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The signup promotion in 2016 was for 5000 or 6000 lumens. Historically it looks like in 2016, 6000 lumens would have been worth five or ten bucks. So I guess th

The signup promotion in 2016 was for 5000 or 6000 lumens. Historically it looks like in 2016, 6000 lumens would have been worth five or ten bucks. So I guess that should be reported as income back then although it approaches being a rounding error. At some point, stellar converted lumens to stellar. Anyone know if that would be considered a taxable event? Did that change my basis?

sokoloff 9y ago
Not a tax pro, but I would treat any involuntary conversion similar to a corporate action where you got new shares for old shares, the new shares inherited the basis of the old shares, and would generally not be a taxable event. This is assuming it’s analogous to a tax-free spinoff event in the equities world.
- toast0 9y ago
  You only get to treat a corporate action as a non-taxable event if the event meets certain requirements and follows certain forms. As cryptocoins aren't actually shares in a corporation, I don't think you're going to get a non-taxable conversion.
  - sokoloff 9y ago
    There is a general doctrine of substance over form. If the substance of the transaction is that "coin A became renamed to coin B with no other changes", that is likely to eventually be judged by the tax court to be a non-taxable event. An individual tax filer can take a position that has a reasonable justification without penalty. You're citing existing precedents/case law that has been decided. The cryptocurrency cases have not yet been adjudicated by the tax court, so as an individual filer, I would be comfortable taking any reasonably justifiable position and defending it in audit if needed.
    - toast0 9y ago
      I don't think the general doctrine applies in this case, given that the law is written to require specific form for no apparent reason, and there is precedent that otherwise meeting the requirement but not following the prescribed form does not result in the desired outcome. I would put more weight on the possibility of considering it a 1031 like-kind exchange, than a tax free merger/reorganization . Although I don't have a lot of exposure to the 1031 rules to know if there's a clear objection there.

sokoloff 9y ago

Not a tax pro, but I would treat any involuntary conversion similar to a corporate action where you got new shares for old shares, the new shares inherited the basis of the old shares, and would generally not be a taxable event. This is assuming it’s analogous to a tax-free spinoff event in the equities world.

toast0 9y ago
You only get to treat a corporate action as a non-taxable event if the event meets certain requirements and follows certain forms. As cryptocoins aren't actually shares in a corporation, I don't think you're going to get a non-taxable conversion.
- sokoloff 9y ago
  There is a general doctrine of substance over form. If the substance of the transaction is that "coin A became renamed to coin B with no other changes", that is likely to eventually be judged by the tax court to be a non-taxable event. An individual tax filer can take a position that has a reasonable justification without penalty. You're citing existing precedents/case law that has been decided. The cryptocurrency cases have not yet been adjudicated by the tax court, so as an individual filer, I would be comfortable taking any reasonably justifiable position and defending it in audit if needed.
  - toast0 9y ago
    I don't think the general doctrine applies in this case, given that the law is written to require specific form for no apparent reason, and there is precedent that otherwise meeting the requirement but not following the prescribed form does not result in the desired outcome. I would put more weight on the possibility of considering it a 1031 like-kind exchange, than a tax free merger/reorganization . Although I don't have a lot of exposure to the 1031 rules to know if there's a clear objection there.