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I suspect this will become a landmark case in tax law. Vitalik was airdropped 50 trillion SHIB tokens. When that happened they were as close to worthless as you

I suspect this will become a landmark case in tax law. Vitalik was airdropped 50 trillion SHIB tokens. When that happened they were as close to worthless as you can get. The IRS has no guidance on how to tax such "gains". Are they a gift? Something with a cost basis of 0 when/if you sell it? Vitalik is Canadian but as far as I can tell their tax collectors don't have clear guidance either. Those 50 trillion SHIB tokens are "worth" one billion dollars. Does that mean that Vitalik now owes hundreds of millions of dollars in short term capital gains? Well probably not, since he donated the "money" to a charity. But that also begs another question, how will the government treat such a large donation? Will he get to write any of that off?

CheezeIt 5y ago
Hold your horses. He’s a Russian-Canadian residing in Singapore, if I’m googling correctly.
- BitwiseFool 5y ago
  That's sure to make the tax situation even crazier.
  - unmole 5y ago
    Why? Singapore doesn't tax capital gains. There isn't anything Canada or Russia can stake a claim to.
533474 5y ago
He was not airdropped, check his wallet, he bought the SHIB tokens. He was airdropped AKITA
robotmay 5y ago
Weirdly, the UK is actually pretty sensible when it comes to crypto taxation, which I note only because normally I'd expect us to have the daftest system in the world. Here you are taxed only using Capital Gains Tax (20%, after the first ~£12500) which in theory applies to any increase in your assets, but only once you sell and convert the value back into GBP. So here Vitalik would owe nothing if he never traded out for "real" money, and then it only applies on your total capital gains in a year: you don't pay it per transaction when trading (although I think if you were a professional trader there would be some other tax handling around that).
9oliYQjP 5y ago
The Canada Revenue Agency is very clear about how they are interpret tax law here. If it’s a gift from a non-employer then it’s most certainly not taxable. There is no gift tax. However, Vitalik has generated a capital gains event by the act of donating a capital property. Canada doesn’t distinguish between short term or long term capital gains. 50% of the fair market value would be taxable at whatever his marginal tax rate is. But if he has donated to a qualifying charity, he may not have to report any of this capital gain. In short, he probably owes no tax from this act.

CheezeIt 5y ago

Hold your horses. He’s a Russian-Canadian residing in Singapore, if I’m googling correctly.

BitwiseFool 5y ago
That's sure to make the tax situation even crazier.
- unmole 5y ago
  Why? Singapore doesn't tax capital gains. There isn't anything Canada or Russia can stake a claim to.

533474 5y ago

He was not airdropped, check his wallet, he bought the SHIB tokens. He was airdropped AKITA

robotmay 5y ago

Weirdly, the UK is actually pretty sensible when it comes to crypto taxation, which I note only because normally I'd expect us to have the daftest system in the world. Here you are taxed only using Capital Gains Tax (20%, after the first ~£12500) which in theory applies to any increase in your assets, but only once you sell and convert the value back into GBP. So here Vitalik would owe nothing if he never traded out for "real" money, and then it only applies on your total capital gains in a year: you don't pay it per transaction when trading (although I think if you were a professional trader there would be some other tax handling around that).

9oliYQjP 5y ago

The Canada Revenue Agency is very clear about how they are interpret tax law here. If it’s a gift from a non-employer then it’s most certainly not taxable. There is no gift tax. However, Vitalik has generated a capital gains event by the act of donating a capital property. Canada doesn’t distinguish between short term or long term capital gains. 50% of the fair market value would be taxable at whatever his marginal tax rate is. But if he has donated to a qualifying charity, he may not have to report any of this capital gain. In short, he probably owes no tax from this act.