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No, it’s not. It means you don’t pay capital gains when you’re merely exchanging one form of crypto for another. You have not realized any gains until you have

by teilo 8y ago

No, it’s not. It means you don’t pay capital gains when you’re merely exchanging one form of crypto for another. You have not realized any gains until you have converted your crypto into real assets. Converting from one form of crypto to another for the purposes of arbitrage only delays the taxes. It never eliminates them. This is really no different than selling and buying stocks in an IRA account.

JumpCrisscross 8y ago
> You have not realized any gains until you have converted your crypto into real assets You transacted into (what you believed was) a proxy for cash. That's obviously selling. Every tax jurisdiction has rules about this because every tax jurisdiction has idiots who thought they'd found a clever workaround. (I think the first American one involved a guy in the 19th century selling property for the key to a lockbox full of cash.)
- RobLach 8y ago
  I feel that people believe that they can get away with things because they imagine a situation where you can argue on a technicality and get away with it. In reality if they want to punish you for this they'll see right through it. Loopholes are only loopholes because there's an established history of authorities not willing to enforce it (brown paper bags around liquor bottles, "Suggested Donations").
ceejayoz 8y ago
> This is really no different than selling and buying stocks in an IRA account. This is an insane assertion. One of the main points of an IRA is that the trades within it aren't taxable events. Trades made outside an IRA are taxable events.
- teilo 8y ago
  I understand the difference. All I meant is that in an IRA the trades are not taxed but the withdrawals are. But I see the point here regarding a cash proxy. Full disclosure: I have zero exposure to crypto. Not my cup of tea.
jungturk 8y ago
Crypto-crypto trades no longer enjoy the like-kind exchange tax treatment you're describing (in the US, as of 12/31/2017). The recent tax law narrowed that benefit to real estate only. https://www.coindesk.com/owe-irs-crypto-crypto-trades/ https://www.coindesk.com/owe-irs-crypto-crypto-trades/
- teilo 8y ago
  I stand corrected.
- JumpCrisscross 8y ago
  > no longer On 31 December 2017, the IRS clarified that § 1031 does not apply to crypt-crypto trades. It did not say § 1031 applied to crypto-crypto trades before then. The article you reference says "traders still may be able to argue that their transactions undertaken in 2017 and prior years were not taxable under the Section 1031 like-kind exchange rules," but that "the application of the like-kind exchange rules to crypto transactions is far from certain" [1, emphasis mine]. [1] https://www.coindesk.com/owe-irs-crypto-crypto-trades/ https://www.coindesk.com/owe-irs-crypto-crypto-trades/

by teilo 8y ago

JumpCrisscross 8y ago

> You have not realized any gains until you have converted your crypto into real assets You transacted into (what you believed was) a proxy for cash. That's obviously selling. Every tax jurisdiction has rules about this because every tax jurisdiction has idiots who thought they'd found a clever workaround. (I think the first American one involved a guy in the 19th century selling property for the key to a lockbox full of cash.)

RobLach 8y ago
I feel that people believe that they can get away with things because they imagine a situation where you can argue on a technicality and get away with it. In reality if they want to punish you for this they'll see right through it. Loopholes are only loopholes because there's an established history of authorities not willing to enforce it (brown paper bags around liquor bottles, "Suggested Donations").

ceejayoz 8y ago

> This is really no different than selling and buying stocks in an IRA account. This is an insane assertion. One of the main points of an IRA is that the trades within it aren't taxable events. Trades made outside an IRA are taxable events.

teilo 8y ago
I understand the difference. All I meant is that in an IRA the trades are not taxed but the withdrawals are. But I see the point here regarding a cash proxy. Full disclosure: I have zero exposure to crypto. Not my cup of tea.

jungturk 8y ago

Crypto-crypto trades no longer enjoy the like-kind exchange tax treatment you're describing (in the US, as of 12/31/2017). The recent tax law narrowed that benefit to real estate only. https://www.coindesk.com/owe-irs-crypto-crypto-trades/ https://www.coindesk.com/owe-irs-crypto-crypto-trades/

teilo 8y ago
I stand corrected.
JumpCrisscross 8y ago
> no longer On 31 December 2017, the IRS clarified that § 1031 does not apply to crypt-crypto trades. It did not say § 1031 applied to crypto-crypto trades before then. The article you reference says "traders still may be able to argue that their transactions undertaken in 2017 and prior years were not taxable under the Section 1031 like-kind exchange rules," but that "the application of the like-kind exchange rules to crypto transactions is far from certain" [1, emphasis mine]. [1] https://www.coindesk.com/owe-irs-crypto-crypto-trades/ https://www.coindesk.com/owe-irs-crypto-crypto-trades/