Anyone aware of the taxation for withdrawal of crypto in Minnesota?

Suppose dual investing BTC/USDT in exchange frequently, actually how to get profit and loss property to undergo Self accessment to UK hmrc? Any optimal strategy to reduce tax?

The IRS Form 1099-DA is planned to take effect January 1, 2025 and will be required for all digital asset brokers.

Introduction

The IRS has drafted the first ever tax form specific to crypto and digital assets. This form, Form 1099-DA, will fundamentally change how cryptos are reported to the IRS and individuals, shifting much of the reporting responsibility off of the taxpayer and onto "brokers". More on that later.

Background

In April 2024, the IRS released the first draft of Form 1099-DA with requirements for custodial brokers being released in July 2024 and a revised draft of Form 1099-DA in August 2024. This form and associated reporting requirements will bring more transparency and reporting to the crypto space than ever before. For the first time, crypto transactions will more or less be treated similar to traditional assets like stock and securities when it comes to brokers being required to report transaction activity to both the taxpayer as well as the IRS. Effective for the 2025 tax year, the IRS will be receiving an immense amount of data regarding taxpayer's crypto activity.

Key Points

1. This form aims to standardize reporting requirements over digital assets, requiring all "brokers" to submit a 1099-DA to the IRS and taxpayer. The IRS defines a broker as an entity that “regularly provides services effectuating transfers of digital assets on behalf of another person”. This includes exchanges, digital asset wallet providers that facilitate trades/transfers, and can even potentially include crypto ATMs. This, of course, raises a lot of questions for wallet providers and crypto ATMs that are not KYC. It is very possible that those brokers who do not collect the adequate information from the taxpayer to complete the 1099-DA will be out of compliance and could face legal action if they continue to serve US taxpayers.
   1. There has been some confusion around whether or not noncustodial wallets will be classified as brokers for purposes of these reporting requirements. In the final requirements Rule published by the IRS in July 2024, the IRS specifies that a facilitative service includes any service that "directly or indirectly effectuates a sale of digital assets, such as providing a party in the sale with access to an automatically executing contract or protocol, providing access to digital asset trading platforms, providing an automated market maker system, providing order matching services, providing market making functions, providing services to discover the most competitive buy and sell prices, or providing escrow or escrow-like services to ensure both parties to an exchange act in accordance with their obligations". While this language suggests it is very likely certain unhosted wallets could be subject to the 1099-DA reporting requirements, it is also important to note that "unhosted wallet providers" has removed from the explicit definition of "broker". This continues to be a grey area and we are eagerly awaiting more clarity from the IRS.
2. The 1099-DA will provide proceeds, cost basis, and gain/loss details for each transaction facilitated on the platform, as well as additional details. More on cost basis later.
3. There is a new section for "wash sales". The instructions read: "Shows the amount of nondeductible loss in a wash sale transaction involving digital assets that are also stock or securities for tax purposes." This is particularly confusing as we know the IRS currently defines crypto as property. This likely means that, as expected, new guidance and regulation will be coming out explicitly disallowing wash sales for crypto. As mentioned in a previous post, the wash sale loophole is still currently open for crypto in 2024, but is expected to be closed as early as 2025. This wording in the 1099-DA further solidifies these expectations. 
4. "Noncovered Assets" will be specifically identified and documented. Noncovered assets are assets that the broker did not provide custodial services for or assets that were transferred into the platform and/or were acquired prior to 2026. If the box is checked indicating it's a non covered asset, certain fields in the form may be blank INCLUDING THE COST BASIS FIELD. This is extremely important to understand as the proceeds may appear as 100% capital gains unless you provide the accurate cost basis on the asset. This will result in taxpayers paying substantially more tax than they might actually owe. Taxpayers should not rely on 1099-DAs with missing cost basis data for tax owed.
5. Brokers must attest to relying on customer-provided data. There is a section where the broker will indicate if they have relied on customer provided data, such as cost basis. The ability to submit data such as cost basis will vary on a broker by broker basis. For example, Coinbase may create a feature to input your own cost basis on assets transferred into the exchange which will then be included on the 1099-DA. If that is the case, this box will be checked.
6. Both stablecoins and NFT transactions are allowed to be aggregated (separately), as long as total proceeds is less than $10,000 annually. All other digital asset transactions will have to be reported separately.

Implications For Taxpayers

Taxpayers can expect to receive 1099-DAs from various different exchanges and wallet providers. The forms received will also be reported directly to the IRS. However, for assets purchased prior to 2025 as well as all assets transferred into a qualifying exchange/wallet provider, cost basis data will not be accurate and will be left blank on the form. As a result, it is imperative that taxpayers maintain accurate cost basis records on their own and continue to report their transaction using Form 8949 (these 1099-DA forms do not replace the requirement to report using Form 8949 and Schedule D).

Comments

While the 1099-DA is going to help streamline data requirements, there are still many issues this will not solve. For one, there are various cost basis accounting methods available to taxpayers. The 1099-DA will default to First-In-First-Out (FIFO). However, a taxpayer may elect to utilize Specific Identification (assuming they meet the data requirements), allowing them to elect more favorable methods such as Highest-In-First-Out (HIFO), which may result in differences in what is being reported on the Form 1099-DA vs what the taxpayer is reporting on their 8949. While the 1099-DA will help bring a lot more transparency to crypto trading, it will not necessarily result in fully accurate tax reporting for taxpayers.

Additionally, it is very important that taxpayers do not solely rely on the 1099-DAs, especially if transferring assets between wallets and exchanges. As mentioned, if an exchange receives an asset from an outside source, it will assign a blank/$0 cost basis to the asset on the 1099-DA. If this was provided to a traditional CPA or filed into turbotax, this would wrongfully result in 100% capital gain. Instead, the taxpayer should identify the cost basis on the assets transferred in and ensure they are correctly reporting it on their 8949. By maintaining accurate records for all crypto activity, taxpayers can ensure they have the proper paper trail to back up their numbers as well as ensure they are optimizing and minimizing tax due while remaining compliant.

TLDR

Starting January 1, 2025, brokers dealing with digital assets, including exchanges and certain wallet providers, must collect and report taxpayer transaction data to the IRS via Form 1099-DA. This form will detail proceeds, cost basis, and gain/loss, though gaps in cost basis (for non-covered assets) can impact tax liability. Taxpayers should keep independent records, especially for assets transferred between wallets, to ensure accurate tax reporting.

Do you know if Crypto Exchanges report your balances and transactions to the authorities?

The ultra rich are using their holdings in order to borrow against it and postpone tax payments while the value of their holdings increases significantly more than the loan interest rate.

Now, with crypto and lending anyone can use the same tactics to keep its wealth growing and enjoy a cash flow with tax postpone in several years.

Anyone is doing it?

Jeff Bezos — also known as the richest man in the world — didn’t pay income taxes from 2016 to 2018

Warren Buffet’s wealth grew by $24.3 billion between 2014 and 2018 yet he only paid $23.7 (almost zero tax) million in taxes during that time

Hi everyone!
I would like to pick your brains, especially those who are knowledgeable with tax, BTC / cryptos.
Situation: I am sending this message to this community on behalf of those who are victims of trading (crypto/btc), like I am. For those who did cryptocurrency investing / trading on any trading platforms (in my case through qexbit.xyz or qebit.org) and earned a whole lot of profit, but later realized they could not withdraw the funds (including their capital) because the trading website keeps asking for substantial fees before releasing the funds. But the clients could not afford, so the money is just sitting there (or so the trading platform wants it to look like). Then the client later realized it was a scam. Questions: *Can trading platforms legally charge fees to clients?
*What do clients or victims have to report when filing for state and federal tax? (in my case, California).
I know these are stupid questions, but it is better to ask than guess.
I am sure a lot of people like me have similar situations and questions and know it much about tax laws.
Please advice. I appreciate your time and your honest opinions.

Hello everyone.

I am struggling to find a crypto software solution where I am able to insert transactions from all of the following sources:

Multiple different evm chains including niche chains such as core, celo, etc.

Starknet

Aptos

Solana

Cosmos, celestia, dymension, injective, osmosis.

I have found some which have more than others, but I am finding it impossible to find a provider who will allow me to connect wallets directly to them to upload my transactions.

I have a large number of wallets with multi tens of thousands of transactions so uploading individual csv files per wallet per chain is completely impractical unfortunately, as they will need significant modifications to be accepted by any of the sites which will accept them on niche chains. I am finding Starknet to be particularly difficult chain to source effectively.

Does anyone have any recommendations for software they have found which may fit my needs?

Thanks in advance for any suggestions.

Hello and thanks for the help in advance. US resident for reference. Can anyone tell me what is the best way to account for gains/losses when using Jupiter Perpetual trading and taxes? I am using coin ledger software, but this doesn't seem to be pulling in the perpetual trade information automatically, just if there was a conversion/swap from one asset to another.

I will outline a couple of examples using situations similar to what I am talking about below using Solana as this is what I have been trading with over the last year. All examples will assume my cost basis for Solana is $50 per token for simplicity sake (not true) and was acquired within the last year so short term capital gains would apply to the principal. I will also for simplicity sake say that the price of entering the trade at the time of trading is 1 Sol is valued at $100 per token.

1. First scenario. What if I enter a position and exit with a 10% gain. Entered perpetual at $100, exited when value reached $110. What was 1 Sol is now 1.07 Sol.

-First question is about entering the position. Just by entering the trade, did I technically create a sale (taxable event) of the Sol I originally bought for $50 or no? I.e. Regardless of the results, no matter what, I would owe 20-37% on the amount I was already up since first purchasing the token?

-Second question is about the amount I would owe based upon the amount I am up following the trade. I assume this would be 20-37% of the $10 value gained?

2. Second scenario. Enter a trade and suffer a 100% loss. Entered perpetual with 1 Sol = $100 (which was originally bought for $50), liquidated at $80. What was 1 Sol is now 0 Sol.

-What portion of this do I get to claim as a loss?

Thanks in advance!

If a joint checking account is used to purchase BTC on one exchange (with the account on the exchange belonging solely to the non-primary checking account holder), and the BTC is later sold on another exchange (with the account on the second exchange again belonging solely to the non-primary checking account holder), are both parties ultimately still responsible for taxes?

Hi all, around 2021/2022 I had made substantial losses in crypto. I’m looking to offset these losses to use as relief of CGT. However due how long ago the trades were I can’t see any of the trades on Binance. I can see my withdrawals and deposits for 2021/2022 which roughly show the losses however it won’t let me go far back for the actual trades. I believe I have 4 years to report losses in order to use them against any potential future gains?

Another issue in itself is I had a mixture of trades which were sold on the same day, within 30 days and within months so not sure if HMRC would’ve seen this as taxable under income or CGT. Is it even worth reporting losses at this point or will it just be a headache. Losses are in the 5 figures

Based in UK. I bought in 2013, not touched a thing until a couple of months ago, so my initial purchases were over a decade ago. Under 20 transactions, untouched until this year when I moved it all to another wallet, moved two thirds of it from there to coinbase and sold. So this is a small amount of transactions, it's just with the initial purchases being so long ago that is confusing me.

Do I need a crypto tax company to work this out, or with it being a small number of transactions, would HMRC be happy with a spreadsheet showing amounts bought and sold, with fees? I have transaction histories downloaded to back that up from the sites I used. I have never filed a Capital Gains Tax form before so I assume it is possible to add files to it?

USA Only

Background

Earlier this year, the IRS released Revenue Procedure 2024-28, implementing changes with significant impacts to how taxpayers are allowed to track cost basis effective January 1, 2025.

I've seen some chatter, speculation, and misinformation across various sources and subreddits regarding this. I'm a licensed CPA (CA) and would like to clarify what is changing, what isn't changing, and how to go about the change in order to remain compliant.

Universal Cost Tracking vs Wallet-Based Cost Tracking

Most people have multiple wallets and multiple exchanges. If you sell and asset, you need to determine the cost basis for that asset in order to calculate your gain or loss. As discussed later, the default method is First-In-First-Out ("FIFO"), meaning if you have multiple ETH, and sell just one ETH, the cost to be used would be your first ETH purchased of the bunch.

Wallet-Based Cost Tracking: Wallet-Based Cost Tracking looks at each wallet individually and requires you to track cost at the wallet by wallet level. Meaning if you had 3 ETH in Wallet A and 5 ETH in Wallet B, and then you sold one ETH from Wallet B, the cost basis to be used would be the earliest purchased ETH from Wallet B only. Under Wallet-Based Cost Tracking, since you sold from Wallet B, you must pull the cost basis from that wallet and cannot pull the cost basis from any other wallet.

Universal Cost Tracking: Under Universal Cost Tracking, cost basis is not required to be tracked at the wallet level, but rather looked at holistically. In that same example where you have 3 ETH in Wallet A and 5 ETH in Wallet B, if you sell 1 ETH from Wallet B, then all 8 ETH should be considered when determining the earliest cost basis ETH. Meaning, if your earliest purchased ETH was in Wallet A, this is the cost basis tax lot that should be used in calculating your gain/loss even though the actual asset was being sold from Wallet B. In other words, your cost basis tax lots are not separated by wallets but are rather looked at all together.

Prior to Rev Proc 24-28

Prior to this new rev proc, taxpayers largely relied on IRS Crypto FAQs 39-41 for guidance on cost basis for digital assets. Notably, First-In-First-Out (FIFO) is the default cost basis method for tax payers, with no obligation to track cost basis at the wallet level (this is called the "universal cost tracking" method). However, if certain data requirements are met, including wallet-based cost tracking, taxpayers could elect to utilize the Specific Identification (Spec ID) method instead. This method allows taxpayers to specifically identify the cost basis tax lots being sold, giving way for more tax-favorable methods such as LIFO, HIFO, Optimized HIFO, etc.

Post Rev Proc 24-28

Effective January 1, 2025, ALL taxpayers will be required to track cost basis at the wallet level. In other words, if you have ETH in Wallet A and ETH in Wallet B, and then you sell some ETH in Wallet B, you cannot pull the cost basis from Wallet A (which was previously allowed when wallet based cost tracking was not required).

Tax payers have been given a Safe Harbor to "reasonably allocate" their cost basis as of the start of 2025. In other words, if you were using FIFO and not using wallet-based cost tracking, you will need to assess all of your current tax lots and allocate them based on your actual holdings in each wallet/exchange. After the allocation is made, and all wallets and exchanges have cost basis tax lots assigned to them, the allocation will be considered complete and from that point forward cost basis will need to be tracked at the wallet level. Meaning assets sold from Wallet A will need to have their cost basis pulled from Wallet A, even if you are just using FIFO.

How to Allocate Cost Basis

I won't sugarcoat this, this will be a huge challenge for most people. This will require that you have detailed records showing all of your tax lots as of 11:59PM on 12/31/2024. While software tools have been imperative to accurate tax preparation and reporting, without proper features to implement this transition, users will be largely unable to "finesse" the software to allocate the transition. On the bright side, it seems like the major softwares have this on their radar and are working on a solution. I have been in touch with a few different softwares, including the team at Koinly, Bitwave, and others, and they have indicated that their team is working on solutions for an easy transition.

If you don't use a software, then you will have to do this allocation manually in excel. To do so, you'll need to aggregate all of your tax lots as of 11:59PM 12/31/2024 into a list. Then, you will need to look at all of your wallets/exchanges and their balances as of that time. After that, start assigning each tax lot to a wallet until you get to the right amount of crypto held in that wallet at that time. This process will be very manual and very painful, I suggest using a software instead.

Do We Have to Use FIFO?

No, while FIFO will remain the default, if you meet the data requirements in Q40 of the crypto FAQ you can still utilize specific ID to cherry pick which assets are being sold. Really, the only big change here is that wallet based cost tracking will be required for those using FIFO now (was already required for those using specific ID).

My Thoughts on Allocation Approach

My thoughts for softwares is that each cost basis tax lot can be proportionally split between the wallets based on the amount of crypto that is in each wallet. For example, if Wallet A has 1 ETH and Wallet B has 3 ETH, then each individual cost basis tax lot should have 1/4th allocated to Wallet A and 3/4ths allocated to Wallet B. This approach should be fairly easy from a software perspective and would allow for a very easy transition for users.

A second approach would be to assign a hierchy based on either short/long holding period or high/low cost basis. For instance, a user might just want Wallet B to have the lowest cost basis ETH and Wallet A to have the highest cost basis. In that instance, the software would look at all of the cost basis tax lots and assign them accordingly based on the user's hierarchy assigned. This approach seems like it may be more difficult to implement from a software perspective, but hey what do I know I am not a software engineer.

I would love to hear the community's thoughts on additional approaches to make the transition as easy as possible for users. Let me know if there is a better way!

TLDR

• Wallet based cost tracking will now be required for those previously using FIFO with the universal method
• Those people will need to allocate their cost basis as of January 1, 2025
• FIFO is NOT required moving forward, but remains the default (Specific ID is still allowed)

In USA, if a person sells P2P, is the price used when calculating tax what the market price is that day or the actual price in the transaction? If so the tax could be much higher or lower compared to selling on a marketplace.

If you have say £100k of BTC, 50K gain and £100k of ETH, 50K gain, you then sell of all of ETH for BTC and all of BTC for ETH have you realised a 100k gain on the two transactions to pay tax on? Or does it fall inside of Bed and breakfast rule?

Looking at ways to crystalise a gain without being out of the market. Thanks

For a relatively small pooled investment in some NFTs, is it possible to report split profits directly on Schedule D for each partner (generate Form 8949 on their behalf as if they made the trades themselves, divided by their share)? Trying to avoid unnecessary complexity with entity formation and K-1s if possible as this is a short term arrangement.

If I bought 100 ATOM through coinbase and I sent that off exchange to a ledger wallet in osmosis and swapped ATOM for JUNO. If I go back from JUNO to ATOM and now have 110 ATOM that I send back to Coinbase 1 year later will I need to show the IRS all that I did off exchange or will they just care when I cash the new 110 ATOM for vs the original 100 ATOM?

"Jan 1, 2025 - U.S. exchanges start tracking crypto sales and disposals reporting to IRS. Taxpayers must use a FIFO-by-account basis tracking method for reporting gain"

"You have until the end of 2024 to set a reasonable “basis” on all of your digital currency (the basis is basically the “cost” of an asset that will determine whether any subsequent transaction results in a capital gain or loss and the amount of the profit or loss). If you fail to establish a reasonably allocated basis, the IRS will presume your basis is ZERO on all of your digital assets beginning January 1, 2025"

More here: https://www.cryptotaxaudit.com/1099 https://www.jdsupra.com/legalnews/the-action-cryptocurrency-investors-8183288/

Edit: I think the website is wrong. Other sources say "starting in 2025, US taxpayers will be required to track their crypto per wallet, using the FIFO or Specific Identification inventory methods"

Say I hold x amount of insert name crypto and I convert it all into USDT or USDC.

This transaction doesn’t involve cashing out to US dollars.

Technically, this transaction is taxable. But.. how’d you pay it? You’d sell the equivalent in USDT to USD that you owe in taxes?

Of course with apps like Coinbase Wallet you can track the amount you initially invested and the gain/loss you made can also be seen from Coinbase Wallet. Would that not be enough?

Thanks.

Does anyone have insights on where to find the corresponding token names for these IBC codes?

ibc/9B1FC3F80786ACDD1808854BCFD234AFB71471C3972FF3DE0E279AFD2D50FDE4
ibc/334740505537E9894A64E8561030695016481830D7B36E6A9B6D13C608B55653

So I had used an exchange to purchase and sell cryptocurrencies and the exchange inevitably closed!

I cannot access their API so wondering what I can do to access the information for tax purposes

Hello. I think I know the answer but I’m not sure. I’m not totally new - been BTC only for a couple years and never sell. My question involves my recent DCA with small amounts into a couple different memes. One case is this My total cost (basically all swaps of layer2 eth, and stable coin) amount to $1946.93. The net cost after all network fees, exchange fees, and amazingly high “slippage” costs amounts to $1691.90. (If I’d paid better attention I simply would have stopped this exercise months ago). My total quantity is 63,120.05. So my cost basis on total swaps before fees and slippage amounts to .030237 per coin, while my cost after the (*ahem) fees and slippage is .026276. If I end up making out with gains in the end of course I’d like to use the higher cost and vice versa. What is the correct cost per coin here? Thanks for all

Hi, would missing transactions in a portfolio ie on Koinly create paying more or less tax. Cheers.

I've been doing it manually for years since koinly doesn't support the X and P chains. I'm tired boss.

So back in 2013 I pool-mined like $3 in Bitcoin and forgot about it. Come 2023 I found out it was still sitting in my wallet and worth almost $1000, so I moved it all to CashApp and sold it off within the year. So now I've got a 1099B from CashApp, which only reports total proceeds. Supposedly I have to fill out a form 8949 to show individual sales.

So here's my question: Do I have to file something special to show that mining event way back before the law even considered it taxable? Or can I just use form 8949, reporting the 2013 date for when the amount was acquired (box 1b), followed by the 2023 CashApp sale date (box 1c) and that's good enough since it's all gain and no cost-basis?

I really thought it'd just be the 1099B and I wouldn't have to bother with anything more.

Italy just raised taxes on crypto from 26% to 42%

Italy government just raised crypto taxes on profit from 26% to 42% starting 2025

It's been a good multi year run, it was already complicated here with multiple taxes (like 0,2% on owned crypto) on crypto, but this unfortunately is starting to make it a no go here... I am sad and angry... other unofficial "ways" are already super controlled .... they managed to strip all the plus sides of crypto here... fight for your government...

Thanks Meloni, you killed another dream

If there is any Italian here or European with some suggestion please share.

As I said may this post be a cautionary tale of voting for "some type of parties".

A lot of Italian crypto blog and groups are already protesting and waiting for more news but the expectations are pretty low right now.

We can hope some of the bigger local crypto players and business (there are few) can push or fight in some way this law but as I said the chances are slim.

PS reposting this with more details as it was not conform with the 500 characters rule, (maybe a bit restrictive, but oh well. Didn't post in the daily because I am hoping to spark some sort of discussion about this theme in the industry.

Repost from r/cryptocurrency

Traded crypto over the last few years, mostly netting a loss and just broke even with a few lucky investments.

I'm using Koinly as I'm planning to withdrawal it.

Everything I've traded has gone through two exchanges.

Can I just connect my exchanges and use that when filing my tax report?

Or do I need to connect every wallet?

Hi,

So, I paid my taxes for my crypto trades in 2023. I've been trading in 2024, but I haven't transferred any cash in or out of Coinbase; I've been trading with what I had in my exchange since 2023.

Let's say I ended 2023 with $10,000 and paid $1,000 in taxes (just as an example), and my current balance as of September 2024 is $15,000.

My understanding was/is that I need to pay taxes on the $5,000, since that's the additional income I've made in 2024.

Now, for some reason, both Coinbase and CoinLedger show that I owe taxes on $16,000 (this is just an example).
I'm very sure there's an error in their calculation, but I just wanted to ask: Is there any situation where I would owe taxes on more than what I actually earned?

My spouse is Geman (has a passport) but is resident in the UK (works here and lives here). Is there a way I could transfer crypto for her to have a gain and then claim under german crypto capital gains rules, as in held for over a year so no capital gains?

I'm a UK citizen.

Thanks for any advice

As a beginner in crypto, i have put my existing capital of 15,000$, I need tax advice to make sure my steps are not tax mistakes. please recommend me reputable tax companies that you have dealt with. Thanks for helping me