Bitcoins/Litecoins/Virtual Currencies

Arden said:

You might be right. I haven't parsed out how Coinbase listings affect coins. I believe there will be a huge runup until it's listed, but I'd be surprised if there was more than a slightly larger than normal selloff after it lists. I suspect VET is just going to keep increasing tbh.

Put it like this, I might not buy the day before it gets listed, but I feel like the people buying now will only benefit from a coinbase listing.

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This has happened to a few coins for sure, pumping after the list on Coinbase with a subsequent dump at the ATH. Usually recovers well though

Regarding capital gains, newbie question.

Obviously if you buy coin X for ten dollars a coin, then sell it for 20 dollars a coin, you pay taxes.

However I’ve seen people mentioning if you want to go into cash to, say, sell at the peak of a cycle, you instead exchange for a stablecoin like DAI which is pegged to the dollar. That way you “cash out” but you don’t have to pay taxes because you didn’t technically sell anything, you exchanged one coin for another.

Am I totally misunderstanding why people say they exchange to DAI, or is that the idea?

So the idea being the stablecoin is $1. Since you exchange, say, $45,000 in ETH for $45,000 in a $1 stablecoin, the rise in ETH from when you bought the ETH originally at that moment gets taxed?

Fadaar said:

I know this isn't the right thread but the good thing about that Streamlight is you can give the front a quarter turn to unseat the contact from the battery so unless the battery itself shits it won't drain. At least I'm assuming it's built the same way mine is (diff model).

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That’s good to know!

Flobee said:

You guys got it. Any price appreciation or depreciation from the initial purchase is taxable. Into a stable coin, cash, or even just another coin.

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Interesting. Maybe for some other countries it doesn’t work that way perhaps. Or why else would some people mention when they want to get out exchanging to stablecoin vs just cash? Is there any advantage to that?

Arden said:

My understanding is if you bought the ETH for 35k and then you convert the ETH to stablecoin when the ETH is worth 45k, you'd have to pay taxes on the 10k you "gained."

But definitely don't take my word for it.

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That doesn’t make any sense.

Look into a “tax free exchange”. They exist to avoid taxes on an exchange of assets. People do it with land all the time.

Crypto, I imagine, would be no different.

Flobee said:

You guys got it. Any price appreciation or depreciation from the initial purchase is taxable. Into a stable coin, cash, or even just another coin.

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Depending on the asset there’s a bunch of different ways to determine the “basis”. It isn’t always 100% appreciation from the time you bought it. It depends. Consult an accountant.

My family just sold a cellular tower w zero capital gains using the proper basis and language in the deal.

Also don’t trust that accountant. Do research beforehand and make your accountant aware of all your options. I guarantee the run-of-the-mill accountant isn’t aware of most the tax reduction strategies available.

Jackie Treehorn said:

Regarding capital gains, newbie question.

Obviously if you buy coin X for ten dollars a coin, then sell it for 20 dollars a coin, you pay taxes.

However I’ve seen people mentioning if you want to go into cash to, say, sell at the peak of a cycle, you instead exchange for a stablecoin like DAI which is pegged to the dollar. That way you “cash out” but you don’t have to pay taxes because you didn’t technically sell anything, you exchanged one coin for another.

Am I totally misunderstanding why people say they exchange to DAI, or is that the idea?

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I've been exchanging instead of buying/selling primarily to avoid Coinbase's fees (plus it's more fun). It works well for that purpose. As far as tax dodging goes...I don't know. If I sell a crypto for $2000 and then buy it back later on a dip, I no longer have that money so it probably shouldn't be taxable right? Like only things I cash out and take the "income" are things I need to worry about? In a fair world that'd be the case, but judging from your question I feel like it isn't the case.

Which brings me to the next thing: Uh, I need to go do the research on how all of this affects taxes, 'cause there's gonna come a point where I'm gonna have to pay up. Since I started doing stocks/cryptos in late January, I haven't really sold much, almost entirely buys and trades. The amount of actual sales I've made where I sold something and kept the money rather than turning around and re-investing it is probably under a thousand total.

Rajaah said:

I've been exchanging instead of buying/selling primarily to avoid Coinbase's fees (plus it's more fun). It works well for that purpose. As far as tax dodging goes...I don't know. If I sell a crypto for $2000 and then buy it back later on a dip, I no longer have that money so it probably shouldn't be taxable right?

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Wrong.

If you’re selling out for cash at a gain it’s taxable. 15% federal and probably 10% depending on your state. So, potentially 25% of what you make on the gain is taxed.

If you’re not taking this into account when you trade you’re probably fucked.

When I was trading frequently I had an excel sheet that included what my capital gains tax would be so I knew if it was worth trading.

Obviously talk to your accountant. I’m not an expert. Any examples I give are from experience or conversations w my own accountant(s).

Tmac said:

Wrong.

If you’re selling out for cash at a gain it’s taxable. 15% federal and probably 10% depending on your state. So, potentially 25% of what you make on the gain is taxed.

If you’re not taking this into account when you trade you’re probably fucked.

When I was trading frequently I had an excel sheet that included what my capital gains tax would be so I knew if it was worth trading.

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Yeah, that figures. I've kept track of my trades, luckily. So I can get a calculator and go run the numbers once I figure all of this out.

It's gonna be a massive pain in the ass, yes.

Right now I'm moving a bunch of BTC to Eth. Gonna stick to that rather than selling until I work everything out.