Cryptocurrency Taxation
The cluster focuses on discussions about tax obligations for Bitcoin and cryptocurrency transactions, including capital gains taxes, IRS treatment of crypto as property, taxable events like trades and conversions, and compliance strategies.
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Isn't the point of bitcoins that you don't have to pay tax on them?
is it possible to stay "above board" with bitcoins? i.e., pay capital gains tax when you cash out, or in someway pay taxes on your bitcoin income?
If you convert BTC to $$ or your local currency, expect a tax situation.
How are taxes handled with bitcoin?
That's specious reasoning, there are many BTC->USD exchanges and the IRS could easily compel you to exchange your currency for USD.
Not sure if you’re being obtuse, but it’s common knowledge that transacting in crypto in the USA creates taxable events.source: https://www.irs.gov/businesses/small-businesses-self-employe...
This is a nonevent. In the US, on the advice of my accountant, I have been treating Bitcoin gains (for "sold" BTC) as capital gains for tax reasons for over a year now. I don't think the IRS would have a problem with this.
Bitcoin transactions are taxable in both the U.S. and Europe, regardless of whether Bitcoin is a currency or asset.Not reporting Bitcoin transactions is income tax fraud. In the U.S., at least, that potentially means that the statute of limitations for when the IRS can go after you for back taxes and penalties never expires.
If you like cryptocurrencies read this:https://www.irs.gov/uac/newsroom/irs-virtual-currency-guidan...
You are forgetting that capital gains tax applies to cypto-to-crypto trades. Meaning, if you buy 10 ETH with 1 BTC, then sell the 10 ETH later for 1.2 BTC, you need to pay capital gains tax on whatever the dollar value of 0.2 BTC was at the time of the trade. This is super hard for the government to track.