BCH Watch Out, You Might Be Shooting Yourself In The Foot

in cryptocurrency •  10 days ago

bitcoin-cash-hardfork-and-taxes.png

Its clear as day right now that many people are piling money into bitcoin cash simply because it is about to hard fork in 2-3 days. But those of you in the USA watch out you could be shooting yourself in the foot when it becomes tax day. Also lets not bypass the thought that something could go very wrong and you could end up losing a ton of money when the sell off happens after the fork or the fork going totally wrong. Things can happen its all human code.

  • A note for the below, I am not a tax adviser nor claim to be one. This is just for some information but as always please do your own research before investing and seek out professional tax advice when needed.

Taxes

Yes you have to pay taxes it is as simple as that, however where it gets confusing is the new laws and what to do in the uncharted territory of hardforks.

For tax reporting to the IRS they currently classifies bitcoin and other virtual currencies as Property. This means you are obliged to report the capital gains and losses from these hard forks. These to me seems like you have to paid captial gains as soon as you acquire the new hard forked asset tokens.

The issue however...

At what value do you claim it at?

Do you claim it as the futures trading or do you claim it as the value of bitcoin or bitcoin cash from where it is being hard forked from ?

The Age Old Pump and Dump

Yeah Bitcoin cash very well might not even fork, if all goes well the blockchain will simply be updated and claim the BCH title while the other goes unsupported and dies. I think this is where people get confused as well. Even if it does split there will be no real value anymore in the current blockchain as it is flawed and why a hard fork is needed just 3 months into the activation of the new coin. Be ready for a serious pump and then dump of BCH back into alts and bitcoin itself.

What it always comes down to is bitcoin holding strong and after 3 fork attempts all of which have failed bitcoin is stronger then ever with a value of nearly $7,000 up from $2,000 just before Bitcoin cash forked. That should go to tell you something.


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*Image pulled from coindesk at - https://www.coindesk.com/coindesk-explainer-bitcoin-cash-forking-blockchain/

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Hi bitcoinflood, I just read your post, after publishing a similar one on the Bitcoin Cash pump and dump currently happening. I didn't comment on the hard fork so this is a nice complement to my post. Reestemed and upvoted. Best regards!

It tells me BTC is still the king and all others are pretenders. There is no way any of these forks take out the original. There is going to be a lot of investment money entering this space and those people are not going to take the time to determine which is better, btc or bch...they will just buy bitcoin (btc). That is what the wall street people will push.

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The problem is that if the big-blockers really want to take the bitcoin mantle with BCH, they have to make the 1mb chain unusable/too expensive. And they can do that by keeping the difficulty high on the 1mb chain and switching to BCH at the right time. There is not way for the 1mb chain to defend against this unless they do a POW change or implement some kind of EDA algo like BCH.

Crazy times for the bitcoin ecosystem are ahead of us. The failure of the 2x fork is just the start of a very long war.

Fork or no fork...Bitcoin is still number one, and will probably always be number one👍

hi introduce my name is jesi @jezieshasan , i have read your interesting blog

All this forking nonsense is starting to piss me off. I think what has recently happened with the lead up to segwit 2x and the abandonment of it, now with the suspected bitcoincash fork. This does nothing to help public opinion of crypto currency. It makes it look like insider knowledge is running rampant

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Bitcoin cash philosophy is that hard forks are a normal upgrade functionality. Its a way to upgrade software.

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Out of the hundreds of millions of people in the USA, each and every year a total of less than 1000 people report their bitcoin gains and losses to the IRS. Most people just don't do it because they know that they just don't have to.
You say yes you have to pay taxes it is as simple as that.
I say No you don't have to pay taxes it is as simple as that.

Waste your hard earned money if you want to give it to the greedy evil people that want control over the earth, but 99% of us holding cryptocurrencies simply won't.

Resteemed and Upvoted by @resteemable
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Fun times indeed! I love that you said, "human code."

Bitcoin Cash is going insanely expensive these days, but it does not have a natural growth!

This post has received gratitude of 15.62 % from @appreciator thanks to @bitcoinflood.

Getting back to the tax topic when the fork for BCH occurred the price was higher than where it is currently. So do you write the higher amount where you received it? And then if you held until the following year and assume BCH prices remain lower than when you got it does that mean its a lost? So confusing. And what form do you put all this on?

Just another Altcoin, staying with BTC for the long run.

interesing

Would it be forking into two versions? Or it will remain one version? I have electron cash 2.9.2. How do I prepare for the hard fork. There is very little information about BCH on the internet. Can someone guide me a little bit here? I would be really grateful.

Very good question about the taxes -- and what value should be claimed?

I'm not a tax adviser, either.

My personal view is the taxable event occurs when you move the hardforked gain. So when BCH forked from BTC, it was not reasonable to tax the value that pumped. However, if you move the funds into BTC (as many did), that is a taxable event much like dividends. At that point, you have a price. For U.S. tax purposes, you could record the BTC price in USD at that moment.

The reason I don't think it's reasonable to tax before moving the funds however. Think about how many hardforks are ahead of us. How many of them will we even be able to do anything with? What if they are stored in a wallet that makes it hard to claim the forked coins?

When we move the coins, we claim value. Until then, no value is realized.

(Other Thought: I'm curious if you could take that dividend and consider it as part of the cost basis for your overall BTC position. So if you had 2 BTC purchase for $10k, you now have 2.5 BTC purchased for $10k. Then you the taxable event would be when you sell part of that 2.5 BTC. This would have the effect of lowering the cost basis and increasing the gain.)