3 ms·

> How do you disclose income from crimes? You report the amount as "other income", I believe. You don't have to say that it is from crimes. I don't do crypto

> How do you disclose income from crimes? You report the amount as "other income", I believe. You don't have to say that it is from crimes. I don't do crypto currency and have been wondering whether you are supposed to report it and pay tax on it when you receive it, or only when you sell it. Before you sell it, maybe it is an unrealized gain, which is currently not taxed.

berberous 5y ago
It is an unrealized gain if you bought it and it appreciates. If you receive it in exchange for services, it is income. This is the same for non-crypto: 1. You buy an artwork by a famous artist for $10k and it appreciates to $20k. This is an unrealized gain and you are not taxed until you sell it. Note that trading one crypto for another is effectively a sale of the first crypto and a purchase of the second, such that you pay gain depending on the value of the second crypto at the time of the trade. 2. Someone gives you a $10k artwork as partial payment for some work you do, eg web design. This is income and taxed as if they paid you $10k. Mining crypto is also income I believe. 3. Someone gifts you an artwork worth $10k. You don’t pay tax. Etc. I would think the best way to characterize this transaction is that it is income, although it’s certainly unusual enough that I won’t say I’m certain. Not tax advice / speak to your own accountant.
- fragmede 5y ago
  In point 1, why does trading of crypto incur a taxable event? If I buy a Picasso for $20 million and then later trade it to a friend for a Van Gogh which is worth $40 million, is that taxable?
  - caffeine 5y ago
    Yes it most certainly is.
    - zdkl 5y ago
      In this scenario, what is the taxable base ?
      - caffeine 5y ago
        You would need a valuation for the painting you disposed of. The fact that you never actually received USD is irrelevant. I had this problem in 2018 - I bought BTC in 2017 before the boom, exchanged a bunch for ETH at the peak of 2018, and then rode the ETH all the way back down. I had to pay a bunch of taxes on the BTC gains I “realised” even though I didn’t get any actual cash out. I had to pick a price settle for BTC/USD on the day I bought ETH.
        laurent92 5y ago
        Same in French law if you move a company abroad: You need a valuation on the day of departure, and are taxed on it, even if you don’t realize the gains.
cslarson 5y ago
If you receive it as income then it's taxable at that point at $ value. If you later sell or trade it you realize capital gains (or losses) and that is a further taxable event.

berberous 5y ago

It is an unrealized gain if you bought it and it appreciates. If you receive it in exchange for services, it is income. This is the same for non-crypto: 1. You buy an artwork by a famous artist for $10k and it appreciates to $20k. This is an unrealized gain and you are not taxed until you sell it. Note that trading one crypto for another is effectively a sale of the first crypto and a purchase of the second, such that you pay gain depending on the value of the second crypto at the time of the trade. 2. Someone gives you a $10k artwork as partial payment for some work you do, eg web design. This is income and taxed as if they paid you $10k. Mining crypto is also income I believe. 3. Someone gifts you an artwork worth $10k. You don’t pay tax. Etc. I would think the best way to characterize this transaction is that it is income, although it’s certainly unusual enough that I won’t say I’m certain. Not tax advice / speak to your own accountant.

fragmede 5y ago
In point 1, why does trading of crypto incur a taxable event? If I buy a Picasso for $20 million and then later trade it to a friend for a Van Gogh which is worth $40 million, is that taxable?
- caffeine 5y ago
  Yes it most certainly is.
  - zdkl 5y ago
    In this scenario, what is the taxable base ?
    - caffeine 5y ago
      You would need a valuation for the painting you disposed of. The fact that you never actually received USD is irrelevant. I had this problem in 2018 - I bought BTC in 2017 before the boom, exchanged a bunch for ETH at the peak of 2018, and then rode the ETH all the way back down. I had to pay a bunch of taxes on the BTC gains I “realised” even though I didn’t get any actual cash out. I had to pick a price settle for BTC/USD on the day I bought ETH.
      - laurent92 5y ago
        Same in French law if you move a company abroad: You need a valuation on the day of departure, and are taxed on it, even if you don’t realize the gains.

cslarson 5y ago

If you receive it as income then it's taxable at that point at $ value. If you later sell or trade it you realize capital gains (or losses) and that is a further taxable event.