I clipped this 10 minute segment from the last LEO roundtable we recorded. We spent some time talking about crypto taxes, what they mean and how we navigate our own tax filings.
The official statements regarding crypto taxes in the U.S. have been sparse. The statements that have been made tend to confuse people.
There are many problems in the crypto industry right now and regulation has been a big one for the past several years since the crypto space really took off.
Now that the average person is starting to get into Bitcoin and cryptocurrencies, the inevitable questions about filing Bitcoin/crypto holdings, logging your transactions, keeping records of your withdrawals and sells is all bubbling up to the surface.
In the midst of all this, we’re experiencing a global economic meltdown and winding down from a full-blown stay-at-home order.
Needless to say, these are interesting times and crypto taxes are one of those things that many people are going to get tripped up with. This section of the podcast provided me with some clarity about my own tracking activities and how I need to proceed in the future when it comes to crypto gains and converting to/from fiat.
Full Roundtable Episode (1.5 Hours) -- https://leofinance.io/hive-167922/@khaleelkazi/srlcywwy
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In This Episode:
- The latest SEC statements about crypto taxes in 2020
- What do filings look like if you’re selling crypto into USD to buy normal things like gas for your car or a cup of coffee?
- How would we file our personal taxes for crypto?
- Example situations for tax filings in 2020
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Point is avoid selling for fiat, I think the best option would be to buy gift cards with your crypto or get a card you load up with a stable coin and run with that instead of lumping cash and sending it to your bank account to be taxed to death
Or maybe find a way to do a face to face transaction crypto for cash? But that is hard as hell and also really risky. :D
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I agree, but I think P2P networks should totally become a thing, it's something I plan on building in the future, but theirs so much to do around it
IRS won't buy that. Even exchanging from one crypto to another is taxable. If found out, they tax you to death AND charge penalties and interest.
Then simply use a currency like Zcoin or Monero, history is erased so you can clear yourself of all those previous transactions and then only have the fiat one declared
It would be nice to buy things directly with crypto - even if I had to say, sell BTC into a stablecoin and use that for day-to-day purchases on a debit card.
The idea here though is how do we live off of our crypto and treat it like a currency. As of right now, the systems aren't in place to handle that so if I want to go buy a cup of coffee, I sell a chunk of BTC into fiat each month and budget out a few purchases like that.
The IRS will always find a way to get paid, so being a U.S. citizen, I know that I will have to abide by their rules. There really isn't a way around paying taxes, but there are ways to bend the rules a bit and do some "creative accounting" as they say and reduce the taxes that we pay.
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I guess for me I don’t want to have my bitcoin pizza moment and have bought something with it and regret it later as the price moves up! Not that I haven’t bought with BTC I have I bought solar panels with it and I’m sure it will be my BTC pizza moment but I’ve also invested in other things with it to hopefully get a return in something deflationary
The crypto market makes the national tax laws seem obsolete let’s say you buy something from me that’s digital an ebook! Who should get the tax? The US? The server where the eBook is stored? It’s going to bring in a lot of tax reform that’s for sure! I agree the US government is going to want their piece of the pipe always And creative accounting cost money.
What I think will happen is certain states will be more friendly to it and gobble up those citizens and businesses and create competition that way! Let’s say one state pulls out no tax on crypto pretty sure it will have a knock in effect the same with countries!
I have no problem leaving mine to protect my wealth I’m not tethered to any place, go where you’re treated best I say
How does one export transactions from Hive? I don’t suppose Hive records the value of a transaction for cost basis and sale price?
Steem/Hive are a nightmare to manually track based on the relentless number of transactions. I also can’t figure out cost basis for tokens like LEO.
I would pay for a service that could automate these things. I currently pay for Taxbit to account for my investment crypto.
Blocktrades has exportable transactions with costs. Taxbit was able to massage that data for processing. However, I couldn’t find useful exports or a method to export from Hive. And then, adding Steem to the mix just makes it super gnarly with a cherry on top.
I think that if you treat Hive as a business, you need to factor in bookkeeping as part of the work. It’s a job in itself until there are tools to automate it.
Yes, bookkeeping is most definitely part of the job description. In the video, we talk about how transfers don't count but the sale of crypto into another crypto counts.
So I guess the best method is to track the times when you sell HIVE (or LEO/hive-based tokens) into another currency and your cost basis/profit for those.
It's honestly a pain in the ass and we need better systems in place from both a regulation standpoint and from an exchange standpoint. The technology exists for automating this stuff, it's just about implementation.
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I was about to start learning Python. Would that help me automate something?
Thank you
Yes