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Question (that I won't interpret as tax advice. I have no crypto positions to my knowledge): do crypto to stablecoin transactions incur taxes equivalent to liqu

Question (that I won't interpret as tax advice. I have no crypto positions to my knowledge): do crypto to stablecoin transactions incur taxes equivalent to liquidating securities to cash? Because if not, that sounds like a massive tax gap that should probably be addressed.

astrange 5y ago
Equivalent to securities yes, but equivalent to stocks no. Wash trades are allowed.
- unmole 5y ago
  So, equivalent to forex?
  - deleted 5y ago
    [deleted]
vmception 5y ago
For US persons, all crypto trades, including crypto to crypto, including to stablecoins, are reportable capital tax events. This was clarified in the 2017 tax reform, and the IRS has also said it applies pre-2017 (pre-2017 law is totally worth challenging but its much lower value involved so its history). I know plenty of people, including their CPAs, that get this wrong. Mostly because they never had to handle taxes themselves before, but they imagine things like only paying taxes when dollars hit their bank account, a wild abstraction that is saying the crypto exchange financial institution is ignorable for taxes and all their onchain data is ignorable for taxes.
- eganist 5y ago
  Nice, thanks. Yeah, the few crypto events I had were thankfully much simpler and easily handled in re: taxes, so this was always an open question for me.
- pjc50 5y ago
  It's quite obvious that none of the people pumping this stuff on Reddit etc. are paying any of these taxes. And the IRS doesn't have the resources to hunt all or even more than a fraction of them. (Fun question to upset everyone: suppose you, along with some other people, own an ownership/control token in a DAO. The DAO makes some trades on your behalf. Who incurs what tax liability?)
  - vmception 5y ago
    I would treat them as board seats in a foundation (orphaned entity) taxed at the entity level, and the entity is non-US As governance tokens aren’t equity, and there is nothing to pass through Either way, there would be enough board seats OR shareholders from different places to dilute ownership to ensure there was no subpart f income bearer board seats, even better than bearer shares. Crypto is immediately picking up the baton after all that energy was used to jettison bearer shares off the planet over the prior two decades.
porknubbins 5y ago
Absolutely. All crypto exchanges from one to another are considered property exchanges where you have to recognize a gain. In contrast, I believe major currencies which are recognized as such have some favorable treatment so that if you are just a traveler who goes to England you aren’t on the hook because the GBP goes up vs USDbut don’t take that as tax advice.
reginold 5y ago
YC startup Cointracker is a terrific tool to take the pain out of archaic crypto taxation: https://www.cointracker.io/ https://www.cointracker.io/ Sure, it's dumb to renew my Notes software and have that be a taxable event but...not my problem anymore :)

astrange 5y ago

Equivalent to securities yes, but equivalent to stocks no. Wash trades are allowed.

unmole 5y ago
So, equivalent to forex?
- deleted 5y ago
  [deleted]

vmception 5y ago

For US persons, all crypto trades, including crypto to crypto, including to stablecoins, are reportable capital tax events. This was clarified in the 2017 tax reform, and the IRS has also said it applies pre-2017 (pre-2017 law is totally worth challenging but its much lower value involved so its history). I know plenty of people, including their CPAs, that get this wrong. Mostly because they never had to handle taxes themselves before, but they imagine things like only paying taxes when dollars hit their bank account, a wild abstraction that is saying the crypto exchange financial institution is ignorable for taxes and all their onchain data is ignorable for taxes.

eganist 5y ago
Nice, thanks. Yeah, the few crypto events I had were thankfully much simpler and easily handled in re: taxes, so this was always an open question for me.
pjc50 5y ago
It's quite obvious that none of the people pumping this stuff on Reddit etc. are paying any of these taxes. And the IRS doesn't have the resources to hunt all or even more than a fraction of them. (Fun question to upset everyone: suppose you, along with some other people, own an ownership/control token in a DAO. The DAO makes some trades on your behalf. Who incurs what tax liability?)
- vmception 5y ago
  I would treat them as board seats in a foundation (orphaned entity) taxed at the entity level, and the entity is non-US As governance tokens aren’t equity, and there is nothing to pass through Either way, there would be enough board seats OR shareholders from different places to dilute ownership to ensure there was no subpart f income bearer board seats, even better than bearer shares. Crypto is immediately picking up the baton after all that energy was used to jettison bearer shares off the planet over the prior two decades.

porknubbins 5y ago

Absolutely. All crypto exchanges from one to another are considered property exchanges where you have to recognize a gain. In contrast, I believe major currencies which are recognized as such have some favorable treatment so that if you are just a traveler who goes to England you aren’t on the hook because the GBP goes up vs USDbut don’t take that as tax advice.

reginold 5y ago

YC startup Cointracker is a terrific tool to take the pain out of archaic crypto taxation: https://www.cointracker.io/ https://www.cointracker.io/ Sure, it's dumb to renew my Notes software and have that be a taxable event but...not my problem anymore :)