RE: Cryptocurrency Taxes: 2018 & 2017 Rules Explained by a Tax Guy and What The Law & IRS Say
Craig - Nice video with an easy to understand explanation - thanks.
It seems clear unless your gains are substantial, 1031 does not seem like it is worth all the paperwork.
But I think accounting accurately for your crytpo activity is a real challenge. Some people have lots of transactions for relatively small values and the accounting becomes complex as there is no traditional currency involved.
But Steemit makes things even more complex. Presumably the rewards you get for your posts and curating are income. Do you need to value them in USD$ on the day you receive them?
Even converting from Steem to Steem Power creates a taxable exchange. Plus you may receive interest on your Steem Power. What about if you delegate it to minnowbooster etc - does your payment have to be valued in USD$ that day?
Or can you use the average for the year? Is the average value for Crypto currencies even calculated anywhere and easily available?
Worse if you are not careful, given the volatility of crypto currencies, you could end up with a taxable gain and a paper loss if it drops in value and you do not realize the loss before the year end? So you end up paying taxes on money you no longer have.
My head hurts thinking about it.
Till all this is sorted out - there seems to be a lot of value in a long term buy and hold strategy.
I would love to hear your thoughts - am I unnecessarily concerned?
Phil
Hey Phil -
You're right about the paperwork. More like it's not worth doing unless you can pay someone (an accountant) to do the paperwork...which would be expensive.
I didn't even consider steemit. I think you're assessment is correct, that (in 2018 at least) powering up steem and vice verse would be taxable events.
Yes, you would value them at USD when you got the rewards.
As for ordering, the IRS allows for a variety of options. Again more complexity.
And yes again...I am scared of recognizing a gain, reinvesting, then not having the money to pay it cuz I lost it! In theory, you can carry back the loss and amend your return, but that's a huge pain in the rear.
Long term buy and hold is great, especially since you can get long-term capital gains treatment, which for some people can be as low as 0%. A great subject for a future video!
Thanks for the comments. And no, you're not unnecessarily concerned...Taxation is an unfortunate extortion that we should all be concerned about.
Craig