The New Crypto U.S Tax Laws
It’s that time of year again and everybody is scrambling to prepare their taxes. But for the crypto community many people are left confused as to how to do their taxes. March 2014, the IRS declared virtual currency to be property, like gold or real estate, and not currency, for tax purposes. That made crypto subject to capital gains taxes. The tax-collecting agency hadn't fully defined how whether cryptocurrencies could be used in like-kind exchanges.
In 2018 that law is set to change.
Now Every time you trade one digital currency for another, one token for another, it's going to be a taxable event. This has many crypto investors in a rage. Many people argue that the government should not be taxing transactions crypto to crypto inside the bitcoin network. Crypto does not belong to the government it belongs to the people therefore falls outside the realms of government. The only taxable event should be when crypto is exchange into dollars.
“Some say the fact that Congress changed the law (prospectively) makes it clear that before the change in the law, crypto swaps were OK. Others say the reverse. It is not clear what the IRS will say. What’s more, there are at least some indications that there’s a last ditch effort to do crypto deals before the end of 2017, including some that might be extended into 2018. The new law (saying 1031 is only for real estate) goes into effect for deals after December 31, 2017.” (http://www.forbes.com/sites/robertwood/)
Another problem is that many people do not have access to those records. What if you had a bot trading for you on platform like bitconnect? What if you were lending crypto on sites like Poloniex? Can you imagine how long it will take you to do your taxes if all you did was day trade for a year? This new tax bill has essentially made all crypto investors criminals.
On the good side, this is a step in regulating crypto in the U.S. However, I think it is clear to say that the U.S government Doesn’t care about regulating from a safety point of view. They only care about making money off it.
I can only imagine what day- and bot-traders with any significant skin in the game will face. The saving grace is that it seems they're currently focusing on those making/trading over 20k, and requiring the exchanges (within the US?) to know their customer (KTC).
I am of the firm belief that the government should keep their sh!t out of this until any crypto becomes FIAT... a flat "I spent this much in 2017, and pulled this much out" should be enough for them. What they'll hate most is when crypto can be used more ubiquitously to buy everyday things, online or in brick-and-mortar stores.
This is going to be... interesting.
I agree. We will have to wait and see.
it's funny , keep up the nice work