Id like to just to put this out there, since no one seems to be talking about it. I don't believe a lot of people who participate in the CRYPTO markets factor in this tax into their profit margin. ITS A HUGE CHUNK OF CHANGE. What are some ways, besides holding on to profits in cryptos, everyone out there would theoretically use to avoid this tax? I know noone out there would ever do this since its against the law, but if you are like me, your are MAKING MONEY HAND OVER FIST, and now you have the first world problem of how to theoretically protect your wealth from the vampire government.
1.Would you just cash out low and slow so there is no huge increase in income that would be labled suspicious?
- What is the highest dollar amount you can cash into your bank account at a time while remaining under the radar?
- Buy gold and silver with cryptocurrencies in states that do not tax precious metals (real money)?
- Buy gift cards with cryptos to then purchase hard assets?
Also, if for whatever reason the government found out that you had Bitcoins that had gone up in value 2000% and demanded capital gains tax for them, what would you do?
Can they prove that you even have them if they aren't on an exchange? (Coinbase transaction records that are released to the IRS which I believe eventually will happen)
Would you just say that you forgot your keys and they are all gone?
Do you think they would still charge you even though they couldn't prove it?
What if you live in a nice house and have a nice lifestyle, yet when they come to collect you have no cryptos?
How far do you believe they (government/tax enforcement/money laundering police) will go when they get desperate from losing all of the tax revenue?
THEY WILL BE FIGHTING TO COLLECT FOR THEIR VERY JOB/EXISTENCE! When it comes to feeding their families, I believe drastic measures will be put into place.
How long do you estimate it will take for retailers to start accepting multiple cryptos?
Businesses will save tremendously on transaction fees. As the world falls into the coming economic rough spot, only the best and most innovative will survive. Do you believe they will begin relatively soon out of necessity just to weather the storm?
If the government cannot prove that you have cryptos to tax, maybe they will pressure businesses to not accept privacy coins such as DASH,BYTECOIN, AND MONERO, making all of their customer's transactions traceable! OR, will they flag you and and demand all transactions/ bill payments are transparent to make sure that you aren't a domestic terrorist/ money launder?
I may just be paranoid, but this technology literally EFFECTS THE GOVERNMENT AS WE KNOW IT AT AN EXISTENTIAL LEVEL! Governments cannot create profit/value, they can only take it from you and give it to others (mostly themselves). If the money/transaction system they use to track and enslave their populations goes away, who provides their paychecks? NOT US, NOT ANYMORE! Besides, how much will their fiat paychecks even be worth in the near future?
Bottom line, this will affect everyone's life tremendously whether you are in cryptos or not . WILL IT BE FOR THE BETTER? WHAT WILL THE TRANSITION PERIOD LOOK LIKE? I may be paranoid ( I am), but I would like other people's thoughts and opinions for the questions above. Lets really think in depth of what this would look like in the near term.
Thanks,
R
these are good questions that I've recently been thinking about as well. wish I had answers or any more dirt to dig into but you dug into the topic quite well.
Nice post. Well thought out. I could see the government trying to stop Crypto exchange if they aren't getting their fair share of investment income taxes. Or at least pass laws so the exchanges declare withdrawals. I already paid taxes on the money I used to invest in Alt Coins, so probably did the person who bought my coins from me. I don't think it will be to much longer before someone gets a wild hair up their ass about the billions of dollars in the exchanges on a daily basis to figure a way to tax that. Only time will tell.
Have a good one!
Q
I talked to my "tax guy" who has works with a lot of traders including folks trading cryptocurrencies and he said that income on cryptos should be reported as general income, not capital gains. So, likely much higher than the 15% long term capital gains. Lots of details still to work out obviously but I think most people would say its best to play it safe to avoid getting caught completely offguard down the line.
Hey man thanks for the knowledge. Have you read any of the stories on Coindesk of regular people buying Bitcoin off of an exchange then selling them for profit to people at Buylocalbitcoins.com, getting heavy prison sentences for not registering for " transmitting money without a license", or "transmitting money on an unlicensed exchange". If so what are your opinions on those sentences when the rules are so vague?
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You mentioned the solution. Don't convert your crypto back to fiat. Theres already a growing marketplace to buy goods direct with crypto. Given a few years, you should be able to buy anything with crypto that USD can buy.
I have a couple of crypto credit cards. I have probably spent less than 200 dollars via those cards mostly to test them. I have been investing in crypto for over two years and done quite nicely. All of it is invested in crypto and will stay there for now. Crypto is the first level playing field for the small investor that I have seen that really does work with massive gains. It's my shot at a comfortable life in a few years.
Where did you get cryptocredit credit cards?
Makes no sense. You'll be charged tax on the purchase unless you're buying from the black market. Institutions that accept bitcoin will have to apply tax the sale.
at least you wont be taxed twice right?
Technically you’re supposed to pay taxes on every transaction. So moving from BTC to ETH your supposed to pay taxes on the gains/losses of your original BTC from when you bought to when you sold for ETH.
And then when you use your ETH to buy CND (and you should ;) you are supposed to pay taxes on the gain/loss of your ETH while you held it.
Down vote for click bate title.
how can i downvote as well ?