Bitcoins/Litecoins/Virtual Currencies

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Keystone

Keystone

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Actually I am serious. What are the monetary ramifications? They are making you report any income that you should be already doing on a different form for currency you have converted to "real money"?

Essentially if you haven't been actively trading or cashing out then there shouldn't be an effect on you from what I understand. At that point it is literally just a box. And if either of those are applicable to you, then you should have been and should be reporting them regardless of the appearance of this new question on your return.

Unless there's something I'm missing (which is possible as I have done about 10 minutes of googling to research this at this point, need to spend some time myself before filing my taxes)
 
Keystone

Keystone

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LachiusTZ said:
You don't fully appreciate the admin requirement of all virtual currency being treated as an asset and calculating all gains and losses associated with it.

It's not even remotely possible

The correct stance in that instance, is to track it within reason, ignore the rest, and have a pre built set of case precedence to provide when / if audited

Criminal literally can do nothing to you if you do that. You do not fit the requirements for prosecution.

It's a non starter
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I get what you're saying and I basically agree with you. They can't expect things like mining tiny fractions of a bitcoin thousands of times a year to be tracked at their actual basis historically at least as this wasn't something that anyone was aware needed to happen at the time. The best they can do from a crypto standpoint is require your trade histories and you absolutely can and will get screwed on that if you're an active trader, but that has always been the case. All this question is doing is bringing it to the forefront of attention for people who may have been previously unaware, to my knowledge at least.

As far as in game currencies, I feel like that's pretty laughable personally and completely agree that there is zero possibility of tracking acquisition of these things in real time, and rather would lean toward reporting them from a transactional standpoint should any actually be converted to "real" money. At least for the ones that aren't by definition convertible as such.


Also want to get my, this isn't tax advise, I don't represent you, don't quote me on anything if the IRS comes knocking on your door, disclosure out of the way here.
 
LachiusTZ

LachiusTZ

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Keystone said:
I get what you're saying and I basically agree with you. They can't expect things like mining tiny fractions of a bitcoin thousands of times a year to be tracked at their actual basis historically at least as this wasn't something that anyone was aware needed to happen at the time. The best they can do from a crypto standpoint is require your trade histories and you absolutely can and will get screwed on that if you're an active trader, but that has always been the case. All this question is doing is bringing it to the forefront of attention for people who may have been previously unaware, to my knowledge at least.

As far as in game currencies, I feel like that's pretty laughable personally and completely agree that there is zero possibility of tracking acquisition of these things in real time, and rather would lean toward reporting them from a transactional standpoint should any actually be converted to "real" money. At least for the ones that aren't by definition convertible as such.


Also want to get my, this isn't tax advise, I don't represent you, don't quote me on anything if the IRS comes knocking on your door, disclosure out of the way here.
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You can't do virtual on a transactional basis.

It's completely insane.

Like you quit playing clash of clans, the gems have a market value of 500$ so you get a 500$ loss? ROFL

Or you buy then use gems, so you have to state filling them on a sch d tracking basis and current value?

What about buying an item in game?

What's the basis for that fungi tunics bro?

Lol

Whoever came up with it is old and doesn't understand the internet. And it's all a gambit to set the standard as far into absurd as possible and force people to litigate it back
 
AladainAF

AladainAF

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LachiusTZ said:
I just got off the phone with a local CPA about this exact thing.

There are some legal expectations that those items don't meet.

If your CPA would rather do as told than contest with a perfectly reasonable position, he is a weak rep at best.

Everything is relative, and you are more exposed than most.

But the position the service has taken is untenable. And the virtual currency part is eventually going to get beaten.

As an aside, we got a video earlier from Rettig and the sbse guy.

Neither of them even understand the problem (with reference to civil referring to criminal), much less have a solution.

Edit:

AladainAF AladainAF not saying don't check the box, I'm saying that approach is wrong and a good CPA would contest it and have a valid position.

And the service has taken a position that is absurd
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My CPA didn't make any determination about that, or make any kind of ruling. He's saying given the timeline, and failing a reasonable timeline for any response from the IRS, its better to be safe than sorry. That's all. He never took any position around the game thing, but he said given that they mention Roblox and Vbucks specifically (which was added in late 2019 to that webpage), that sets a general standard to what they are looking at and that they could have a compelling argument, if it ever made it to court, the reasoning on checking the box even when it came to games.

I agree that checking it for just games is stupid, I'm just relaying the details of the discussion. There's no way in hell the IRS is ever going to be able to enforce it at that level, we all know this.
 
AladainAF

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Keystone said:
Actually I am serious. What are the monetary ramifications? They are making you report any income that you should be already doing on a different form for currency you have converted to "real money"?

Essentially if you haven't been actively trading or cashing out then there shouldn't be an effect on you from what I understand. At that point it is literally just a box. And if either of those are applicable to you, then you should have been and should be reporting them regardless of the appearance of this new question on your return.

Unless there's something I'm missing (which is possible as I have done about 10 minutes of googling to research this at this point, need to spend some time myself before filing my taxes)
Click to expand...

My requirements, at least for now, is that I am required to provide all USD transactions related to my virtual currency sales, and at the end of the year, I have to provide my CPA with the actual value of virtual currency that I am holding in the unit of account of the virtual currency (eg: not "500 USD of SL money", but instead "50,000 Linden Dollars")

If you're not actively trading or cashing out, then there is no effect. The box however, does seem to be centered around transacting. It doesn't say "do you have any virtual currency", it's asking if you had any transactions of it of any kind in 2019. Based on the IRS's own definition, if you bought any Vbucks or Roblox money in 2019 (or anything like that), you have to check yes.
 
Khane

Khane

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And it's all new territory. So treating it as just a checkbox is insane. "Forget it, who cares. Dont even worry about how you approach it in the future. Just check the box."
 
LachiusTZ

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AladainAF said:
Could, but that would be a nightmare for everyone involved. In my business alone, I have almost 14,000 transactions .. today.
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I meant the expectation is unreasonable.

Like, every time you trade alchs for chaos in PoE?... Or every scroll you loot, all the transmutes you blow in crafting...

Lulz it's so fucking insane to anyone that games
 
Ravishing

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I've said somewhere in this thread that this would be the 1 thing that could threaten bitcoin. Im sure it'll happen eventually.. probably 10 years from now USD will be 100% digital.

dailyhodl.com

Rumors Circulating That Fed Will Announce Plans to Digitize the Dollar, Says Anthony Pompliano, As US and China Kick Off Historic Trade Deal - The Daily Hodl

Rumors are swirling that the Federal Reserve plans to announce an initiative to digitize the US dollar, according to Anthony Pompliano, co-founder of the blockchain venture capital fund Morgan Creek Digital. Pomp first tweeted about the rumors earlier today, reporting that an announcement could...
dailyhodl.com dailyhodl.com
 
Keystone

Keystone

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meh, without reading the article (yea i know), part of the appeal of bitcoin is that it isn't tied to a government etc. that can screw it up with inflation etc. Unless they similarly cap the supply of whatever digitized dollar they print up from a code basis then bitcoin will still have it's appeal.
 
AladainAF

AladainAF

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www.forbes.com

IRS Intensifies Hunt For Crypto Tax Cheats

You may think you will not be caught, but the IRS is hunting crypto in a big way. The best way to avoid penalties is to disclose and report showing you did not willfully evade taxes. You could face large penalties and even potential criminal investigation.
www.forbes.com www.forbes.com

Article said:
The IRS draft 2019 Form 1040 contained a question targeting cryptocurrency too. A checkbox on Schedule 1 requires taxpayers to answer whether at any time during 2019 they sold, sent, exchanged, or otherwise acquired any financial interest in cryptocurrency.

That should tell you something. After all, the Department of Justice Tax Division has successfully argued that the mere failure to check a box, in the FBAR reporting context, is per-se willfulness. Willful failures, as opposed on non-willful actions, carry higher penalties and an increased threat of criminal investigation.
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The box, as far as I can say, calls it "Virtual Currency" and not "Cryptocurrency". The IRS has definitions for both, and the form (last draft I saw at least) said "Virtual Currency", which is a considerably less loose definition.
 
AladainAF

AladainAF

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The IRS appears to have grown a couple of brain cells.

www.cnn.com

IRS quietly deletes guideline that Fortnite virtual currency must be reported on tax returns

For months leading up to this tax season, a section of the IRS's website advised players of Fortnite, the popular online video game, that their use of in-game virtual currency could be subject to federal taxes.
www.cnn.com www.cnn.com

However.....

But on Wednesday, the IRS scrubbed all mentions of the in-game currency from the webpage after questions from CNN and other outlets about the policy. Despite the sudden deletion, experts believe that transactions involving video game currencies will still need to be reported under a new question the IRS is including this year on tax forms. Just because the IRS deleted the language, they said, does not resolve questions about how the IRS plans to treat video game currencies
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Furry

Furry

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I'm curious to see what the halving event does to BTC. I don't think this one will be good.
 
Khane

Khane

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A bit ironic that it was created to be decentralized and not tied to financial institutions and then Wall Street sunk its teeth into it and now it's inextricably linked
 
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