Bitcoin and Crypto Talk (Merged)(includes NFT) (5 Viewers)

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superchuck500 said:
I bet this is fairly common actually (inexperienced traders not stashing away the capital gains tax). If those numbers get big, it can be a problem.

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Chuck, help me understand. Is he getting this notification because he sold off his position? Does crypto work differently from stock holdings?
 
livefromDC said:
Chuck, help me understand. Is he getting this notification because he sold off his position? Does crypto work differently from stock holdings?
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No, it's the same. Crypto is an asset so when you sell it for a gain, it's a taxable event. If the asset is held for less than 12 months, it's a short-term capital gain taxed at the filer's ordinary income rate and if it is held longer than 12 months, it's a long term capital gain taxed at the filer's capital gains tax rate.

The crypto trading platforms will generate a 1099 at the end of the year showing the account's activity. If a person wants to file a tax return and not evade taxes, they need to use that 1099 information. Run the calculations or put it in the tax software and it will compute the tax owed.

This appears to be this person's tax return filing instructions (from either tax software like Turbo Tax or from an accountant) that has computed that he owes over $160K, but he's saying that he doesn't have the money - he apparently never put away the tax portion of his gains when he sold them and just reinvested all of the sale proceeds . . . and the market has turned and he no longer has the money he needs to pay the tax.
 
superchuck500 said:
No, it's the same. Crypto is an asset so when you sell it for a gain, it's a taxable event. If the asset is held for less than 12 months, it's a short-term capital gain taxed at the filer's ordinary income rate and if it is held longer than 12 months, it's a long term capital gain taxed at the filer's capital gains tax rate.

The crypto trading platforms will generate a 1099 at the end of the year showing the account's activity. If a person wants to file a tax return and not evade taxes, they need to use that 1099 information. Run the calculations or put it in the tax software and it will compute the tax owed.

This appears to be this person's tax return filing instructions (from either tax software like Turbo Tax or from an accountant) that has computed that he owes over $160K, but he's saying that he doesn't have the money - he apparently never put away the tax portion of his gains when he sold them and just reinvested all of the sale proceeds . . . and the market has turned and he no longer has the money he needs to pay the tax.
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Yep, when I was a financial advisor years ago, this was a point of emphasis with clients, especially those with a high volume of trading activity. If you don't know what you're doing and don't plan well, stuff like this example can easily happen.
 
superchuck500 said:
No, it's the same. Crypto is an asset so when you sell it for a gain, it's a taxable event. If the asset is held for less than 12 months, it's a short-term capital gain taxed at the filer's ordinary income rate and if it is held longer than 12 months, it's a long term capital gain taxed at the filer's capital gains tax rate.

The crypto trading platforms will generate a 1099 at the end of the year showing the account's activity. If a person wants to file a tax return and not evade taxes, they need to use that 1099 information. Run the calculations or put it in the tax software and it will compute the tax owed.

This appears to be this person's tax return filing instructions (from either tax software like Turbo Tax or from an accountant) that has computed that he owes over $160K, but he's saying that he doesn't have the money - he apparently never put away the tax portion of his gains when he sold them and just reinvested all of the sale proceeds . . . and the market has turned and he no longer has the money he needs to pay the tax.
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Oh. Poor guy. We really should teach more financial literacy in school.
 
DaveXA said:
Yep, when I was a financial advisor years ago, this was a point of emphasis with clients, especially those with a high volume of trading activity. If you don't know what you're doing and don't plan well, stuff like this example can easily happen.
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I just got through what was a seven-year process of selling a company and each year had installments that were capital gains, generating significant tax (the company was long-held so the basis was zero). After the first year or two of trying to bank the proceeds and earn some interest until tax time, it was just too hard to avoid co-mingling the funds and then you get in the spot of having a big tax bill. So I started just sending in the tax payment at the time of receiving the money.

It's far easier to just send the money in at the time of the gain (you're supposed to anyway). Frequent trading doesn't quite lend itself to that (there's a bunch of events, not just one or a few) - but traders should definitely be sending quarterly tax payments to avoid this problem and be more disciplined about it.
 
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superchuck500 said:
I just got through what was a seven-year process of selling a company and each year had installments that were capital gains, generating significant tax (the company was long-held so the basis was zero). After the first year or two of trying to bank the proceeds and earn some interest until tax time, it was just too hard to avoid co-mingling the funds and then you get in the spot of having a big tax bill.

It's far easier to just send the money in at the time of the gain (you're supposed to anyway). Frequent trading doesn't quite lend itself to that (there's a bunch of events, not just one or a few) - but traders should definitely be sending quarterly tax payments to avoid this problem and be more disciplined about it.
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Indeed. We had some self employed business people who were supposed to make quarterly tax payments and it wasn't uncommon that some would have to sell part of their portfolio to cover tax payments because they would either not pay on time or miss a couple of them during the year. Sometimes a client would also underestimate their tax liability at the end of a given year and the quarterly payments would not be enough to cover it. Definitely something to stay on top of.

Also, I don't know how the reporting is now, but in the past (i assume it's still the case), the IRS would assume all of the proceeds of the sale of a given investment was income and a tax filer would have to figure out and include the cost basis when filing their taxes.
 
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DaveXA said:
Indeed. We had some self employed business people who were supposed to make quarterly tax payments and it wasn't uncommon that some would have to sell part of their portfolio to cover tax payments because they would either not pay on time or miss a couple of them during the year. Sometimes a client would also underestimate their tax liability at the end of a given year and the quarterly payments would not be enough to cover it. Definitely something to stay on top of.
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I should probably do more to protect gains, but I just buy.
 
livefromDC said:
I should probably do more to protect gains, but I just buy.
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If you're buying and holding, it's not really an issue until it's time to sell. There are ways to mitigate your tax liability over a period of time, but if you try to unload all at once, depending on how much you're selling, it would be good to sell your losers in the same tax year to offset those gains.
 
Beast said:
Anyone using Binance.US? I’ve been using Coinbase so far but want to buy some NEAR. It’s not available on Coinbase.
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www.reuters.com

How crypto giant Binance built ties to a Russian FSB-linked agency

In April 2021, Russia's financial intelligence unit met in Moscow with the regional head of Binance, the world's largest crypto exchange. The Russians wanted Binance to agree to hand over client data, including names and addresses, to help them fight crime, according to text messages the company...
www.reuters.com www.reuters.com
 
superchuck500 said:
www.reuters.com

How crypto giant Binance built ties to a Russian FSB-linked agency

In April 2021, Russia's financial intelligence unit met in Moscow with the regional head of Binance, the world's largest crypto exchange. The Russians wanted Binance to agree to hand over client data, including names and addresses, to help them fight crime, according to text messages the company...
www.reuters.com www.reuters.com
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After reading that, Binance is in big trouble if that article makes waves like it should.
 
superchuck500 said:
www.reuters.com

How crypto giant Binance built ties to a Russian FSB-linked agency

In April 2021, Russia's financial intelligence unit met in Moscow with the regional head of Binance, the world's largest crypto exchange. The Russians wanted Binance to agree to hand over client data, including names and addresses, to help them fight crime, according to text messages the company...
www.reuters.com www.reuters.com
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superchuck500 said:
The replies on this are funny.




😂

1650941842561.png
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I saw where one of the chains, can’t recall which one, was planning on releasing dNFTs, where ‘d’ means ‘dynamic’

 

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