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As far as I understand it, IRS wants cryptocurrency traders to report USD profit on every trade. This gets extremely ugly if you are trading one cryptocurrency

by cwkoss 7y ago

As far as I understand it, IRS wants cryptocurrency traders to report USD profit on every trade. This gets extremely ugly if you are trading one cryptocurrency for another, as these trades are unclear as to whether they are an entry or an exit. Now, I simply recommend that everyone only trades USD-to-crypto and back, never crypto-to-crypto if you want to comply with tax law - it gets very complicated fast.

sdinsn 7y ago
> This gets extremely ugly if you are trading one cryptocurrency for another, as these trades are unclear as to whether they are an entry or an exit. Trading one crytocurrency for another is a taxable event. Just like how trading one real currency for another is a taxable event. It's not unclear and trading platforms provide tax tools that solves this problem I traded crypto and paid my taxes
- 171243 7y ago
  I believe prior to 2018 this was not the case with crypto.
  - verdverm 7y ago
    Weren't they treated more like property then?
    - uwuhn 7y ago
      I think Like-Kind is the term. Someone please correct me if I'm wrong, but IIRC any crypto-for-crypto was a Like-Kind exchange prior to Jan 1, 2018.
      - garmaine 7y ago
        There is no evidence this is the case except wishful thinking.
      - topmonk 7y ago
        It was possible to do so before that date, but you could also not treat it that way, as well. The IRS then released guidance that after Jan 1st 2018, it was not acceptable to do so.
  - JumpCrisscross 7y ago
    > prior to 2018 this was not the case with crypto This is "far from certain" [1]. After 31 December 2017, like-kind exchanges are limited to real estate transactions. Before that date, it's ambiguous. [1] https://www.coindesk.com/owe-irs-crypto-crypto-trades https://www.coindesk.com/owe-irs-crypto-crypto-trades
anonymous5133 7y ago
Also with the crypto->crypto trades there are many exchanges that don't track anything. There are some that are completely decentralized and work based on using smart contracts. Who knows how the IRS is going to tackle that issue. It is very small segment of the overall market though.

by cwkoss 7y ago

sdinsn 7y ago

> This gets extremely ugly if you are trading one cryptocurrency for another, as these trades are unclear as to whether they are an entry or an exit. Trading one crytocurrency for another is a taxable event. Just like how trading one real currency for another is a taxable event. It's not unclear and trading platforms provide tax tools that solves this problem I traded crypto and paid my taxes

171243 7y ago
I believe prior to 2018 this was not the case with crypto.
- verdverm 7y ago
  Weren't they treated more like property then?
  - uwuhn 7y ago
    I think Like-Kind is the term. Someone please correct me if I'm wrong, but IIRC any crypto-for-crypto was a Like-Kind exchange prior to Jan 1, 2018.
    - garmaine 7y ago
      There is no evidence this is the case except wishful thinking.
    - topmonk 7y ago
      It was possible to do so before that date, but you could also not treat it that way, as well. The IRS then released guidance that after Jan 1st 2018, it was not acceptable to do so.
- JumpCrisscross 7y ago
  > prior to 2018 this was not the case with crypto This is "far from certain" [1]. After 31 December 2017, like-kind exchanges are limited to real estate transactions. Before that date, it's ambiguous. [1] https://www.coindesk.com/owe-irs-crypto-crypto-trades https://www.coindesk.com/owe-irs-crypto-crypto-trades

anonymous5133 7y ago

Also with the crypto->crypto trades there are many exchanges that don't track anything. There are some that are completely decentralized and work based on using smart contracts. Who knows how the IRS is going to tackle that issue. It is very small segment of the overall market though.