4 ms·

It's nearly impossible. Here's just a few situations that are unclear (no i'm not asking for advice, nor do I think HN is my personal CPA) 1. You buy into an I

It's nearly impossible. Here's just a few situations that are unclear (no i'm not asking for advice, nor do I think HN is my personal CPA) 1. You buy into an ICO and it exit scams 2. You get staking / masternode payouts (but don't sell them to $ or another coin) 3. You trade futures - can you use Form 6781? 4. What's your cost basis on a futures trade if not (selling/buying bitcoin with borrowed bitcoin)? 5. You receive funding/interest payouts on an open leveraged trade 6. One of your coins forks 7. You have trades on a DEX with no downloadable history 8. You have trades on an exchange which no longer exists 9. You are awarded coins as part of an airdrop to holders of (other coin) 10. You get hacked (are you sure you aren't faking that to avoid taxes, citizen?)

defen 8y ago
> 6. One of your coins forks I've been advised to report these as regular income, using the value of the asset on the day you received it. For example, if you were holding 1 Bitcoin on August 1 (and therefore received 1 Bitcoin Cash due to the fork) you would report regular income of $294.60 (value of Bitcoin Cash at time of fork). If you eventually sell it, your cost basis is then $294.60.
- panarky 8y ago
  What if there's no active market at the time of the fork? For example, on October 24, 2017 for Bitcoin Gold, or on December 12, 2017 for UnitedBitcoin, there was no market. What do you do? What if there's an illiquid market with crazy prices at the time of the fork. Do you use that market price even if you're physically unable to sell your forked coins on that market?
  - sushid 8y ago
    I'm not a CPA either but considering it income on the day of the fork is assured not a burden on you. That means you have tax obligations on all potential future forks, regardless of whether you know it or do anything with that information. IIRC the suggestion I found online was to pay capital gains tax on the full amount you sold or exchanged the coin for.
panarky 8y ago
If you trade 1,000 BTC for 10,000 ETH and never touch fiat, is that a taxable event? That trade on January 12 would have been worth $14 million. If you acquired the BTC years ago, you could have a tax liability of $5 million even though you never gained a single dollar. Today that ETH is only worth $5 million. You would have to sell all of it to pay your taxes.
- celticninja 8y ago
  In some jurisdictions that is a taxable event. However isn't a gain only a gain when it is realised? If I have 10 BTC worth a $1000 and then they are worth $100000, do I need to report a gain if I don't sell them? My assumption is that I only have a taxable gain when I turn it into USD.
- wang_li 8y ago
  Some dude on reddit sold btc in December for ~$100k profit. Bought random coins in January and lost almost all of it. Is looking at a $30k tax bill. Can’t offset the loss because he crossed a year boundary between the transactions. His annual income was only something like $35k.
- namlem 8y ago
  Yes, in the US that is definitely taxable. Keep in mind you can also write off losses though.

defen 8y ago

> 6. One of your coins forks I've been advised to report these as regular income, using the value of the asset on the day you received it. For example, if you were holding 1 Bitcoin on August 1 (and therefore received 1 Bitcoin Cash due to the fork) you would report regular income of $294.60 (value of Bitcoin Cash at time of fork). If you eventually sell it, your cost basis is then $294.60.

panarky 8y ago
What if there's no active market at the time of the fork? For example, on October 24, 2017 for Bitcoin Gold, or on December 12, 2017 for UnitedBitcoin, there was no market. What do you do? What if there's an illiquid market with crazy prices at the time of the fork. Do you use that market price even if you're physically unable to sell your forked coins on that market?
- sushid 8y ago
  I'm not a CPA either but considering it income on the day of the fork is assured not a burden on you. That means you have tax obligations on all potential future forks, regardless of whether you know it or do anything with that information. IIRC the suggestion I found online was to pay capital gains tax on the full amount you sold or exchanged the coin for.

panarky 8y ago

If you trade 1,000 BTC for 10,000 ETH and never touch fiat, is that a taxable event? That trade on January 12 would have been worth $14 million. If you acquired the BTC years ago, you could have a tax liability of $5 million even though you never gained a single dollar. Today that ETH is only worth $5 million. You would have to sell all of it to pay your taxes.

celticninja 8y ago
In some jurisdictions that is a taxable event. However isn't a gain only a gain when it is realised? If I have 10 BTC worth a $1000 and then they are worth $100000, do I need to report a gain if I don't sell them? My assumption is that I only have a taxable gain when I turn it into USD.
wang_li 8y ago
Some dude on reddit sold btc in December for ~$100k profit. Bought random coins in January and lost almost all of it. Is looking at a $30k tax bill. Can’t offset the loss because he crossed a year boundary between the transactions. His annual income was only something like $35k.
namlem 8y ago
Yes, in the US that is definitely taxable. Keep in mind you can also write off losses though.