/r/CryptoTax

Photograph via snooOG

Proper taxation of cryptocurrency gains and losses.

This sub is for discussing proper taxation of cryptocurrencies, and legal tax minimization. It is focused on the US, but discussion about crypto taxation in other countries is welcome as well.

Note: The users of this subreddit do not provide tax, legal or accounting advice. This material on this subreddit is here for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. The opinions posted on this subreddit are wholly owned by the users who post them.

🚨 Check the Crypto tax FAQ before posting!
🚨 Use specific post titles, not "Quick question" or "Tax help". Those may be deleted.

/r/CryptoTax

11,090 Subscribers

1

Moved from the UK to Canada- checking CGT situation

Hi Everyone,

I moved to Canada this January from the UK on a 3 year sponsored work visa. I brought all of my crypto assets from coinbase which is obviously linked to my UK bank account.

Now though that I'm living in Canada, if i sell my assets here, do I report the CGT to the UK or Canada?

Many Thanks- the moose

1 Comment
2024/05/18
20:49 UTC

3

Celsius Tax Question

If I got back 1 btc from Celsius, and sold today.

Do I:

  1. Pay tax on amount at Petition Date minus 15 days (this is amount I received)
  2. Pay tax on the capital gains from today (this is the amount I sell)

Assume this is a gain (I did not have btc in my wallet so being given it is considered a taxable event).

6 Comments
2024/05/17
16:14 UTC

8

Day trading dozens of times per day between Exchanges, how will Taxes work?

hey, I'm from Europe and my wife is from Asia, I use Kraken and she uses Upbit (a Korean Exchange) and I noticed that there's many coins very overpriced on her app, I'm talking differences of up to 17% when converting to the same Fiat, it's crazy, while other coins are pretty much the same on both.

So my idea was, buy a coin in Exchange A that's overpriced on Exchange B, Sell it on Exchange B and buy a "neutral" coin to get the funds back to Exchange A and repeat the process to infinity for easy money printing I guess.

Now... how do taxes even work in a situation like that? We both have our own accounts so the cryto will be transferring between different people dozens of times per day. Will opening an account on just one of our names so it's always changing Exchanges but still is owned by the same individual make this easier or no matter how you do it this is a tax nightmare?

12 Comments
2024/05/17
15:11 UTC

0

Buy/Sell crypto for family members? Easiest Method to assist/custody?

I have a family member who is a bit too old to handle all the security protocols. What's the best way to custody someone else's crypto account without any tax consequences? They are very savvy about all the scam emails, links , private wallet info, etc. , but a bit overwhelmed by all the security, 2FA, etc..

I want to get them invested a small amount (through donations).

If I buy an asset and move it to "their" wallet (in my possession), a month later, can I "sell" it to them at whatever price I choose (i.e. the price I paid)? or must the price reflect the timestamp the transfer to the wallet is made? In other words I buy 0.01 BTC today and I don't transfer it for a month. Can I "sell" the crypto to them at the price I bought it at (at the point of withdrawing to their private wallet)? My plan was to manage the asset in a hardware wallet until it's time to sell, then transfer it to their Exchange account and just have them sell it. And then provide them with a receipt for cost basis.

What kinds of tax scenarios does this bring up? I'd prefer to not blur the lines of custody and ownership in any way, to keep it simple, and not have any "3rd party" activity. I don't want any entanglement with each other's accounts. I only buy/sell on exchanges, and store in wallet, no outside transactions. The person will benefit from their long term cap gain limits vs me just keeping it in my account until cashing out.
The other concern is if they open a Coinbase account, and don't deposit any fiat, but only deposit crypto and cash out, will that cause some kind of security block on their account? What's the best way to custody someone else's crypto account without any tax consequences? Thanks.

2 Comments
2024/05/16
18:52 UTC

4

Trying to understand cryptotax challenges

I'm a college researcher and I'm trying to understand some of the challenges associated with tracking gains and losses with crypto. Can anyone help me to understand what makes it so hard to calculate your tax gains/losses and why existing programs (e.g. Koinly) are not up to the task?

I appreciate anyone's input/insight on this!

20 Comments
2024/05/15
13:22 UTC

8

Salary paid in crypto (Portugal)

Hey everyone, I've heard that the laws in Portugal are changing quite a bit, and I'm not completely up to date on the current crypto tax regulations there.

Given my family background, I'm eligible for Portuguese citizenship, so I'm considering relocating there while earning my salary in USDC, I'm self employed if that makes any difference.

My main question is: If I keep my USDC for a year and only convert it to FIAT after 12 months, will I be subject to taxes?

14 Comments
2024/05/14
16:46 UTC

2

FTX Vigilante

Greetings all, my team is building a case on a member of FTX who was at the forefront of the fraudulent activity but hasn't received any consequence. We have already traced a 50m transaction from FTX to his wallet which is being used as evidence in his court hearing as we speak. The next step for my team is to build testimonies of FTX victims. We have legal backing and all means and intentions of taking this all the way. If you wish to come forth with your transaction history with FTX leading up to the scandal, every little helps. My team are currently creating a discord server to funnel everyone who wishes to share their transaction history in the hopes of making the process more streamlined. So everyone who wants to help bring this guy down drop me a message. Much appreciated.

3 Comments
2024/05/13
21:26 UTC

7

IRS Trouble - Looks like BlockFi misreporting - Where do I begin, please help!

Fellow Redditors, please help me find the first step out of some IRS trouble. Here's my association with BlockFi:

  1. Withdraw all my assets after the Celsius withdrawal freezing, so I don't think they owe me anything.
  2. Exclusively ONLY did, cash deposit > USDT > USDT Interest, as far as I can remember. Did no BTC, ETH, etc.
  3. I never filed for any losses or gains, this is all from tax year 2022 and I remember reading advice along the lines of, wait till losses are in play and do something next year.
  4. Between Celsius loss and then everything going under, I wanted nothing to do with crypto so I didn't look into anything retroactive for my taxes, when doing my 2023.
  5. I don't have any physical records of my BlockFi tax forms that I can find and going to their website and app, it seems like everything is shut down.
  6. Yes, I admit I am an idiot and have been negligent on the topic. I guess I was hoping things would just go away, but here we are. So, if you want to mock me, yell at me, I welcome it, but please remember to help too :).
  7. We don't have a CPA, we do our own taxes via H&R block.

So, what is the situation now?:

  1. Today, we received a bill from the IRS, of hefty funds. Amount of it, does not seem to be anywhere close to what I would have made in "interest" from BlockFi deposits. Going by the line by line description, which, IRS says it got through the reported 1099-DIV and such, looks like what they are reporting as "sold" was my cash to USDT deposits to accrue interest, NOT just "gained" income, which would have been my interest paid (is that correct)?
  2. I don't know where to begin defending this. Where do I get the source of what BlockFi sent? What do we know as a community of what BlockFi has reported for you all and what I am sharing?
  3. I assume I need to get a CPA immediately to defend this or do I need to go to a tax attorney, ASAP?

Please assist!

20 Comments
2024/05/13
20:02 UTC

1

UK: Which country to base myself for tax purposes with regards to Crypto trading?

Hi,

I am looking to set up a company abroad for lower taxes on my Crypto Trading, does anyone have any insight or recommendations?

7 Comments
2024/05/10
14:00 UTC

1

https://sanc.tm/w?ref=HHISQ4

[ Removed by Reddit on account of violating the content policy. ]

0 Comments
2024/05/10
12:07 UTC

2

What is the capital gains allowance in Canada, do I have to start reporting over certain amount?

2 Comments
2024/05/09
05:33 UTC

3

UK crypto tax

If I have a payment made to a crypto wallet and only spend from that wallet is this subject to tax?

As how would the HMRC know of the payment made or the crypto spent if it's in an encrypted wallet?

I may be a mong, This is why I'm asking.

Thanks in advance

10 Comments
2024/05/08
12:39 UTC

0

How can we save crypto taxes in India?

Drop common myths and and get answered if you can use those methods

1 Comment
2024/05/08
09:51 UTC

2

Can I pay taxes on 2024 transaction in 2025 tax return?

Let's say I made a few trades in altcoin/USDc pairs this year (2024) and made a gain of $20,000 USDC from a $3000 initial deposit. I plan using that $20,000 USDC to buy Bitcoin (in 2024) that I plan to hold onto for over a year (2025). In 2025 I plan to sell that BTC and cash out into USD. Will I have to pay taxes on the initial amount of money I made (the $20,000 in USDc) when I file my 2024 taxes. Or will I be able to pay those taxes when I pull out completely to USD when I file my 2025 taxes?

4 Comments
2024/05/08
03:25 UTC

0

Crypto scam taxes

US taxpayer. So I put a few $ , not big money, in a " let me manage your crypto trading " scam. After 3 months I supposedly had 25 x my investment. The original agreement was the "manager would get 25% of the gains at the end of 90 days.

So 90 days go by. Balance is supposedly 25x. Scammer says send me 25% in Bitcoin to my address and I send you the balance. Of course that would never happen. So I offered to send my fee to their lawyer, to deliver it in person, to send a check. Lots of options that involved actual accountability on their part. Ghosted by them.

My question is; is there any chance the IRS could say I had income of the 25x even if I can't access it? Or it doesn't exist.

17 Comments
2024/05/06
21:14 UTC

4

How can I show a crypto loss?

I've loss thousands in crypto and have no idea how to show a loss as it's been moved all over before ultimately being a loss. Some lost in the celsius bankruptcy etc.

14 Comments
2024/05/06
02:28 UTC

0

Has anybody done crypto taxes before?

Are there any online apps that I should use, should I hire an accountant, or should I do it myself?

11 Comments
2024/05/05
20:27 UTC

3

Canada Tax: is registering ENS name or creating a Safe wallet a taxable event?

Hi!

In Canada, each disposal of Crypto asset is a taxable event. So when you swap your ETH for wBTC, this is a taxable event and you'll have to pay taxes on the capital gain (taxes on 50% of the capital gain): selling price - ACB (Adjusted Cost Base).

But what about if you spend your ETH to register an ENS name? What about if you spend ETH to pay for gas fees to create a Safe Wallet?

Thanks!

7 Comments
2024/05/05
15:42 UTC

3

open a company crypto exchange account

hi. i would like to set up a company and open a company’s crypto exchange account on say binance international. after i pass all the kyc with company’s documents on binance, can i just transfer all the crypto from my personal account to the company’s crypto account? will i encounter any tax on this operation?

the personal account is already reporting to the uk hmrc for few years.

thanks!

1 Comment
2024/05/05
09:39 UTC

4

I get paid in crypto for work each week. How would i go about this on taxes?

I get paid $1500 a week in crypto for work, sometimes eth but mainly USDT. How would I file these on taxes? Only business tax? If I get paid $1500 USDT and cash out, is there any capital gain?

8 Comments
2024/05/04
19:52 UTC

2

How can I find the best cryptocurrency and blockchain financial management service?

I need a cryptocurrency and blockchain financial management service. Where I can find one for a proper deal?

5 Comments
2024/05/04
18:17 UTC

7

Question about cayman island tax

Is it possible to set up a company in the Cayman Islands, send my funds to the company, trade stocks and crypto under the company name, and only pay tax on the amount that I pay myself (via dividends or income) back where my tax residency is?

1 Comment
2024/05/04
16:29 UTC

1

I have a tax liability question regarding the short term buying/selling of SOL and how I am going to be affected in the short term with regards to my tax liability.

As the title states, I don't have a thorough understanding of the tax implications specifically the shortterm buying and selling of SOL and how it is going to affect me when I file my taxes. What I need is someone to explain to me in detail, what is to stop me from buying SOL at a market price of let's say $120, waiting for it to appreciate to let's say $140, selling at $140, and then rinse and repeating that process (assuming the SOL behaves that way) all within a year time frame. Can some explain to me what is going to happen to happen at the end of the taxable year in tax terms if I keep doing that?

Bonus points!!!! If someone would also like to explain to me what happens if I hold SOL for longer for a year and then sell AND what are you guys using (software) in terms of tracking your buy and sell price and what you can accurately predict your tax liability is going to be for that given year.

Appreciate any all help!

Cheers

5 Comments
2024/05/04
03:24 UTC

11

Want to sell old crypto, I have no records

I have several old wallets that show transactions from 2012-2017. I bought the coins on a site called "Localbitcoins" using pre-paid debit cards loaded at a 7-eleven (I wasn't old enough to have a credit card), then I spent some of it and now I have a little left. I cannot access my account on Localbitcoins (I tried and it said my account has been terminated and I have no right to access it anymore).

I now want to transfer what I have left to coinbase or a similar site and sell it.

I have no records other than the transactions in each wallet, and I do not know which ones were transactions between wallets I control (on computer or a website) and which transactions would be considered a sale/gain (I never sold any, only spent it and now there's some left).

Please let me know how this will affect me and what I should consider before moving coins to coinbase and selling them (and how this can work with tax software common here maybe) - the only good thing I see is that it should be a low tax rate since they've been held long term and my income will be under $40,000.

16 Comments
2024/05/03
03:10 UTC

6

Can anyone help me understand estimated gains on Coinbase?

I recently sold some stashes of crypto and then used a small chunk of money on spot trading. I made about 5k and then a week later lost the 5k because of volatility. But Coinbase is still saying my estimated gains are 10k even after losing what I had made the last week. Is this still right? Do I not get a loss in that?

11 Comments
2024/05/03
02:22 UTC

2

Two basic questions on how tax on crypto is calculated

I have two (hopefully) basic questions on how crypto taxes are calculated. I am in the UK, but perhaps the basic principles apply in other countries too.

  1. Say at the start of tax year 23/24, you buy one of a crypto token for $100. Midway through tax year 23/24 you buy another one of the same crypto token for $1,000, so you are now holding two of that crypto tokens. Then just before the end of tax year 23/24 you sell one of the same crypto token for $10,000. You do all your trading & investing on the same exchange. So when it comes to crypto taxes, how is it decided exactly WHICH of the two crypto tokens you sold before the end of the tax year? I.e., is your capital gain for the year $9,000 or $9,900?
  2. Say in tax year 22/23 you buy one of a crypto token for $100. On the last day or tax year 22/23, the price of that token is $1,000. On the first day of tax year 23/24, the price of that token is still $1,000. Finally, midway through tax year 23/24, you sell that one crypto token for $10,000. Is the capital gain that you need to pay tax on for 23/24 equal to $9,000 (the realised gain since the first day of that tax year) or is it equal to $9,900 (the realised gain since the token was actually bought)?
6 Comments
2024/05/01
16:05 UTC

1

Selling Crypto to avoid capital gains tax in Hong Kong

I'm an american. So say if I send my crypto to a friend in Hong Kong, and he sells it for me and gives me the cash back. Am I able to avoid capital gains taxes since there is no capital gains tax on digital assets in Hong Kong?

9 Comments
2024/05/01
04:15 UTC

4

Understanding How Crypto Gifts Are Taxed: What You Need to Know

I have been seeing a lot of similar questions around how crypto gifts are taxed, so I thought I'd make a post breaking it down and clarifying some of the recurring questions.

  1. When receiving a gift, you do not pay any tax. Receiving a gift is a tax free event for the recipient.
  2. When giving a gift, you may be subject to the "gift tax" for the amount over the annual exclusion limit ($17k for 2023). There is also a lifetime limit ($12.92M for 2023). The gift tax amount is not fixed and can range from ~18%-40% on the amount over the exclusion limit. Also, do the recipient of the gift a favor and provide them with your cost basis, they'll need it later.
  3. As the recipient of a gift, you will be subject to capital gains tax when you sell the gift. Capital gains/(losses) = Selling price - Cost basis. For gifted property, determining cost-basis can be challenging. You can only actually determine your cost basis once you sell. The three key data points are (1) the FMV of the gift on the day you receive it, (2) the Selling price of the gift, and (3) the gift giver's adjusted cost basis. Below are the possible scenarios and the resulting cost basis each (with a bonus fourth for when you don't know the gift giver's cost basis). For direct IRS guidance on these, see Publication 551, page 9.
    1. You sell your gift for less than the FMV of the gift on the day you received it.
      1. Your cost basis is the lower of (1) the gift giver's adjusted cost basis or (2) the FMV of the gift on the day you received it. This is the only scenario where a capital loss is possible. The sell price would need to be less than both of the above in order for a capital loss to be realized.
    2. You sell your gift for more than the FMV of the gift on the day you received it, AND more than the gift giver's adjusted cost basis.
      1. Your cost basis is equal to the gift giver's cost basis, regardless of the FMV of the gift at time of receipt.
    3. You sell your gift for more than the FMV of the gift on the day you received it, BUT less than the gift giver's adjusted cost basis.
      1. You actually do not have a taxable event here. This is one of the very rare instances in which selling property does not result in a capital gain/loss taxable event.
    4. Bonus: The gift giver's cost basis is unknown/undocumented.
      1. Your cost basis is deemed to be $0. In other words, you will have a 100% capital gain on the sale. Unfortunately, the IRS has been explicit about this, see the IRS Crypto FAQ, Q32.
  4. If you sell your gift in pieces (as opposed to all at once), you will need to assess each piece independently using the above framework.
  5. In order for something to be deemed a "gift", it must meet certain requirements. In short, a gift is when there is a transfer of property/currency from one individual to another while receiving nothing, or less than full value, in return. The tax applies whether or not the donor intends the transfer to be a gift if the transfer meets these criteria. Additionally, a gift can be the allocation to an individual of income being generated from property when receiving nothing or less than full value in return, the sale of property at less than its full value, or if you make an interest-free or reduced interest loan. I've summarized straight from the source, but if you'd like to read the direct IRS guidance, here it is IRS Gift Tax.
    1. Just because its been asked a lot... No, if you provide a service to someone and they give you crypto in return, it is not a "gift". It would be considered ordinary income and would be taxed as such. Your ordinary income amount to be reported would be the FMV of the crypto received on the day of receipt. This would also be your cost basis for when you sell and need to calculate capital gain/loss.

There you have it. That is how gifts are taxed. There seems to be a lot of confusion (rightfully so) on how to handle crypto gifts. So I've linked straight to IRS guidance for each piece in order to avoid misinformation.

If there are any other professionals out there who have differing interpretations on the guidance, I'd love to hear from you and get your opinions. Always looking to knowledge share.

Happy to answer any questions or clarify any of the above. Cheers all and hope this helps.

0 Comments
2024/04/30
17:58 UTC

2

Dumb question- Does trustwallet operate under FIFO on outbound transfers?

9 Comments
2024/04/30
01:10 UTC

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