Source
r/CryptoCurrency•
rixhr

Taxable events?

FOCUSED DISCUSSION

Q1. If I buy Etherum and within an hour use that Etherum to say buy Dent, with very little change in the price of Ether between the purchase and trade, is that the 'taxable event'? The price difference in Ether in your local currency?

Luckily in Australia at the moment it seems that they are only interested in cash outs over 10k. But I can see that changing and I want to know what I should be taking note of just in case.

Q2. Let's say our government changes their position and wants to tax gains year by year even though your holding (and that's the way it's in the States atm?). But I'm holding a crypto like Power Ledger, purchased with money which I've already paid tax on for the purpose of supplying myself with power now and in the future. Would I be taxed on those Powrs yearly because it happens to go up in value? Seems crazy, seeing that the purpose of Powrs is to be used for energy? I shouldn't be double taxed, unless of course I sell them for fiat at a profit.

Personally I don't believe in paying tax on a asset if I haven't cashed out. That's like my house growing in value and being taxed accordingly while I own it and I would have to sell a portion to be on the good side of the law. Capital gains makes sense, taxing while holding seems like an opportunist money grab that we should be fighting against.

Posted Feb 25, 2018, 5:25 AM UTC

217
CryptixIRedditor for 31 days.•

Some are confused so I’ll be very clear.

  1. Buying a crypto with fiat is NOT a taxable event. Any poster suggesting that is wrong.
  2. Selling crypto for crypto or for fiat IS a taxable event (long or short cap gains depending on holding term).
  3. There is no tax for holding. Not yearly or otherwise - only when you sell at a gain or loss. That will not change because it wouldn’t be fair or even possible to enforce without putting many investors in a situation where they wouldn’t be able to afford to pay their taxes.

Hope that helps.

3
SatoriNakamotoRedditor for 7 months.•

In Australia?

1
sulventRedditor for 6 months.•

If crypto to crypto is taxable, then I hope they accept eth?

1
GordonthegodRedditor for 3 months.•

Stupidly, yes.

2
GordonthegodRedditor for 3 months.•

For q1

1
floppy67Redditor for 7 months.•

Only selling is a taxable event (whether that be for fiat or other cryptos).

You don’t pay tax on unrealised gains (holding something that’s increased in value).

2
ShinjukuWardRedditor for 2 months.•

Q1.) Yes that is a taxable event. At least here in the United States. Every single exchange is a taxable event. Hopefully it gets changed that it becomes a like exchange.

Buy Ether > Use Ether to buy Alt Coin > Sell Altcoin at some point.

That’s 3 separate taxable events.

Q2.) Not sure. Can’t answer this.

1
rixhrOPRedditor for 2 months.•

Hang on, so your also taxed while buying the Ether in the first place?

1
ShinjukuWardRedditor for 2 months.•

Exchanging FIAT to Crypto is from my understanding considered a taxable event. Don’t quote me on that.

1
TJ11240•

I thought taxes only apply to capital gains (or losses) from the difference between buy and sell value.

1
ShinjukuWardRedditor for 2 months.•

That too! Man gotta love the IRS...

So you get taxed exchanging AND on the gains when you sell (percentage based on if you sell before 365 days or after. Longer than a year hold is taxed less than a short term sell). This is why day trading seems stupid to me and HODLING long term you pay less in taxes.

2
[deleted]•

[removed]

1
[deleted]•

[removed]

1
devilldog4 - 5 years account age. 250 - 500 comment karma.•

Q1: It doesn't matter whether or not you made money to be considered an event. An event with no change in value from one currency to another is needless paper shuffling but still should recorded/logged for tax purposes.

Q2. Purchasing crypto with fiat is not an event. Hodling is also not an event. Feel free to hold until such a time as you wish to spend or convert it. Once that event occurs you use the length of time to determine whether or not you pay long or short term capital gains (long > 365 days and short being less than).

This is all based on current United States tax laws.

1
rixhrOPRedditor for 2 months.•

Ok, thanks. That makes sense.

1
Mr_N1ce•

Important note for q1:

Some countries, like Germany, use FIFO valuation for the events. So instead of selling ETH for the price you just bought it, you're selling it for the price of the oldest, not yet sold ETH in your portfolio... That can be a huge difference.

The safest way around this is to use a trading currency that you don't store otherwise. i.e. buy BCH -> trade for BNB -> trade for whatever you really want on Binance.

It sucks but is the only way I know to honestly avoid paying taxes for every trade (if your country use FIFO valuation and gains are tax free after a longer hold period)

1
rixhrOPRedditor for 2 months.•

Hmm, that sux. As far as I can see at the moment Australia doesn't have a policy for crypto - crypto, just cash out. Also for me I've only ever bought Ether and within a few hours maybe a day max bought the alt I wanted with entireity of Ether.

Annoyingly complex, brings the need to be able to purchase exactly the coin someone wants with fiat or a country's tax agency needs to understand to buy an alt, some sort of grey area is needed for fiat to ether/BTC to alt coin, maybe an amount of time. So much needless paper work to go through for everyone because a person wants to buy a few Power ledges for eg. to keep their lights on.

1