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/biz/ - Business & Finance

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49914999 No.49914999 [Reply] [Original]

Hypothetical situation:
>Spend $1/token on 1000 tokens
>Tokens shoot up in value to $10,000/token
>Receive 50 tokens = $500,000 via staking
>Have to pay 30% tax on staking rewards. Tax = $150,000
Ok...
>Sell $220,000 worth of token to pay for tax
>Get taxed 30% for realising your capital gains; you get to keep $154,000 of your $220,000 sale
>Use your $154,000 post-take gains to pay for your $150,000 tax bill
>You get to keep $4000 only

My math might be wrong somewhere but the gist is true. If you bought tokens for cheap and they rocket on value, you can't live off staking rewards because you pay tax on receiving it, then pay tax on cashing out to pay for the initial tax, ad infinitum.

>> No.49915368

>>49914999
nice numbers. i work in tax, you don't really know what you're talking about. how about just don't spend the entire 500,000 in profit. also, cap gains are 15% or 20% if you're rich and you held for over a year.

>> No.49915486

>>49915368
I didn't say spend the entire 500000 in profit. Merely receiving the tokens means you have to pay their fiat worth in tax. Didn't you know? That's why you have to sell some off to pay for the initial tax bill, but you end up paying additional tax for the ones you just sold off.