After all, it's not as if Schedule D  or Form 8949  has a standardized way to report it.
There's no official ticker symbol, so you just write in a description.
I paid capital gains taxes on trading in 2015, and I wrote in something like "gain on sale of digital currency".
I can't believe I'm one of just 802 people to have paid taxes on these transactions.
 https://www.irs.gov/pub/irs-pdf/f1040sd.pdf (pdf)
 https://www.irs.gov/pub/irs-pdf/f8949.pdf (pdf)
I was unlucky ... BFL never got their engineering straight and the machine never appeared.
I was lucky ... I demanded a refund early and got back a full cash refund.
I was unlucky ... 325 BTC today would be worth US$1.35 million had I just held on instead of buying a BFL machine.
I was lucky ... my 325 BTC was held at Mt Gox and we know those BTC all vanished.
So ... I'm glad I made some decent gains back in the day, but I sure wish I still had the 325 BTC in a legitimate and safe form.
Did I miss something?
with Find "8949", as I was unsure of what document that was, I see that I reported a sell of BTC in 2014. I wonder if that was counted.
In 2015 I see a sell reported of Ether, because of the crowdsale selling. (Yes, and this is why I'm not rich). I wonder if that was counted
> Here is a paragraph from Utzke's affidavit that states only 802 individuals filed a bitcoin-related Form 8949 in 2015
Oops they only looked for bitcoin.
IRS: Exchanges need to generate 1099s.
Coinbase: We're sending out those 1099s now.
What happened instead:
IRS: Everybody calculate your own Bitcoin capital gains on the honor system; we trust you.
Coinbase: Yeah suckers, calculate that stuff yourself.
IRS: Hey wait, nobody is reporting Bitcoin gains. Let's sue Coinbase to hoover up every scrap of data they have and spend a lot of money on social media/blockchain analysis.
Coinbase: We're fighting this overbroad lawsuit to the death!
It sure seems like there's an obvious solution to this issue and both sides know what it is, but they're choosing lawsuits instead.
Please pay your taxes. Thanks.
How is property tax not a friction? Total I pay about $5,500+ annually, and it increases every year. That's money I could have spent or invested elsewhere, is it not?
I'm not saying we shouldn't tax crypto at all, but some countries don't and they seem to do all right. Maybe there's a middle ground.
"cryptographic hash inputs" which are colloquially called cryptocurrencies are functionally similar, and are subject to like-kind until a specific exception is made.
the IRS inadvertantly made altcoins the biggest potential tax shelter in history.
This isn't much of a problem because BTC and ETH are close to all-time highs, but in theory you can see how somebody could exchange BTC for ETH, ETH plummets, and they end up owing more in taxes than they are worth. A similar scenario occurred after the dot-com crash in 2001.
The IRS does specifically state that 1031 exchanges don't apply to stocks or "securities of indebtedness" (bonds), or to personal property.
1031s are for property held for use in a business or for investment.
It's not just real estate. People use 1031 exchanges to defer taxes on artwork, collectibles, boats and commodities.
BTC and ETH aren't stocks and they're not "securities of indebtedness". The matter isn't settled.
Here's the IRS's statement on what's excluded: https://www.irs.gov/newsroom/like-kind-exchanges-under-irc-c...
You must convert to USD first to swap stocks. With crypto you don't have to.
> they end up owing more in taxes than they are worth
That's bizarre and punitive, and does not seem to be consistent with a fair system.
With a few exceptions (like-kind exchanges come to mind), you owe the capital gains tax when you dispose of the property. That you continue to take on market risk afterwards does not enter into it.
IANATL, YMMV, consult a professional, etc.
When I buy GOOGL for $400/share, then trade it for APPL at a 1:5 ratio, if APPL on the day of the trade goes for $100/share, then my cost basis for GOOGL is $500/share.
Otherwise, there would be an obvious tax loophole where instead of paying taxes on my gains in GOOGL, I'd trade it for another stock, then instantly sell the new stock (Which made no gains between me acquiring it, and selling it.)
Just because I'm investing into magic internet money doesn't mean I shouldn't pay taxes on gains.
No, on the BTC -> ETH transaction, your capital gain is the difference between the dollar-equivalent cost of the ETH at the time of the trade and the dollar-equivalent cost of the BTC at purchase.
On the ETH to BTC transaction, it's the same thing, with “ETH” and “BTC” reversed (for the “new” BTC).
On the BTC to USD transaction, it's the actual quantity of dollars minus the dollar-equivalent cost of the BTC at the previous transaction.
In each transaction, you pay taxes on the net gain from the prior transaction. You don't pay taxes on the same income more than once.
People (this applies to US citizens only) will not report gains, and I hope they get audited. Pay your fair share silicon valley.