4 ms·

I imagine if the total was over $10,000 it would violate laws against structuring.

jdmichal 7y ago
Structuring laws are any attempt to evade reporting. There's no dollar limit on it; the limits depend on the reporting laws or policies. You're thinking $10,000 because that is the limit for deposit reporting. But if this law has a limit of $200 for reporting, then that is the limit for structuring.
- mattferderer 7y ago
  So if someone bought 3 BTC in say 2015 for $200 each, they now would have roughly $25,000. If I understand right, they could then use that without paying any taxes on all transactions under $200? I assume you would still have to account for that somewhere? Even if only in your personal accounts, in case you do some larger transactions or trading. For example if you decide to sell $5,000 of your BTC for US dollars. That now becomes a capital gain tax. You need to list the date you purchased it (date in 2005) & the date you sold it (now). Your accounting software or books would still need to keep record of when you bought/sold/lost/used BTC though to properly mark which ones are long term gains and which are short and which were used for small transactions. Please correct me if I'm wrong.
  - deleted 7y ago
    [deleted]
  - ska 7y ago
    sort of (if i'm reading you right), the $200 doesn't apply to the basis you bough things at, but the capital gain. So your purchase price is irrelevant. If you bought 3 at 100 and sold them at 150, you would have a net capital gain of 3x(150-100) = 150 and wouldn't have to report it. If you sold them at 1100 gain is 3x(1100-100) = 3000 and you would report as capital gain on your taxes. Right now you have to do this for any amount. Structuring is a separate issue. Typically that would mean that you can't break up a large gain into a bunch of < 200 gains to take advantage of this. Note that the language is pretty specific though, and I don't think it applies to any transaction.
    - lonelappde 7y ago
      "Structuring" is only to do with violating the "spirit" of the paperwork rules, tending to avoid detection of taxable or otherwise regulatable activity. It is separate from the rules about what you are legally obligated to pay in taxes, which generally apply to total amount transacted/gained and aren't affected by the size of individual transactions.
      - ska 7y ago
        I don't think i suggested otherwise, but edited to make it clearer.
    - mattferderer 7y ago
      I had to read up on structuring. Thank you for that. It's nice to have a term to search for when trying to understand a topic. What's still not clear to me is at what point does it become structuring. I've found plenty of obvious examples such as splitting two deposits of $8,000 into a bank after selling an item for $16,000. But what about someone who just buys their groceries and fills their vehicle up with gas with BTC that is worth much more than they paid for it years ago? Is it structuring if you're spending this money in multiple transactions that only add up to $1,000/month every month for the rest of your life? After reading up on a few structuring cases all, my conclusion is that there is no black & white rule on this & it is up to the prosecution to show that the accused knew that they were structuring & that it was illegal. If that's the case, I would assume the above example could be found guilty. Side note, I'm in no way able to benefit on this. I just have an interest in IRS rules and politics.
      - jdmichal 7y ago
        If the spending is for clearly separate transactions, such as your example of shopping at different stores, then that seems like it would be fairly easy to defend. What would be problematic here is, say, buying a car with BTC in multiple "transactions", each of which is individually below the $200 gain threshold. It's really a single transaction taking place: BTC for a car. That could be interpreted as intentionally structuring the payments in a way that obviously works around the spirit of the proposed law.
  - jdmichal 7y ago
    IANAL. My reading is the same. All BTC transactions -- and by that I mean transactions made in BTC, not currency conversions -- for which the difference in the basis and current value are less than $200, exclude that difference from income. Note that the transaction does not have to be less than $200; the gain needs to be less than $200. The volatility of BTC might make this relatively hard to qualify for. My big question is how this will work for accounting purposes as far as which basis is used. When you sell, say, a stock, you have to designate exactly which stock you are selling to calculate gains. If this works the same, you can choose in ways that get you as close to that $200 line as possible.
    - mattferderer 7y ago
      > My big question is how this will work for accounting purposes as far as which basis is used. When you sell, say, a stock, you have to designate exactly which stock you are selling to calculate gains. If this works the same, you can choose in ways that get you as close to that $200 line as possible 100% yes. I've heard some arguments about needing to be consistent with a formula, FIFO or LIFO. Though I'm not sure how true that is. I'm also not sure how you would do that if you have currency split among different apps. > transaction does not have to be less than $200; the gain needs to be less than $200 Thank you for this clarification.
      - jdmichal 7y ago
        FIFO and LIFO are common options, but for stocks you can also elect to calculate based on specific shares. (Depending, of course, on support from your brokerage.) If one can do the same with BTC transactions, it will make staying under the limit much more achievable... Especially if you can mix lots, allowing losses to offset gains in a single transaction.

Structuring laws are any attempt to evade reporting. There's no dollar limit on it; the limits depend on the reporting laws or policies. You're thinking $10,000 because that is the limit for deposit reporting. But if this law has a limit of $200 for reporting, then that is the limit for structuring.

mattferderer 7y ago
So if someone bought 3 BTC in say 2015 for $200 each, they now would have roughly $25,000. If I understand right, they could then use that without paying any taxes on all transactions under $200? I assume you would still have to account for that somewhere? Even if only in your personal accounts, in case you do some larger transactions or trading. For example if you decide to sell $5,000 of your BTC for US dollars. That now becomes a capital gain tax. You need to list the date you purchased it (date in 2005) & the date you sold it (now). Your accounting software or books would still need to keep record of when you bought/sold/lost/used BTC though to properly mark which ones are long term gains and which are short and which were used for small transactions. Please correct me if I'm wrong.
- deleted 7y ago
  [deleted]
- ska 7y ago
  sort of (if i'm reading you right), the $200 doesn't apply to the basis you bough things at, but the capital gain. So your purchase price is irrelevant. If you bought 3 at 100 and sold them at 150, you would have a net capital gain of 3x(150-100) = 150 and wouldn't have to report it. If you sold them at 1100 gain is 3x(1100-100) = 3000 and you would report as capital gain on your taxes. Right now you have to do this for any amount. Structuring is a separate issue. Typically that would mean that you can't break up a large gain into a bunch of < 200 gains to take advantage of this. Note that the language is pretty specific though, and I don't think it applies to any transaction.
  - lonelappde 7y ago
    "Structuring" is only to do with violating the "spirit" of the paperwork rules, tending to avoid detection of taxable or otherwise regulatable activity. It is separate from the rules about what you are legally obligated to pay in taxes, which generally apply to total amount transacted/gained and aren't affected by the size of individual transactions.
    - ska 7y ago
      I don't think i suggested otherwise, but edited to make it clearer.
  - mattferderer 7y ago
    I had to read up on structuring. Thank you for that. It's nice to have a term to search for when trying to understand a topic. What's still not clear to me is at what point does it become structuring. I've found plenty of obvious examples such as splitting two deposits of $8,000 into a bank after selling an item for $16,000. But what about someone who just buys their groceries and fills their vehicle up with gas with BTC that is worth much more than they paid for it years ago? Is it structuring if you're spending this money in multiple transactions that only add up to $1,000/month every month for the rest of your life? After reading up on a few structuring cases all, my conclusion is that there is no black & white rule on this & it is up to the prosecution to show that the accused knew that they were structuring & that it was illegal. If that's the case, I would assume the above example could be found guilty. Side note, I'm in no way able to benefit on this. I just have an interest in IRS rules and politics.
    - jdmichal 7y ago
      If the spending is for clearly separate transactions, such as your example of shopping at different stores, then that seems like it would be fairly easy to defend. What would be problematic here is, say, buying a car with BTC in multiple "transactions", each of which is individually below the $200 gain threshold. It's really a single transaction taking place: BTC for a car. That could be interpreted as intentionally structuring the payments in a way that obviously works around the spirit of the proposed law.
- jdmichal 7y ago
  IANAL. My reading is the same. All BTC transactions -- and by that I mean transactions made in BTC, not currency conversions -- for which the difference in the basis and current value are less than $200, exclude that difference from income. Note that the transaction does not have to be less than $200; the gain needs to be less than $200. The volatility of BTC might make this relatively hard to qualify for. My big question is how this will work for accounting purposes as far as which basis is used. When you sell, say, a stock, you have to designate exactly which stock you are selling to calculate gains. If this works the same, you can choose in ways that get you as close to that $200 line as possible.
  - mattferderer 7y ago
    > My big question is how this will work for accounting purposes as far as which basis is used. When you sell, say, a stock, you have to designate exactly which stock you are selling to calculate gains. If this works the same, you can choose in ways that get you as close to that $200 line as possible 100% yes. I've heard some arguments about needing to be consistent with a formula, FIFO or LIFO. Though I'm not sure how true that is. I'm also not sure how you would do that if you have currency split among different apps. > transaction does not have to be less than $200; the gain needs to be less than $200 Thank you for this clarification.
    - jdmichal 7y ago
      FIFO and LIFO are common options, but for stocks you can also elect to calculate based on specific shares. (Depending, of course, on support from your brokerage.) If one can do the same with BTC transactions, it will make staying under the limit much more achievable... Especially if you can mix lots, allowing losses to offset gains in a single transaction.