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In non-legal terms: if you gain less than $200 from personal transactions, this amount is not included in your gross income, hence not subject of capital gains
by mrleiter 7y ago
In non-legal terms: if you gain less than $200 from personal transactions, this amount is not included in your gross income, hence not subject of capital gains tax. If it is more, the whole amount is taxable.
So if you gain $199, it‘s tax free.
If you gain $201, the whole $201 is treated as gross income and hence taxable.
- HenryKissinger 7y agoWhy couldn't a crypto millionaire simply automate every transaction in chunks of $199 and avoid taxes then?
- TomMarius 7y agoTypically law (at large) forbids purposefully bending the law against its spirit and intent, which is also noted and publicized.
- ainiriand 7y agoWell you can do that. But it is the income that the entity declares what is taxed. In the same vein, you can also work without declaring your income to avoid taxes. Avoiding taxes is something that millionaires already do, I do not see why this should be any different.
- topmonk 7y agoAvoiding tax illegally, which not reporting income would imply, is what some people do. Not only millionaires and not all millionaires do this.
- mrleiter 7y agoThis is not possible, since the law exempts anything up to $200 from your gross income calculation, from which your taxable income is derived. Taxable income is periodically calculated according to your taxable year. So if you exceed those $200 within your taxable year, it is taxed. Does not matter how many transaction it takes.
- profquail 7y agoThat’s known as “structuring” and is illegal: https://en.m.wikipedia.org/wiki/Structuring https://en.m.wikipedia.org/wiki/Structuring
- Ajedi32 7y agoThis conversation reminds me of https://xkcd.com/1494/ https://xkcd.com/1494/
- SkyBelow 7y agoAnd yet you can hire a lawyer who can show you similar looking loopholes that are completely legal. Structuring to avoid taxes is illegal but the double Irish method isn't? There are many other such loopholes and telling the legal from the illegal appears mostly arbitrary.
- EGreg 7y agoI was always wondering why no one steals luggage at the airport. You can walk in and take stuff!
- ianai 7y agoAh, but how often is that law enforced? And is it easily enforced? This seems ever increasing in importance nowadays.
- jki275 7y agoIt's certainly enforced, you'll see it often in money laundering cases where people have tried to deposit funds just under the 10k reporting limit.
- stanferder 7y agoIt's enforced so often that people who aren't even trying to circumvent the law get nailed: https://www.forbes.com/sites/robertwood/2017/04/05/91-of-irs-seizures-for-structuring-involve-lawful-taxpayers https://www.forbes.com/sites/robertwood/2017/04/05/91-of-irs...
- m3kw9 7y agoIt’s also called “we see what you are really doing”