RE: It's official, cryptocurrency has at least 3 million users! But tax complications threaten to rub out all legitimate use cases
In theory yes, but we don't know they'll accept FIFO or LILO. I've used similar apps so I know what you're referring to. It's the best we can do right now but still we don't know for sure.
It will be a burden for the IRS to enforce it because there will be millions of people to enforce it on. Not that the information on Steemit is impossible to detect, but more that the IRS should have more important cases to handle.
Yes, after your gift, I would owe income taxes on your gift subject to the gift tax rules on property. If it devalued to $5, I am only screwed if I don't sell it. If I do sell it, I'm fine. The bot doesn't "protect" you -- it simply tells you what the effect of your various (but rather few) options are.
And this is based on what? I looked up gift taxes and see no evidence the receiver of the gift owes taxes. The sender of the gift is supposed to owe taxes. If what you say is true, couldn't someone screw you over by giving you a taxable event which bankrupts you? Who says there is enough liquidity for you to sell it at $100,000 just because the market that day says it's the price?
The issue here is there is a cap on capital losses but there is no cap on capital gains. So you get some fixed amount you can declare as losses. It is these many trap scenarios which will keep Steem and cryptocurrency from having mainstream adoption as long as taxes remain so complex.
The gift tax laws are constantly in a state of flux but the following items have always been constant.
The sender does NOT owe taxes because he is giving a gift per se. On the other hand, because it is a transaction/transfer, any previously untaxed appreciation is taxed to the sender at the time of the transaction.
When there is a limit on tax-free gifts, it is not possible to screw someone over. Look at the rules for property. If someone gives you a $20M house (when the tax-free limit is low), you are going to be forced to sell it -- but you're never going to owe more than the normal taxes on the money that you receive when you sell it (and you're certainly not forced to sell it in one day).
And you don't think these rules are too complicated for casual people? I don't understand all this stuff, and probably no one but a tax lawyer will. This will keep cryptocurrency from mainstream adoption.
What you're saying basically is we all need to consult with a CPA to participate in Steemit in a significant way.
I'm not even sure two tax lawyers would agree.
I would agree with you on that!!!
Tax laws, in general, are far, FAR more complicated than they should be.
What I'm trying to do is to make it so that a CPA isn't necessary.