3 ms·

In Canadian law, when you 'convert' the coin to another, it instantly triggers capital gains. If you convert the new coin, capital gains (or losses) are trigger

In Canadian law, when you 'convert' the coin to another, it instantly triggers capital gains. If you convert the new coin, capital gains (or losses) are triggered at the time of conversion. Its the same as if you were to pay for a new car with some Google shares and your old car, where there is no conversion to money- it's barter trade. The CRA (Canadian IRS) treats BitCoin transactions as barter trade- and you have to declare the trade in equivalent dollar values. The happy path does not allow for easy avoidance of capital gains. I am not sure what happens if you were to purchase outside the country though- although I think the limiting factor here is the exchange you're converting on. Connecting with banks subject them to regulation and reporting. I wonder if I buy BitCoin in a Caymen Island exchange, sell on the exchange for profit into a Caymen Island bank account, then transfer the wealth into a Canadian account, if I could avoid capital gains. This is all in OP's comment though where the institutions responsible for taxation have a wealth of domain knowledge. The tax code is complicated because people with a ton of wealth on the line have found and exploited every loophole imaginable. Nothing I can think of hasn't already been considered.

Kiro 9y ago
> In Canadian law, when you 'convert' the coin to another, it instantly triggers capital gains. That's interesting. How does it work with hard forks like Bitcoin Cash?
- yebyen 9y ago
  That's a great question, it seems you're not "converting" the coin if you don't have to lose the original BTC. I think you'd treat it as found money (income, but at what value? it would be really hard to say what the value is on Day 1 of the hard fork, but you could go by what the markets said it was worth... or do you use the value of the BCH from when you first "claimed" it and moved it to a BCH address? or use the value it had when you first sold it? what if you were holding BTC at the time of the fork but never claimed your BCH, do you have any way to prove that? Do you need to?) Then once you transact it just once, it should be easy, same question as any other crypto currency; you pay capital gains on the appreciated value (the gains) after you sell. But what is your "cost basis" in that calculation? I don't want to overpay taxes, but I think the safest thing to do would be to treat that first sale as pure income and pay the regular marginal income tax rate on the full value, because truly you'd actually have no cost basis until you had actually bought some BCH.
- badloginagain 9y ago
  I would think it works as if you were just 'given' some stock. If it appreciates from nothing to something, you'd pay capital gains on the total value of the stock- (total value - the amount you paid ($0)) = amount you get taxed on. At least, I would believe that's the spirit of the law.

Kiro 9y ago

> In Canadian law, when you 'convert' the coin to another, it instantly triggers capital gains. That's interesting. How does it work with hard forks like Bitcoin Cash?

yebyen 9y ago
That's a great question, it seems you're not "converting" the coin if you don't have to lose the original BTC. I think you'd treat it as found money (income, but at what value? it would be really hard to say what the value is on Day 1 of the hard fork, but you could go by what the markets said it was worth... or do you use the value of the BCH from when you first "claimed" it and moved it to a BCH address? or use the value it had when you first sold it? what if you were holding BTC at the time of the fork but never claimed your BCH, do you have any way to prove that? Do you need to?) Then once you transact it just once, it should be easy, same question as any other crypto currency; you pay capital gains on the appreciated value (the gains) after you sell. But what is your "cost basis" in that calculation? I don't want to overpay taxes, but I think the safest thing to do would be to treat that first sale as pure income and pay the regular marginal income tax rate on the full value, because truly you'd actually have no cost basis until you had actually bought some BCH.
badloginagain 9y ago
I would think it works as if you were just 'given' some stock. If it appreciates from nothing to something, you'd pay capital gains on the total value of the stock- (total value - the amount you paid ($0)) = amount you get taxed on. At least, I would believe that's the spirit of the law.