Amerifat tax question

Thankfully the value is still in USD, not BTC, so you'd pay nothing, but be able to write off up to 3k in losses and carry over what is left.

The tax structure around crypto is literally a worst case scenario

What do you mean by that, exactly?

Also, correct me if I'm wrong, but isn't this a favorable system? Isn't it in our best interest to have the rest of 2018 be a shitty year for crypto? Because then we can take a crazy loss deductible, roll anything over $3000 onto the next few years, and then hope for potential gains in 2019? If we can write off any losses on a roll-over basis, then technically, in the long run, we aren't losing any money (accounting profits, not economic)?

nigger, I paid like 20k in taxes on my gains last year, and my stack is worth less than that now

In no circumstance is it favorable to lose money, are you insane?

I meant that the way the taxes are structured is the biggest possible pain in the ass. The way the tax is now, EVERY SINGLE transaction is a SINGLE and SEPARATE taxable event, and you're theoretically supposed to send the taxes right then and there, or at least quarterly, but only can declare losses at the end.

You're losnig 100% of the money that goes down, but pay tax only on 25% of gains. It's much more favorable to have gains, no matter how small.

>temporarily
sure, just make sure it's not a wash sale when you rebuy

But if we're assuming that BTC is following the typical log scale, it will be in decline for a few years before popping off again. So wouldn't it be ideal to maximize your loss deductible for this year, then buy back in [being careful to avoid wash tx like said], and await the gains"

t. IRS

I mean, this is going by the rule book, no law is being broken here. Just circumnavigating the clusterfuck of the taxcode in trying to minimize losses.

No, because any losses you get back, you pay taxes again if and when it goes back to that level.

I'll use myself as an example. I started with anout 9k invested RIGHT BEFORE the bull run. Perfect timing. Bought XRB at 40 cents, IOTA at 30 cents, and ETH at 250. I traded these back and forth with a lot of shitcoins (BTS, ADA, XVG) and my stack was worth about 70k dec 31st. I Paid taxes on 61k gains, about 18k worth since it was short term gains taxed at normal income rate.

Right now my stack is worth about 17k, a good 50k under it's december value (JUUUUST). But I've paid taxes on gains UP TO 70k. So if it recovers and goes allll the way back to 70k, I will still have a zero tax burden.

Lets assume that we go sideways for three years, and I carry over alllll my losses and write off 45k worth of losses. I lost alll that money, and I'm starting with a balance of 15k. If I get to 20k, I pay taxes on the gains from 51-20. Lets say it goes to 70k again. I WOULD PAY TAXES AGAIN UP TO THE 70K because I took the losses as a deduction.

>Lets assume that we go sideways for three years

or however many years it takes to write them all off.

TLDR you will pay no taxes if you recover from losses, but you will pay taxes if you recover after declaring them as losses on your capital gains

Okay, I understand. Are you an accounting student? You really know your shit.

How about the $3000 deductible, how does it work exactly?

Say i make $30,000 a year as regular income, hence I'll get taxed 15% which comes out to $4,500 owed.

How is the $3,000 deductible applied?

A. I deduct $3,000 from what I owe [$4500-3000] coming out to just $1,500 taxes.

B. The $3,000 is deducted from my initial income of $30,000 so [30,000-3,000] = $27,000*.15 = $4050 owed

The deduction is from your taxable income, not tax burden.

No, I'm a pharmacist, but I own my own store so I deal a lot with taxes and know a lot because I have to. I spent a LOT of time going over the crypto laws because the last thing I want is the IRS up my asshole over fake internet money when I literaly sell drugs for a living

I believe if you make that much (or little), you have a lower rate if not zero.

I'm 31 years old.

Ah, so its not really as good as I had thought it would be. If the $3,000 is deducted from the taxable income of $30,000 from my example, then that's actually not very generous at all in terms of write-offs, is it? I was under the impression that it would be deducted from your total burden.

ooooo I see why you think it's a good deal.

Yeah, it's really not much at fucking all, especially if you're like me and lost literally 20x that much so far this year. If I cashed out, It'd take me like 15 years to write them off at 3k a year.

Fuckin hell.

Ahahahaha yeah I'm such a cockring.

Do you plan on washing the trades anyway this year? I figure its still some good pocket change , especially if you're right on the edge of the tax bracket below you.

Nah I'm just gonna eat it. Put it all in VEN or ICX and forget about it and hope they become the dominant chain in the future. The next ETH and 100x moon is out there, and it's probably a platform coin, not a p2p or AI coin IMO. I can afford to lose it all, so w/e.

they're trolling you. you can claim losses if you have them if you do sell at a loss.

nigga learn to read, this doesn't even relate to what OP is talking about

yes it's favorable. $10k buy then immediate sell is $0 gain/loss assuming price didn't move. you don't take the loss until you sell the shitcoin and that will be calculated from the shitcoin's buy price. people think taxing crypto is unfair or something, but short term is taxed literally exactly the same as W-2 income they are already being taxed on and have been their whole lives, and long term is a juicy 15%.

just forget crypto and think of it as property or cars or something. that's all the IRS cares about, just dollars. $10k in shitty cars for $10k in other shitty cars still a $0 gain until you sell the other shitty cars. and you are thinking in the mindset of a loser, there's nothing good about taking loses. you should not be selling any cryptos unless they were a high risk shitcoin bet that went sour and will never recover. alts with good fundamentals and ETH will be much higher than they are at EOY.

Literally all of this is incorrect. Capital gains are taxed on current value, not realized value.

>just forget crypto and think of it as property or cars or something. that's all the IRS cares about, just dollars. $10k in shitty cars for $10k in other shitty cars still a $0 gain until you sell the other shitty cars

Crypto is not like-kind exchange anymore. Trading BTC for ETH is taxed the same as 'trading' 10000 USD for a parcel of land.

just fuck off, you obviously live in some shithole country with different tax laws and no running water.

literally exactly what I said

That's such a shit, I can't believe they only allow you $3,000 off your taxable income per year, even if its short term. That's literally jack shit.

Stop flaming goys we're all being raped by the govt. collectively, lets hold hands and kiss instead

I am in quite a lot of these tax threads because I'm one of the 800 people who has been filing their trades for 5 years. these guys are in every thread and are either so deluded that cannot accept any reason, or they just mislead people on purpose to fuck with them. I've lost my patience with them.

and even allowing people to deduct capital losses is generous from a different point of view. the government is literally paying people back for making stupid decisions and selling at a loss.

But $3,000 is like 1-2% savings across all income class brackets by my calculations. Its marginally, negligibly generous at best. I guess if the game were easy then everyone would be ballin' out.

Retards like me who lost something like 1/3 of their yearly income this year on short run capital investments are really taking the bullet, and the deduction money will net me a new pair of shoes & slacks, basically. Maybe I'm just being greedy.

The other guy is right, they are doing you a favor by even allowing that desu.

Well with the findings ITT, if I were to wash sell via the 32 day rule, I'd basically make enough money back to pay my accountant for all the rummaging through he'd have to do with my crypto tx's. It would probably be better and easier for me to just hold and forget about this whole deal, and hope that crypto moves up again someday?

taxation is not that linear. it will reduce your taxable income so there are still many more factors down the line that will determine your final tax bill, and a reduction of $3k will still only affect your final tax bill for around $1k at most probably. but I guess that is a lot for some people. the moral of the story is if you're taking losses you're not making any money, that money is gone. you just owe slightly less tax on your other money.

sorry I was pretty harsh I've been flamed a lot in tax threads

wash sales don't apply to cryptos since they are property in the IRS's view and not securities. that doesn't mean you should exploit it though but you shouldn't worry about reporting it. also just track usd price with your buying and selling for every sale and you can either do it yourself or spoonfeed your accountant and get a lesser bill from them. if you are holding decent coins then you should not sell and wait for a bull market. even hold shitty coins if you can afford it, odds are some idiot will buy them in the next bull run.

I ran everything through bitcointax, got a form, imported it into TurboTax Deluxe, and it calculated my taxes automatically. Granted, I made money instead of losing, so I ended up owing taxes. But if I had lost money, it would have automatically calculated that and given a tax credit

If you go this route, I recommend you pay a little extra for the audit defense in case you do get audited

Of course, I am relatively confident in my hold's, was only thinking of selling temporarily to get that tax benefit.

Thanks for the advice.

benefit is slim to none unless you literally need extra cash to survive and not worth the risk of dumping a good bag of cryptos that will be worth much, much more in a few years

It all depends on what you mean by "temporarily." Read up on wash sales: investopedia.com/terms/w/washsale.asp There's a rule that you have to wait a certain amount of time to buy back something you've deducted as a loss on your taxes.

not applicable to cryptos but abusing it will probably put you in a precarious position