taxes is that there are two brackets: short and long term.
Short term capital gains and taxed at a much higher rate than long term taxes. The threshold is one calendar (NOT fiscal) year.
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The second most important thing to understand is that you are only required to pay taxes on profits made, not losses. If you buy a crypto at the all time high and panic sell at a loss, you do not owe taxes on that transaction.
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The third most important is that you pay taxes on what the coin cost AT THE TIME OF EXCHANGE, not the current value. This is your biggest money-saver.

>>2978707
Now let's dive into the nitty-gritty.
Some people have the idea that you can subtract the amount of fiat (USD for our purposes) you originally bought your first crypto with from the dollar amount of when you cashed out, and pay the capital gains tax on that final amount. This is known as first-in-first-out and works in real estate and commodities trading, but not crypto. You might be able to get away with that if you're dealing in small amounts and have no history with the IRS, but if you gain any scrutiny at all from Uncle Sam, you will be royally, royally fucked.

Assuming you will be trying to be the Wolf of /biz/rael and start daytrading like the worthless neet sperg you are, you will rack up a SHIT TON of microtransactions between different cryptos. This is why it's important to use an exchange like Bittrex or similar that keep printable records of all exchanges.
When you exchange a crypto for another crypto, a chain of imaginary events is created that are very real to the IRS:

(crypto X is converted to the current value of USD ---> USD is used to purchase crypto Y)

If this was your only transaction, this means nothing because (unless you are an utter retard) crypto X and Y will have the same value at the exact moment of exchange. The trouble (or good fortune, depending on how you look at it) comes when you have multiple transactions. Buckle your seatbelts, we're about to reach autistic levels of tax complication - I'll try to make it as simple as I can: with an example.

Fuck off, kike.

>>2978718
Say you purchase 1 BTC for $3300, and you immediately trade .5 BTC for 1682385.221 memecoins, then a day later the price of BTC has gone down to $3000 and you trade your remaining .5 BTC for 10 altcoins. Because BTC depreciated $300, you now have $300 of deductible losses. So if your memecoins' value skyrockets and you make a profit of $1500, you can deduct $300 from your taxable capital gain. Paying 28% on $1200 is much better than $1500. But what happens when you have sixteen different BTC purchases in complicated decimal amounts all at different $USD values? And hundreds of crypto-crypto microtransactions? Haha, fuck you, we're the government, do the math and pay us go to jail. Blue lives matter vote for higher taxes haha :)
You can either print your spreadsheets, do the math, and hope you didn't fuck up, or use a service like bitcoin.tax that does all of it for you for a stomachable fee. Or, if you're dealing in large amounts of crypto currency and are already in lambo land, find a local CPA that specializes in cryptocurrency.

If you've read all of this and still have questions, below is a list of helpful links to help you determine what to do come tax season:

>>2978705


i don't pay taxes sperglord, why should i.

Stop shitting up /biz/

sage

>>2978732
>https://bitcoin.tax/blog/filing-your-bitcoin-taxes/ (guide on tax filing)
>https://bitcoin.tax/ (crypto version of turbotax and only reputable API)
>https://bitcoin.tax/cpa (very short list of local crypto CPAs)
>http://www.thebitcoincpa.com/ (somewhat reputable online-only crypto CPA that takes a fuckhuge fee)
>https://en.bitcoin.it/wiki/Tax_compliance (straight from the horse's mouth)
>https://www.irs.gov/pub/irs-pdf/f1040.pdf (IRS form for those who are gifted with mathematical skills are testicular fortitude who want to DIY)
>https://turbotax.intuit.com/tax-tools/tax-tips/Taxes-101/Tax-Tips-for-Bitcoin-and-Virtual-Currency/INF29402.html (marketing ploy to get you to use bloated overpriced normie software to file your crypto taxes. Has some good info)
>http://www.investopedia.com/university/definitive-bitcoin-tax-guide-dont-let-irs-snow-you/ (good info from a fiat trader's perspective)
>https://greatagain.gov/ (to support the un-fucking of the current situation. Will beg you for money)

>>2978743
Before I close, in the interest of a fuller understanding of the crypto community's relationship with regulatory bodies and tax agencies, it is worth noting some things. Be fully aware that THIS IS NOT LEGAL, PROFESSIONAL, PERSONAL OR ANY OTHER KIND OF ADVICE AND ALL OF THE ACTIVITIES DESCRIBED BELOW THIS LINE ARE ILLEGAL AND CAN LAND YOU IN DEBT OR IN JAIL OR BOTH.
Some CRIMINAL traders are able to avoid taxes altogether by using best anonymizing practices. The IRS can only tax you if they know who you are and what you are doing with your crypto. Under US law, the IRS requires exchanges to have a government-issued photo ID on file before you can buy crypto with US dollars. These are called know your customer laws. Once your fiat is in crypto, it can be transferred to a series of temporary wallets under the blanket of a proxy, tor network, or VPN. Some wallets even have proxy settings built into them. Once anonymized by a wallet, some people then transfer that crypto to a different exchange with no user identity on file and do their daytrading on that website, under a VPN. Once they have day traded to their heart's content and made a fuckload of money and are ready to cash out back to fiat currency, they will use a website like localbitcoins.com to exchange their crypto for a variety of payment methods that do not require personal identification, such as cash-in-person, cash-by-mail, amazon gift card, prepaid credit card, etc. Unless that crypto has been obtained my illegal methods, at this point NO LAW HAS BEEN BROKEN. But if you fail to pay taxes on your dividends, you are guilty of TAX FRAUD AND MONEY LAUNDERING and will be spending the next 2-10 years in FEDERAL prison. Federal prisons have xboxes though, so if you just really want to be a homosexual consolefag, this might be a fun roundabout way of achieving that.

>>2978737

bumping so mod overlords will see

Taxes... That will bring a lot of the "traders" back to reality.

Obviously you only pay taxes if you profit hur hur.

I never profited from Bitcoin cos I was too late. Eth fixed that, and I am up to pay the lord of all bazookas.

I used to laugh at Americans since schedenfreude is always a blast, but this is truly depressing.
I'm sorry about the scathing posts I've made in the past, no one deserves to live under this kind of jewish sovereign power.
It's so transparent from all the aspects of American economy (rampant credit card use, the concept of credit rating, taxation) that everything is done at the damages of the people, but damn.

I'm so sorry.

>>2978934
pls kill us

God bless the land of the free!

Our only hope now is that some supreme leader nukes the US back to native american times so the rest of the world gets spared from all the diarrhoea they produce

gonna bump, interesting thread

>>2978737