Current Events > Can't people avoid capital gain tax with crypto?

(+) Yeah! (+)

No different than having stacks of cash?

Like take the funds to a casino play a little than cash out?

Here in Canada you don't pay taxes from winnings at a casino similar to the lottery unless you're a pro gambler. Not sure if it's the same in the US.

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In the US, youre supposed to report gambling earnings as taxable income, but nobody is gonna do that if they win $50 on like a horse race or $100 from a slot machine.

But if you win a large enough amount (not sure on how much), I do believe that the gambling establishment is required to officially make it reportable and issue you a document based on it. Were talking $1,000+ in earnings on a single bet or cash-in. Not sure on the details though.

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In the US you're definitely taxed on gambling winnings. You can deduct gambling losses up to the amount of winnings, but it's an itemized deduction so it might not offset the winnings.

Anyway, no there's no way of legally avoiding capital gains on crypto if you sell, spend, or exchange it. If you spend crypto at a casino, that's a taxable transaction. What some people are doing now, is taking a loan against their crypto if they need the cash and don't want to sell their crypto.

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Banks are offering loans against crypto or loaning companies? Guess the casino idea only works for us Canadians.

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youre essentially talking money laundering, and yea its gonna work as long as you dont get caught, wouldnt risk it though, Im not that greedy

Pretty sure the CRA has something in there about crypto.

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If you make enough to worry about taxes then pay your taxes. Dont screw your self.

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H0LD_Austin_Era posted...

Banks are offering loans against crypto or loaning companies?

DeFi, sites like Nexo, BlockFi, and Celsius. You can deposit your crypto to earn interest, and also take out loans against your crypto.

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EndOfDiscOne posted...

also take out loans against your crypto.

How do they do this without the IRS getting involved?

Yeah Banks shouldnt be able to tax it because it isnt real money.
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The Popo posted...

In the US, youre supposed to report gambling earnings as taxable income, but nobody is gonna do that if they win $50 on like a horse race or $100 from a slot machine.

But if you win a large enough amount (not sure on how much), I do believe that the gambling establishment is required to officially make it reportable and issue you a document based on it. Were talking $1,000+ in earnings on a single bet or cash-in. Not sure on the details though.

In MA its anything over $600 has to be reported, not sure about other states

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Duncan plz!!!

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Yeah, you definitely are supposed to pay capital gains on your crypto. I know some people were using some other method to defer paying taxes, but I'm pretty sure the IRS shut that down a few years ago.

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"Structuring" is a crime.

So here's a question, say you funded a little get rich quick Defi coin and jumped out at x1000 or so and transferred to a more stable coin. So you have a million+ sitting in Defi crypto in a wallet that's unconnected to you in any way.

If you withdraw small payments here and there, how will the government ever know you made a killing? Isn't that like the point of DeFi?

Rathinor posted...

If you withdraw small payments here and there, how will the government ever know you made a killing?

That's what "structuring" is, and you're mostly hoping that someone at a clearinghouse isn't catching on to multiple $950 cash-outs at semi-regular intervals.

Rathinor posted...

How do they do this without the IRS getting involved?

There's nothing taxable about taking out a loan. But if the price of your crypto drops enough, your crypto is liquidated to pay back the loan. That's taxable just like cashing out of your crypto.

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Not really

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Interesting

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If you don't report those earnings, that could end up being a real problem for you.

You are expected to pay capital gains tax on crypto profit. It follows the same rules on short term vs long term capital gains as stock, last I checked. In any case, Coinbase and presumably other popular exchanges have summaries you can download each tax season for use when youre doing your taxes.

For me Ive always added my crypto earnings when filing my taxes and never had problems.

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Cocytus posted...

If you don't report those earnings, that could end up being a real problem for you.

yeah id def recommend reporting earnings and paying the taxes. Crypto isnt going anywhere and if we want it at its full potential we need the IRS to not ban it. They need to consider it a new asset class and a new source of tax revenue, because it will be.

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I'll talk with my accountant, but he said I don't need to file any earnings until I sell.

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H0LD_Austin_Era posted...

I'll talk with my accountant, but he said I don't need to file any earnings until I sell.

Probably, thats how it is in the US too

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No you can't. I swear, it's almost like crypto shills are all completely devoid of knowledge of anything.

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By the way: https://www.reuters.com/world/us/us-court-authorizes-irs-seek-identities-taxpayers-who-have-used-cryptocurrency-2021-05-05/

Assuming you've made a decent chunk, they're coming for your ass.

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You know what the government and the IRS like? Money. You know what they don't like? Losing out on their cut. Safe to say, any net income whether it's from working, investing, or pimping, is gonna want to be taxed by that red, white, and blue revenant otherwise known as Uncle Sam. So choose your moves carefully.

Not legally!

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THe income has to be in excess of a certain amount to really matter; what is it, like 2400? 3600? but there is a threshold and I think it's the former.

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ShyOx posted...

THe income has to be in excess of a certain amount to really matter; what is it, like 2400? 3600? but there is a threshold and I think it's the former.

Where do people come up with these numbers? All sales or exchanges are subject to capital gains in the short term.

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Anyone know if it's the same in the UK? Particularly regarding exchanging between gains and a stable koin, instead of selling.

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Questionmarktarius posted...

That's what "structuring" is, and you're mostly hoping that someone at a clearinghouse isn't catching on to multiple $950 cash-outs at semi-regular intervals.

while this is true it is very unlikely transactions that small would raise any flags. most traditional financial institutions only have to report transactions over 10k so it would be very suspicious if a person had multiple transaction for like 9k and would likely get flagged, something under 1k likely wouldn't be unless the number of transactions was just astronomical

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andel posted...

while this is true it is very unlikely transactions that small would raise any flags. most traditional financial institutions only have to report transactions over 10k so it would be very suspicious if a person had multiple transaction for like 9k and would likely get flagged, something under 1k likely wouldn't be unless the number of transactions was just astronomical

So how would that work? Say you sell and make short-term capital gains of $90,000 in one year. If you only do $9XX a week in bank transfers, it's unlikely you'll get caught, even though the taxable portion is $90,000 and that should be in the IRS' records? The reputable brokerages don't fool around with tax documents.

IRC section 1256 is prolly how they *should* be taxed a la forex trades
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