3 ms·

Can you elaborate? Currency treatment wouldn’t make sense for most digital assets but what way would the tax treatment be worse than unclassified property?

sokoloff 6y ago
If I buy Euros with USD and then buy a meal or hotel stay with those Euros, I don’t pay any US tax (and importantly, I have no IRS paperwork obligation) regardless of whether the Euro-USD exchange rate changed on the meantime. The same is not true if you replace Euro with Bitcoin above.
- vmception 6y ago
  That doesn’t answer the question, that was an unnecessary example about the status quo, how would it be worse if the IRS treated them like currency because you just wrote an example showing how it would be better. Let’s just wait for the person I originally responded to then
  - sokoloff 6y ago
    Showing a use case where a digital asset is used as currency seems perfectly responsive to your comment that currency treatment doesn’t make sense for digital assets.
    - vmception 6y ago
      I said for most digital assets. That wasn’t an accident. Utility tokens, security tokens, NFTs, wouldn’t make sense to be treated as currency, since I’m around people that require me to specify. And then you have an example that didn’t show how proper accepted legal designation as a currency, in the future, would lead to worse tax treatment, which is the supposition we were talking about. Let me know if you come up with something.
- refurb 6y ago
  If you you make more than $200 USD because exchange rates changed, you are supposed to report that as capital gains. Of course, most don’t. https://www.irs.gov/publications/p525#en_US_2019_publink1000229538 https://www.irs.gov/publications/p525#en_US_2019_publink1000...
  - sokoloff 6y ago
    I would argue in the case where I used the currency to buy something in that currency that I did not have a “gain on a currency transaction” of any amount.
    - refurb 6y ago
      I would guess the IRS would disagree, since you're even supposed to pay taxes on bartering where no currency exchanges hands, just goods or services. So if you exchange $20 USD for foreign currency and then buy something a month later where it would have cost $25USD to get the same amount of currency, that's a capital gain.

sokoloff 6y ago

If I buy Euros with USD and then buy a meal or hotel stay with those Euros, I don’t pay any US tax (and importantly, I have no IRS paperwork obligation) regardless of whether the Euro-USD exchange rate changed on the meantime. The same is not true if you replace Euro with Bitcoin above.

vmception 6y ago
That doesn’t answer the question, that was an unnecessary example about the status quo, how would it be worse if the IRS treated them like currency because you just wrote an example showing how it would be better. Let’s just wait for the person I originally responded to then
- sokoloff 6y ago
  Showing a use case where a digital asset is used as currency seems perfectly responsive to your comment that currency treatment doesn’t make sense for digital assets.
  - vmception 6y ago
    I said for most digital assets. That wasn’t an accident. Utility tokens, security tokens, NFTs, wouldn’t make sense to be treated as currency, since I’m around people that require me to specify. And then you have an example that didn’t show how proper accepted legal designation as a currency, in the future, would lead to worse tax treatment, which is the supposition we were talking about. Let me know if you come up with something.
refurb 6y ago
If you you make more than $200 USD because exchange rates changed, you are supposed to report that as capital gains. Of course, most don’t. https://www.irs.gov/publications/p525#en_US_2019_publink1000229538 https://www.irs.gov/publications/p525#en_US_2019_publink1000...
- sokoloff 6y ago
  I would argue in the case where I used the currency to buy something in that currency that I did not have a “gain on a currency transaction” of any amount.
  - refurb 6y ago
    I would guess the IRS would disagree, since you're even supposed to pay taxes on bartering where no currency exchanges hands, just goods or services. So if you exchange $20 USD for foreign currency and then buy something a month later where it would have cost $25USD to get the same amount of currency, that's a capital gain.