Source
r/SafeMoonInvesting•
SquashedTarget

Reflections + Safemoon Exchange + Taxbit partnership = A lot of unhappy people who owe the government money

This is all assuming you live in the US.

It was announced a little while back that Safemoon has partnered with Taxbit. We know nothing about this partnership but can assume Safemoon is bringing them in for help with compliance for government reporting. Tax reporting is literally their primary purpose.

Assuming Taxbit will be reporting transactions to the IRS for the Safemoon exchange then this is going to get interesting really quickly. The reason for this is mining, staking, and airdrops have already been declared taxable income by the IRS. It is safe to assume reflections will be considered income as well. In short, reflections are taxable income the moment they hit your wallet and Taxbit will likely narc everyone out to the IRS.

Thoughts?

Posted Jan 30, 2022, 6:06 PM UTC

822
ThenCheesecake5701•

I don't understand all this freaking out about tax compliance. If your bag rockets to the moon, you hire a CPA and tax lawyer to deal with it. If not, well, then who cares? The IRS will not be chasing you for your $25 of SafeMoon that is now worth a quarter of a penny.

8
Crypto-buff•

I don't understand it either - if you make money, you pay taxes. It has always been this way.

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[deleted]•

Taxman uses dust attacks to keep a track of peeps bag these days, paying tax is inevitable there's no escaping it. I'll settle for that if anything I have hits the jackpot!

2
Tripping-Traveller•

I think the taxbit thing will be nothing for 2021, but eventually I'll bet SFM starts up with kyc for whatever exchange stuff they have going on. Then taxbit will really come into play.

They'll know which wallet addresses are linked to us citizens for anyone using the safemoon app. Even a VPN will not hide all the other ways to track location on a phone.

Time will tell what exactly tax bit will mean, but the tax man will get his cut one way or another. Safemoon will sell this as a good thing for holders, And it might even keep the sec/doj off their backs if they're drumming up enough tax revenue.

4
Crypto-buff•

BINGO!

+1

0
GrapeApeTheGreat•

Unfortunately for us in the United States it's going to have to go this way for crypto, eventually. I've already seen crypto companies identifying people who own their wallets due to new Federal regulation. It's inevitable.

2
Crypto-buff•

All major exchanges are already on board with this. It is no big deal unless you have been avoiding paying your taxes.

No one should have concerns about paying their fair share of taxes.

I actually resent the inference that those in the SafeMoon Army are in large opposition to paying their fair share of taxes.

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AppropriateRabbit569•

Perhaps I don't understand how/why reflections would be taxable income the moment they hit your wallet. I would've thought they'd be taxable from the moment they became realized gains/losses when they are withdrawn. Theoretically, someone could gift you a million dollars in some invested asset and then if that asset were to suddenly drop 80% in value, you'd have to pay the taxes on the original, invested higher amount?

1
Crypto-buff•

I am with you. I am looking into it. I have forwarded this link to my accountant for comment.

https://www.irs.gov/pub/irs-drop/n-14-21.pdf

I will share with you what she has to say.

3
AppropriateRabbit569•

Thank you. I really appreciate it!

2
SquashedTargetOP•

Gifts are explicitly exempt from taxable until you realize gains on them.

Reflections are basically the same thing as mining/airdrops/staking. You're getting free crypto for holding. This means that crypto is income as soon as it hits your crypto wallet.

Look at the link that the other commenter posted.

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1
Crypto-buff•

To be clear they are not taxable until they hit you fiat wallet - an important distinction.

Then how they are taxed is dependant whether they qualify as capital gains, or general income.

for at least 90% of the people holding SafeMoon, there reflections haven't surpassed the losses from their inital investment level. And if by chance they do, they will generally be below $200.00.

I held over 3.5-million V1 and my refection in 2021 added up to under $40.00 - to which I say big deal, and left them as crypto.

There is no need for me to claim them, until I convert them.

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SquashedTargetOP•

To be clear they are not taxable until they hit you fiat wallet - an important distinction.

This is incorrect. Receiving airdrop/mining/staking crypto is a taxable event. They are taxable when they hit your crypto wallet.

Yes, when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income

https://www.irs.gov/pub/irs-drop/n-14-21.pdf

There is no need for me to claim them, until I convert them.

Incorrect. The are taxable at the value when earned as soon as they hit your crypto wallet.

It is not about the reflections making up for the loss in value. The reflections are taxable as income immediately. You cannot balance it out against losses until you actually realize the loss (convert/sell the safemoon that depreciated in value).

7
Crypto-buff•

I stand corrected - the rest of what i said stands.

For 90% or more of safemoon holders that will be able to show a loss, this is no big deal, what-so-ever... the tokens have been worth sweet fuck all...

For those that got caught out on the safemoon tax theft , they can just claim the Bernie Madoff deduction. That will get them / you some money back and put safemoon on the IRS radar...

My compliments to the op for creating a great topic of discussion. I personally learned some thing valuable.

1
SquashedTargetOP•

The thing about the Safemooners is they will have to sell to show a loss.

You have to think as each transaction as an individual thing:

  • You buy $100 worth of Safemoon

  • Your $100 generates $10 in reflections. This $10 is immediately considered taxable income and must be reported as regular income on your yearly tax return.

  • Safemoon takes a dump (again). Your $110 of safemoon is now worth $50.

The $60 in losses does NOT offset the $10 in income until you actually realize the loss. You have to have a taxable event on that specific group of Safemoon to realize the loss.

Like I implied in the OP, I think the Taxbit reporting will be a wakeup call for the cultists and it may very well destroy Safemoon. They will hold and hold until Uncle Sam comes asking for his cut of the reflections even though the total investment is down.

EDIT: Also, yes, mining/staking/airdrop income is taxed twice. Once when received and again when disposed (sold, traded, spent, etc.). Something something Taxation is theft.

4
Crypto-buff•

We get it!

But SafeMoon investors have only 9-months of reporting in 2021, and the token has done nothing but fall in value. In same, so have the reflections, and furthermore, most wallets have under 2000.00 in tokens in them.

You are literally talking about less than 50.00 in taxes for most investors. Most won't report it and the IRS isn't going to chase after such minor sums.

Good points but they don't add up to being a big deal or a SafeMoon token or community killer - not even close.

The Army keeps dropping good money after bad every month - they will happily pay 10-20 bucks in taxes, if they even declare them.

SafeMoon has not made a single one of the 90% that I have been referring to any significant income. That is why they are still trying to pump it and grasping for hopium in any and all form that are presented to them.

Tax is a normal part of investing - nothing new here. You make money- you pay taxes.

SafeMoon investors expect to pay taxes like everyone else. I am one you are or were also.

What I liked about your post, is that it pointed me to the Bernie Madoff deduction - if the IRS sees enough people claiming this deductions, it will help us put the SFM LLC in the hot seat.

I have no desire to put other investors in a hot seat of any kind.

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