2 ms·

This is a great analysis, but I’m stuck on this point. > 1) Someone who wants to sell $1M USD of BTC may be happy to take $1M USDT instead for legal/tax purpos

by krrrh 9y ago

This is a great analysis, but I’m stuck on this point. > 1) Someone who wants to sell $1M USD of BTC may be happy to take $1M USDT instead for legal/tax purposes. Can you clarify that you mean for the purpose of tax evasion as opposed to tax avoidance? IANATL but it seems very unlikely that the IRS or any tax jusrisdiction that I’m aware of, would consider a trade into USDT a like-kind transaction [1]. It would still trigger capital gains. If lots of people really are operating under a different belief then this is going to get really messy. If there’s a crypto-correction, non-HODLers could be left with tax liabilities they can’t cover. [1] https://en.m.wikipedia.org/wiki/Like-kind_exchange https://en.m.wikipedia.org/wiki/Like-kind_exchange

meritt 9y ago
I've specifically seen folks discussing converting to tether now (on the fear that BTC will fall) and waiting til 2018 to redeem due to pending tax cuts. So this would be an avoidance strategy. I have no idea on the legal specifics or whether or not Tether/Bitfinex are going to be providing reporting to governmental agencies (like Coinbase+IRS are doing). The discussions I've seen often cite Tether as a way to capture profits in USD and holding off on the "real" USD conversion at a later place or time (taxes or restrictive outflows like China's $50k USD/yr limit). Basically viewing it as a way to operate in USD without creating a banking paper trail. If conversion to USDT causes a legally taxable event that's going to remove a significant portion of the proposed use-cases for tether. > If lots of people really are operating under a different belief then this is going to get really messy. I think "really messy" is a given at this point. I was in Starbucks a few days ago and overhead a non-tech savvy man say: "I need to figure out how to buy some of that bitcoin so I can get rich but all the websites I've found are crooks!"

by krrrh 9y ago

meritt 9y ago

I've specifically seen folks discussing converting to tether now (on the fear that BTC will fall) and waiting til 2018 to redeem due to pending tax cuts. So this would be an avoidance strategy. I have no idea on the legal specifics or whether or not Tether/Bitfinex are going to be providing reporting to governmental agencies (like Coinbase+IRS are doing). The discussions I've seen often cite Tether as a way to capture profits in USD and holding off on the "real" USD conversion at a later place or time (taxes or restrictive outflows like China's $50k USD/yr limit). Basically viewing it as a way to operate in USD without creating a banking paper trail. If conversion to USDT causes a legally taxable event that's going to remove a significant portion of the proposed use-cases for tether. > If lots of people really are operating under a different belief then this is going to get really messy. I think "really messy" is a given at this point. I was in Starbucks a few days ago and overhead a non-tech savvy man say: "I need to figure out how to buy some of that bitcoin so I can get rich but all the websites I've found are crooks!"