/biz/ - Business & Finance

[Anonymous No.4633183]

>I've seen a lot of misinformation on how Cryptos are taxed and I wanted to clear the air for the LTC community. There's a lot of day traders that do not know this and are in for a rude awakening. This is for [Form 8949](https://www.irs.gov/pub/irs-pdf/f8949.pdf)) in addition to [Schedule D on the 1040](https://www.irs.gov/pub/irs-pdf/f1040sd.pdf).).

>Currently, the [SEC treats cryptocurrencies as a property](https://turbotax.intuit.com/tax-tips/tax-payments/tax-tips-for-bitcoin-and-virtual-currency/L1ZOgU00q).). This means they are subject to capital gains tax. **Any time you make a trade, whether it be from crypto to crypto or crypto to FIAT, it is considered a taxable event. Even using crypto to purchase items counts as a taxable event**

>If you held the crypto less than a year before selling, it is subject to short term capital gain taxes. **Short Term capital gains are treated as ordinary income and thus are taxed at your tax bracket** The gains can even push you into the next tax bracket if you were close.

>For instance, say you held LTC for 9 months, sold it during a dip, and then bought back at a lower price. Not only is this considered a taxable event, you also lose the 9 months progress toward the long term capital gains status.

>[Long Term capital games are subject to different tax percentages](https://i.imgur.com/veDWSVf.png).). So if you had a stack sitting in cold storage for longer than a year and decided to sell them, you'd owe almost half as much in taxes.

[Anonymous No.4633198]

>>4633183
>[So how does it work?]
(https://www.investopedia.com/articles/personal-finance/101515/comparing-longterm-vs-shortterm-capital-gain-tax-rates.asp?lgl=af-top-textlink-in-content).). First, you need to determine your NET capital gains. Every exchange has a record of your transactions and some allow you to export it to .csv. They have all of your trading information, personal information used to get verified on the exchange, and the IP addresses you made the trades from. Some exchanges, such as Coinbase/Gdax, [only report transactions over $20K to the IRS](https://www.forbes.com/sites/robertwood/2017/08/24/irs-hunts-bitcoin-user-identities-with-software-in-tax-enforcement-push/).). That doesn't mean if you're making transactions for less, you're exempt from taxes, just means it's unlikely you'll get audited. It's much better to be proactive than get audited and take the Wesley Snipes route.

[Anonymous No.4633215]

>>4633198
>**EXAMPLE:**
>For simplicity, let's say you have all short-term capital gains. Start with your initial investment and then go to your first transaction. Let's say you invested $1,000 when LTC was $25 and you received 40 LTC.

>Three months down the road, LTC increased to $50 and you decide you want to take some profits. You sell 10 LTC at $50 for $500 total and so the taxable amount is $50*10 - $25*10 = $250.

>Three months later, LTC dips to $10 and you panic sell 10 of your coins. $10*10 - $25*10 = -$150. This is negative since you sold at a loss.

>Finally, three months after that, LTC rises to $100 and you've had enough and sell the rest of your LTC. $100*20 - $25*20 = $1,500

>To get your total short term capital gains taxable amount, you add up the results of all the transactions: $250 -$150+$1,500 = $1,600

>Now multiply that times whichever tax bracket that puts you in to get how much taxes you owe. ($1,600 * .25) = $400 taxes owed.

>Another thing I want to bring up is the like-kind properties (Section 1031). This states if products are similar, you can trade them without it being considered a taxable event. The IRS has been silent whether or not Crypto to Crypto transactions should be considered taxable. BUT I believe it's better to ease on the side of caution, especially with how the US views crypto currently.

>There is a [new tax bill](https://www.congress.gov/bill/115th-congress/house-bill/1/text)) going through Congress (also included in the Senate), that will limit Section 1031 to ONLY real estate:

>"SEC. 3303. LIKE-KIND EXCHANGES OF REAL PROPERTY.
(a) In General.—Section 1031(a)(1) is amended by striking “property” each place it appears and inserting “real property”."

>This leads me to believe that Crypto to Crypto is considered a taxable event. And I believe it will be this way until the SEC deems Crypto as a currency

[Anonymous No.4633262]

I'm not reading shit and that's a penis

[Anonymous No.4633286]

>>4633215
>>Now multiply that times whichever tax bracket that puts you in to get how much taxes you owe. ($1,600 * .25) = $400 taxes owed.

this isn't that horrible. a question though, if you're in that .25 tax bracket and you invested $5k of your money into a coin that mooned 1000x, and you made say 300,000, at that instant are you part of that higher tax bracket? or are you still at .25 until the end of the year or something?

[merely a messenger No.4633317]

>>4633286
>The gains can even push you into the next tax bracket if you were close.

[Anonymous No.4633330]

TO me TO YOU

[Anonymous No.4633336]

>>4633317

kinda sux being a burger now

[Anonymous No.4633446]

>>4633183
Oddly, this is a good news for crypto. RIn result, we get

1. XMR moon
2. Increased amount of hodlers muhimnot selling.jpg = less supply/demans = prices about to go up
3. It is taxed, then it is legit. Boomer influx