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> USDC, DAI, USDT are all used more than ever, orders of magnitude more Even these cryptos aren't being used as currencies per se. They're popular, sure, but t

> USDC, DAI, USDT are all used more than ever, orders of magnitude more Even these cryptos aren't being used as currencies per se. They're popular, sure, but they're popular because A) they allow traders to move funds between crypto 'investments' without converting to fiat (i.e. without triggering cap gains), and B) They allow investors to "avoid market volatility" (but in a manner far riskier than fiat, given that even DAI or USDT could go to zero tomorrow). ...but they're still not currencies. Nobody is buying a hamburger with DAI.

nostrademons 5y ago
If the trader is being honest, converting cryptocurrencies to stablecoins is a taxable event triggering capital gains. The IRS considers any exchange of one cryptocurrency for another to be a sale of a capital asset and purchase of another.
- erosenbe0 5y ago
  Yes. They are assets and you must pay tax every time you swap them or even use them to make a purchase. It's like making a purchase with Apple stock or swapping Apple stock for Google stock. Pay tax.
- sizzle 5y ago
  How will the government track and get their dues?
  - vmception 5y ago
    Typically they use account information from the exchanges and follow that onchain But they generally rely on individuals to report accurately. Obviously wage-earners arent used to that as their employers withhold money for taxes and report to the IRS so this crowd may find this new found freedom to be foreign and a chance to “get away with” something, but everyone else has lived in a world where they report their taxes voluntarily and accurately
nikanj 5y ago
I'd be very surprised if your tax agency agrees that moving via USDT does not trigger capital gains. Then again, I'm operating under the impression most people cheat on their taxes w.r.t cryptos
- koonsolo 5y ago
  US only. It seems even Puerto Rico doesn't ask capital gains on crypto.
  - waych 5y ago
    IRS considers cryptocurrency as property, and exchanging one for another is a taxable event. See "Q16. Will I recognize a gain or loss if I exchange my virtual currency for other property?" [1]: A16. Yes. If you exchange virtual currency held as a capital asset for other property, including for goods or for another virtual currency, you will recognize a capital gain or loss. For more information on capital gains and capital losses, see Publication 544, Sales and Other Dispositions of Assets. [1]: https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions https://www.irs.gov/individuals/international-taxpayers/freq...
    - dgjnvhhb 5y ago
      Not if you move to Puerto Rico.
  - prepend 5y ago
    I think that’s more a function of Puerto Rico not having federal taxes than anything about crypto (ie, no capital gains or income tax on anything, including crypto).
vmception 5y ago
I’ve paid many people with stablecoins, even make in-kind investments (not like-kind) You dont have a way of quantify if people are tax cheats (as what you described does not prevent capital gains liability), stores of value, or buying hamburgers
tastyfreeze 5y ago
Like-kind exchange doesn't apply to cryptocurrencies. Exchanging BTC for a stablecoin does trigger capital gains as does selling a stablecoin for fiat. In the BTC-USDC scenario it is a little trickier to calculate the basis in USD but capital gains taxes still apply.
- vmception 5y ago
  It isnt tricker at all. Very simple math.
  - tastyfreeze 5y ago
    Yes, if you record the USD value of both sides at the time of trade. If you only record the execution price of your BTC/USDT trade you will need to later find the price of BTC/USD and USDT/USD at the time of execution. Trickier in the sense that it requires more attention than simply recording the execution price and fees of a BTC/USD trade.
    - vmception 5y ago
      Most charting and accounting services do this for any time period if you need to look it up, or do it automatically Only more annoying when you have to use an AMM’s info site and the chart isnt very granular or go back far enough. Pancakeswap’s info site doesnt even work. So yes best to keep track at that exact time of trade

nostrademons 5y ago

If the trader is being honest, converting cryptocurrencies to stablecoins is a taxable event triggering capital gains. The IRS considers any exchange of one cryptocurrency for another to be a sale of a capital asset and purchase of another.

erosenbe0 5y ago
Yes. They are assets and you must pay tax every time you swap them or even use them to make a purchase. It's like making a purchase with Apple stock or swapping Apple stock for Google stock. Pay tax.
sizzle 5y ago
How will the government track and get their dues?
- vmception 5y ago
  Typically they use account information from the exchanges and follow that onchain But they generally rely on individuals to report accurately. Obviously wage-earners arent used to that as their employers withhold money for taxes and report to the IRS so this crowd may find this new found freedom to be foreign and a chance to “get away with” something, but everyone else has lived in a world where they report their taxes voluntarily and accurately

nikanj 5y ago

I'd be very surprised if your tax agency agrees that moving via USDT does not trigger capital gains. Then again, I'm operating under the impression most people cheat on their taxes w.r.t cryptos

koonsolo 5y ago
US only. It seems even Puerto Rico doesn't ask capital gains on crypto.
- waych 5y ago
  IRS considers cryptocurrency as property, and exchanging one for another is a taxable event. See "Q16. Will I recognize a gain or loss if I exchange my virtual currency for other property?" [1]: A16. Yes. If you exchange virtual currency held as a capital asset for other property, including for goods or for another virtual currency, you will recognize a capital gain or loss. For more information on capital gains and capital losses, see Publication 544, Sales and Other Dispositions of Assets. [1]: https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions https://www.irs.gov/individuals/international-taxpayers/freq...
  - dgjnvhhb 5y ago
    Not if you move to Puerto Rico.
- prepend 5y ago
  I think that’s more a function of Puerto Rico not having federal taxes than anything about crypto (ie, no capital gains or income tax on anything, including crypto).

vmception 5y ago

I’ve paid many people with stablecoins, even make in-kind investments (not like-kind) You dont have a way of quantify if people are tax cheats (as what you described does not prevent capital gains liability), stores of value, or buying hamburgers

tastyfreeze 5y ago

Like-kind exchange doesn't apply to cryptocurrencies. Exchanging BTC for a stablecoin does trigger capital gains as does selling a stablecoin for fiat. In the BTC-USDC scenario it is a little trickier to calculate the basis in USD but capital gains taxes still apply.

vmception 5y ago
It isnt tricker at all. Very simple math.
- tastyfreeze 5y ago
  Yes, if you record the USD value of both sides at the time of trade. If you only record the execution price of your BTC/USDT trade you will need to later find the price of BTC/USD and USDT/USD at the time of execution. Trickier in the sense that it requires more attention than simply recording the execution price and fees of a BTC/USD trade.
  - vmception 5y ago
    Most charting and accounting services do this for any time period if you need to look it up, or do it automatically Only more annoying when you have to use an AMM’s info site and the chart isnt very granular or go back far enough. Pancakeswap’s info site doesnt even work. So yes best to keep track at that exact time of trade