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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

by 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

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.