4 ms·

If it's not your main source of income then it's presumably a personal transaction, i.e. it's not a company transaction. This would cover most crypto day trader

by anjc 7y ago

If it's not your main source of income then it's presumably a personal transaction, i.e. it's not a company transaction. This would cover most crypto day traders. That you're buying Litecoin from a stranger with your Bitcoin doesn't make it not personal.

flyingfences 7y ago
The bill introduces the exact same exemption made for foreign currencies: you don't pay tax on small capital gains that you happen to accrue while you hold the currency and then spend it.
- anjc 7y ago
  A capital gain of $200 for a single transaction is plenty for day traders who do it in their spare time. This is still a personal transaction, even if you happen to profit from it.
  - AmericanChopper 7y ago
    > This is still a personal transaction, even if you happen to profit from it. It’s a novel interpretation, but sadly the Internal Revenue Code already defines “personal transaction”, and it includes all business transactions, or transactions made for the purposes of producing income. I guess you’re free to interpret the law any way you like, but i’d recommend that anybody who wants to avoid criminal charges should not base any decisions on your definition of a personal transaction.
    - anjc 7y ago
      > recommend that anybody who wants to avoid criminal charges should not base any decisions on your definition of a personal transaction. Well of course
      - AmericanChopper 7y ago
        Just realized I meant to say “excludes” in my parent comment. Basically, no day trader transactions would be exempt from tax under this.
        anjc 7y ago
        I'm confused then, we seem to be in agreement? If you're not a professional day trader, and you don't trade crypto as a primary source of income, then are your trades not "personal" going by the definition you gave?
        AmericanChopper 7y ago
        They are not. Any transaction entered into for the purposes of generating income is not a personal transaction. It doesn’t matter what your primary income is, what legal entities you have or have not created, or how you structure your transactions. This only covers transactions that are not business transactions, where a small capital gain is incidentally generated seperate to the purpose of the transaction. The same rule already applies to foreign currency. If you casually trade forex on the side, you have to pay tax on all your capital gains. If you go on holiday and incidentally make a < $200 capital gain when converting your money back to USD when you return home, you don’t have to pay tax on that. The line of reasoning that this somehow creates a loophole for avoiding tax on for-profit trading seemed to dominate this thread, and it is based on a complete misunderstanding of the existing tax code. If you just read the words “personal transaction” and knew nothing else about tax law, then I can see how you could come to that conclusion. But those words are already legally defined in this context. The 988e personal transaction does not allow for tax free forex or crypto trading, and any attempt to contrive it to mean that would have you laughed at in a criminal court. Lastly, and I’m not 100% sure about this, but I’m reasonably confident that personal purchases made with crypto would already be covered by this exemption, given existing IRS guidance on how to handle crypto transactions. If that’s true then this is more of a legislative clarification than a change.

by anjc 7y ago

flyingfences 7y ago

The bill introduces the exact same exemption made for foreign currencies: you don't pay tax on small capital gains that you happen to accrue while you hold the currency and then spend it.

anjc 7y ago
A capital gain of $200 for a single transaction is plenty for day traders who do it in their spare time. This is still a personal transaction, even if you happen to profit from it.
- AmericanChopper 7y ago
  > This is still a personal transaction, even if you happen to profit from it. It’s a novel interpretation, but sadly the Internal Revenue Code already defines “personal transaction”, and it includes all business transactions, or transactions made for the purposes of producing income. I guess you’re free to interpret the law any way you like, but i’d recommend that anybody who wants to avoid criminal charges should not base any decisions on your definition of a personal transaction.
  - anjc 7y ago
    > recommend that anybody who wants to avoid criminal charges should not base any decisions on your definition of a personal transaction. Well of course
    - AmericanChopper 7y ago
      Just realized I meant to say “excludes” in my parent comment. Basically, no day trader transactions would be exempt from tax under this.
      - anjc 7y ago
        I'm confused then, we seem to be in agreement? If you're not a professional day trader, and you don't trade crypto as a primary source of income, then are your trades not "personal" going by the definition you gave?
        AmericanChopper 7y ago
        They are not. Any transaction entered into for the purposes of generating income is not a personal transaction. It doesn’t matter what your primary income is, what legal entities you have or have not created, or how you structure your transactions. This only covers transactions that are not business transactions, where a small capital gain is incidentally generated seperate to the purpose of the transaction. The same rule already applies to foreign currency. If you casually trade forex on the side, you have to pay tax on all your capital gains. If you go on holiday and incidentally make a < $200 capital gain when converting your money back to USD when you return home, you don’t have to pay tax on that. The line of reasoning that this somehow creates a loophole for avoiding tax on for-profit trading seemed to dominate this thread, and it is based on a complete misunderstanding of the existing tax code. If you just read the words “personal transaction” and knew nothing else about tax law, then I can see how you could come to that conclusion. But those words are already legally defined in this context. The 988e personal transaction does not allow for tax free forex or crypto trading, and any attempt to contrive it to mean that would have you laughed at in a criminal court. Lastly, and I’m not 100% sure about this, but I’m reasonably confident that personal purchases made with crypto would already be covered by this exemption, given existing IRS guidance on how to handle crypto transactions. If that’s true then this is more of a legislative clarification than a change.