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Crypto-Currency: A Guide to Common Tax Situations by Mrme487 in personalfinance

[–]Mrme487[S] 0 points1 point  (0 children)

It’s not completely clear. I would personally lean toward not declaring these because they aren’t sales in my view. But call this another area where there is some uncertainty.

Crypto-Currency: A Guide to Common Tax Situations by Mrme487 in personalfinance

[–]Mrme487[S] 0 points1 point  (0 children)

I think there is some confusion on terms. Here is a very simple example of how mining is taxed (assuming it is a business, not a hobby). Let me know if this helps.

  1. Figure out your revenue. Your revenue is how much money you made before deducting any expenses. To figure this out, find every time you successfully mined any crypto (including fractions of a coin). Every time you mined something, multiply the value of the crypto at that moment by the number of coins you mined. Then, add all these values together.

  2. Figure out your costs. Your costs are the expenses associated with mining. For most people, there are two big costs - computers/processors/hardware and electricity. Electricity is always going to be an expense. Computer hardware is also an expense, but since it lasts for several years there are special rules on whether all of the cost gets counted in one year or whether you have to spread the cost out over multiple years.

  3. Subtract expenses from revenue. Pay tax on the profit.

Best of /r/personalfinance 2017 Winners! by slalomz in personalfinance

[–]Mrme487 8 points9 points  (0 children)

Thanks for running this thread! Gold received - am honored and appreciative. Allow me to express my feelings in the form of a Haiku:

Taxes - they are tough

So many changes to learn

I use TurboTax

Bank teller withdrew 2k~ from my account and we didn’t know till today. by Spacequeenmashi in personalfinance

[–]Mrme487[M] 10 points11 points  (0 children)

Unproductive - removed.

TL;DR - debate over the meaning of the words adult/mature.

Windfall in Cryptocurrency, receiving income from crypto holdings. How to move forward? by dashicon in personalfinance

[–]Mrme487 0 points1 point  (0 children)

Yeah it is usually doesn't work this way...I don't know exactly what he/she is proposing, but it doesn't pass the "smell" test.

Crypto-Currency: A Guide to Common Tax Situations by Mrme487 in CryptoCurrency

[–]Mrme487[S] 1 point2 points  (0 children)

You're (probably) wrong. I personally believe that crypto to crypto was always taxable (i.e. in 2017 as well as in 2018). However, I also acknowledge that an extremely aggressive person could claim that 2017 crypto to crypto trades qualify under section 1031 (like kind exchange rules). I don't think the IRS would accept this position. I think it will end up being litigated in court. But the probability of success appears to me to be non-zero (but small).

What changed is that, starting 1/1/2018, there is a 0% (versus a very small, but non-zero) chance that crypto to crypto qualifies under 1031. Congress didn't target crypto with this change - they restricted it to real estate only, which impacts many different groups of investors.

TL;DR - you're wrong. If you ignore me, expect to fight with the IRS. If you really understand what you are doing from a tax perspective, this is an acceptable (but I think silly) choice. If you don't really understand what you are doing, please don't go down this path.

Crypto-Currency: A Guide to Common Tax Situations by Mrme487 in personalfinance

[–]Mrme487[S] 0 points1 point  (0 children)

Ah yes, you are talking about a “Starker” type 1031 exchange. Sorry, this gets outside what I know about and very technical.

Crypto-Currency: A Guide to Common Tax Situations by Mrme487 in personalfinance

[–]Mrme487[S] 0 points1 point  (0 children)

Sounds reasonable to me. Unfortunately the whole “lack of official guidance” leaves people to just do their best and hope the IRS will accept it.

Crypto-Currency: A Guide to Common Tax Situations by Mrme487 in personalfinance

[–]Mrme487[S] 0 points1 point  (0 children)

Are you talking about for 2017 or 2018? For 2017, I don’t like them but I’ll concede that there is some uncertainty about them. Anything happening 1/1/2018 or later is 100% out; Congress directly addressed this issue with the new tax bill.

Crypto-Currency: A Guide to Common Tax Situations by Mrme487 in personalfinance

[–]Mrme487[S] 1 point2 points  (0 children)

Sorry, this thread is about crypto, not cars. I’ll say that what you are doing sounds very unusual and potentially falls into the area of collectibles, which can sometimes have their own special tax rules and rates.

Crypto-Currency: A Guide to Common Tax Situations by Mrme487 in personalfinance

[–]Mrme487[S] 1 point2 points  (0 children)

12/31/2017. You file your return in early 2018 to report income/transactions that happened during the calendar year of 2017.

Crypto-Currency: A Guide to Common Tax Situations by Mrme487 in personalfinance

[–]Mrme487[S] 0 points1 point  (0 children)

if I were to turn $100 into $10,000 worth of Ethereum, then withdraw the funds into a "virtual wallet" on Coinbase

This is fine - no tax.

and then purchase Bitcoin with all of that money, does that need to be reported?

Yes, this must be reported and is taxable. You have a $9,900 gain and will likely owe around ~$1,500 in taxes on this.

Using the stock analogy, I do not believe that had I purchased a stock, sold it on an exchange, and then used those proceeds to purchase a different stock, that I would need to report it unless I "cashed out".

You absolutely would need to report and pay tax in this example. As soon as you sold the first stock (or even if you traded it for a different stock), you owe tax on the gain.

Or again, not until I "cashed out"?

Crypto to crypto is a form of cashing out in the IRS' eyes. So is stock for stock. So is crypto (or stock) for good/services.

Crypto-Currency: A Guide to Common Tax Situations by Mrme487 in personalfinance

[–]Mrme487[S] 0 points1 point  (0 children)

That might work, but it’s a pretty poor estimate. Going forward you really need to keep better track. Start a spreadsheet with how many hours your rig is on and on what dates. Figure out how much electricity it uses per hour.

If I sell Bitcoin to Buy a House, can i avoid large taxes? by ValiantThor420 in personalfinance

[–]Mrme487[M] 0 points1 point  (0 children)

Please note that in order to keep this subreddit a high-quality place to discuss personal finance, posts advising breaking the law (whether serious or not) or asking for advice on how to break the law will be removed.

Find our Subreddit Rules for guidelines on our quality standards. We look forward to higher quality posts from your account in the future! Thanks.

Questions about being diluted out of a company by burneraccount30000 in personalfinance

[–]Mrme487[M] 0 points1 point  (0 children)

Your submission has been removed because it is primarily a legal question or discussion. Other subreddits are better equipped to address these topics:

  • /r/legaladvice can help you determine if you need to contact a lawyer and you may get some basic advice.

  • /r/asklaw may be able to further help you with legal questions.

While those subreddits can sometimes offer basic advice, talking to a local lawyer is the best way to answer any legal questions.

Crypto-Currency: A Guide to Common Tax Situations by Mrme487 in personalfinance

[–]Mrme487[S] 1 point2 points  (0 children)

If you’re a business, mined coins are subject to self employment + income tax in the year you mine them. If you don’t sell them, then when you do so in the future the change in price between sale date and mining date is a capital gain.

You don’t have a choice between being a hobby or a business. You’re one or the other based on the answers to the questions I listed above.

But for what it’s worth, it’s often better to be a business. Not always, but more often than not.

Crypto-Currency: A Guide to Common Tax Situations by Mrme487 in personalfinance

[–]Mrme487[S] 0 points1 point  (0 children)

It’s tricky. Certainly you can deduct the electricity used by your machine. But you need to come up with a way to track the amount used by it versus you personally. There isn’t a magic formula - you just have to be prepared to justify your claim on this item.

First time post seeking midlife advice by ToastE1980 in personalfinance

[–]Mrme487[M] 0 points1 point  (0 children)

Are you willing to follow our rules and quality guidelines going forward? Please let me know. Thanks!

January 2017 I was -$5k in the hole. January 2018 I am +$6k. I have to thank PF for that. by OhWhatUpBob in personalfinance

[–]Mrme487[M] 0 points1 point  (0 children)

We try and restrict "success stories" to the weekend thread. You are welcome to post it in that thread tomorrow.

Crypto-Currency: A Guide to Common Tax Situations by Mrme487 in personalfinance

[–]Mrme487[S] 1 point2 points  (0 children)

There are all kinds of complicated rules for worthless items. So let's pretend BTC drops to $1 instead of $0.

In this situation, you would still have to report and pay tax on your gains, but you could also deduct your losses (assuming you sold). So the net is $0 (or even a loss for you), but only if you sell. If you don't sell, you can't clam the loss.

Brother taking pictures of payslips. Need to know what actions can be taken. by TheGuyWhoLolz in personalfinance

[–]Mrme487[M] 0 points1 point  (0 children)

Your submission has been removed because it is primarily a legal question or discussion. Other subreddits are better equipped to address these topics:

  • /r/legaladvice can help you determine if you need to contact a lawyer and you may get some basic advice.

  • /r/asklaw may be able to further help you with legal questions.

While those subreddits can sometimes offer basic advice, talking to a local lawyer is the best way to answer any legal questions.

Reminder: Lower taxes and bigger paychecks for most Americans come February by [deleted] in personalfinance

[–]Mrme487[M] 0 points1 point  (0 children)

Your comment has been removed because we don't allow political discussions, political baiting, or soapboxing (rule 6).