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1/ Short term, so 50k tax is 150k gains 2/ Your possibility is correct - the IRS computes tax on USD-equivalent as of trades completed Dec 31; but the USD pric

1/ Short term, so 50k tax is 150k gains 2/ Your possibility is correct - the IRS computes tax on USD-equivalent as of trades completed Dec 31; but the USD price crashed in 2018'Q1, and he can't pay his tax bill in crypto. He can deduct the USD-equivalent losses next year but only against capital gains, not his W2 income, and the tax is due now in USD.

deleted 9y ago
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dustingetz 9y ago
Continued: As a though experiment: lets say 100% of crypto traders owe 1/3 of their gains (obviously not real). There is nowhere close to enough USD liquidity to handle a sell like that and it would liquidate everyone and still leave them unable to pay their USD tax bill. The apparent USD liquidity is mostly actually Tether liquidity. There is not actual USD liquidity – nobody is buying huge amounts of BTC who doesn't already have it – so we don't even have pricing data on what the USD price is, all that data has been corrupted by systemic exposure to Tether. Obviously the thought experiment is totally absurd but it raises questions like, what exactly is the tipping point and how much liquidity is there actually?
- deleted 9y ago
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- provost 9y ago
  Gains are only realized when they sell, so liquidity doesn’t matter if they don’t sell.
  - dustingetz 9y ago
    It matters if you traded alts, which all of reddit was doing for the last six months and what this whole issue is about
andrewjl 9y ago
The IRS will only tax you on realized gains. Assuming individuals bought BTC (or alt coins or any other asset for that matter), and are still holding it, no taxes will be due until it is sold. If the individual sold their BTC in 2017, then they needed to have set aside a percentage of any profits for tax purposes. So I'm inclined to agree with antisthenes, this person is either being untruthful or they lack a coherent investment plan and have a spectacularly bad tax planner.

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dustingetz 9y ago

Continued: As a though experiment: lets say 100% of crypto traders owe 1/3 of their gains (obviously not real). There is nowhere close to enough USD liquidity to handle a sell like that and it would liquidate everyone and still leave them unable to pay their USD tax bill. The apparent USD liquidity is mostly actually Tether liquidity. There is not actual USD liquidity – nobody is buying huge amounts of BTC who doesn't already have it – so we don't even have pricing data on what the USD price is, all that data has been corrupted by systemic exposure to Tether. Obviously the thought experiment is totally absurd but it raises questions like, what exactly is the tipping point and how much liquidity is there actually?

deleted 9y ago
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provost 9y ago
Gains are only realized when they sell, so liquidity doesn’t matter if they don’t sell.
- dustingetz 9y ago
  It matters if you traded alts, which all of reddit was doing for the last six months and what this whole issue is about

andrewjl 9y ago

The IRS will only tax you on realized gains. Assuming individuals bought BTC (or alt coins or any other asset for that matter), and are still holding it, no taxes will be due until it is sold. If the individual sold their BTC in 2017, then they needed to have set aside a percentage of any profits for tax purposes. So I'm inclined to agree with antisthenes, this person is either being untruthful or they lack a coherent investment plan and have a spectacularly bad tax planner.