I think we are thinking a lot ahead, we need to have Safecoin first for the conversion which is another year away if not long. A lot can happen in between.
Except that in the US, capital gain loss deductions are limited to $3,000 per annum.
The good news is that the IRS is neither as smart nor as competent as you believe them to be. Give them their unearned profits at your expense if that is what you choose to do.
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Wrong.
Do not accept it.
The governments say you are obliged to report. Your real genuine obligation is a personal decision. You are not a slave in any way, shape, or form. Do not falsely make yourself into a philosophical âvictimâ.
You will make your choice based on your morals and values - donât insinuate that you have no choice by blaming some âsystemâ of tyranny for your choices.
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So we should delete the word âobligationâ or at least âobliged by lawâ from the dictionary?
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[quote=âbones, post:29, topic:23995, full:trueâ]
If your not selling for a profit theres no tax.
Its a replacement coin for one already owned.
No profit = no tax.
[/quote]
That would depend on where you live.
If memory serves, any personal property can technically be taxed in the USA as long as the value of the item is over the minimum taxable value. This is why cars, boats, homes and other large items held for personal use are taxed yearly. Yes, cryptocurrency is personal property last I checked.
I think this is because you donât have to sell something to make use of it. For example, a car could be used as collateral to get a loan. You still own the car as long as you fulfill your side of the loan. This causes the car to have a useful value without being sold, so it is taxed on that value.
If that is the case.
Surely your assets are taxable anyway, as a place holder token, or funtioning token.
The swap is then irrelevant to that tax situation, if its to be taxed anyway, no?
Does anybody know what exactly your Crypto tax obligations are in Wyoming.
Im not very well versed in US tax law. Does no state property taxes on crypto exempt you from crypto taxes all together?
The senate of Wyoming has passed a decision (bill 111) exempting cryptocurrencies from property taxation in the state.
How does this affect federal taxes?
Not a bit in the US. Just no state taxes.
Thatâs whole dependent on the state/municipality, that doesnât apply to federal taxes. Federal taxes only taxes gains on assets after their sale. The question then becomes, does the exchange of MAID for Safecoin constitute a âsaleâ. According to current US law, it almost certainly does. That means the gains of MAID will be taxed at the time of the exchange.
Granted, the network should be more or less anonymous, so itâs all self reporting.
You are assuming the IRS is actively tracking every transaction and every holder of crypto under its jurisdiction. Maybe the NSA is doing that, but I highly doubt the IRS has any clue on where to start to pull that off, especially since reporting rules for exchanges is a rather recent thing.
Itâs highly doubtful the IRS would know someone actually burned their coin to exchange for Safecoin. Whether or not one should report that seems like a personal decision. By letter of the law, that is likely a taxable event, at the least the IRS would see it as one. By logic, until you sell your Safecoin, you shouldnât owe any taxes.
No, if you bought a coupon or ticket or gift card (for business purposes) then at the point you bought those is the taxable event.
If you sell them then that is a taxable event.
If you exchange them for what the coupon/ticket/giftcard was bought for then it very could be a non-taxable event. No one would consider that pre-purchase of big-priced item is going to be taxed when you hand over the coupon for the item. So is a MAID, it is a pre-purchased safecoin. The taxable event is mostly when you bought the token for the goods, not when you receive the goods. OR you sold/disposed the token.
Yes some tax systems may tax both but that would be a draconian tax system
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That isnât correct. According to the IRS, cryptocurrency is taxed when spent, when mined (mining for profit counts as a business and is taxed as self-employment!), and sale. More information from the IRS: https://www.irs.gov/pub/irs-drop/n-14-21.pdf
The only saving grace is indeed the self-reporting, though exchanges, payment processors and the like in the USA are forced to comply with tax laws which can cause a paper trail to lead to you.
I wish that was the case. The last time I used a gift card in the USA (this spring) the item I bought with it was taxed. The card was also taxed when it was purchased. Business or not, itâs taxed both ways.
The US system is fairly draconian and I suspect itâs intentionally confusing. (Tinfoil hat time!) I suspect the confusion is there to help discourage new users. It also gives more ways for people to get snared. After all, Al Capone was nailed for tax evasion and not the thousands of other illegal things he did. (tinfoil hat time over)
First, yes, you get taxed for acquiring and spending/selling crypto, but you donât get taxed on it simply because you have it. That is what I was addressing.
Second, gift cards should not be taxed at purchase. If you were taxed, you got screwed.
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It depends on the classification of the token, and thatâs going to be decided either by tax authorities or in court.
For example, if you acquire an âoptionâ to buy shares, it is taxable in the UK both on any gain in value when you exchange the option for the shares, and when you sell the shares. The crucial point, and the reason this makes sense is that the value of the thing you end up with may be higher when you do the exchange than when you acquired the option - and possibly the same for a âtokenâ such as MAID (though that is no doubt going to be argued about!).
But it does seem logical to me that any gain in value during the time you hold something will be regarded as taxable when you do an exchange for something else, in the UK at least.
Taxing each exchange isnât draconian because you donât get taxed twice, you only get taxed on the gain in the relevant period, so you can actually reduce your liability if you time the exchange and final sale to make use of allowances in different tax years for example.
Whether this applies to MAID -> Safecoin -> storage PUTS -> actual storage transactions is unknown, but I would assume for planning purposes that the first two will be regarded as taxable by the relevant authority. The third not, because gains there are unlikely to be significant. So you can probably reduce your liability by using any allowances you have to the full - by exchanging during different tax years as noted.
An exception in the UK (I think, but donât take this as advice), is when you can show that you make your living as a professional trader. In that case they donât always require you to account for tax on every single transaction, but may allow all trades to be rolled up during a specified period, such as the overall âbook valueâ at the end of the day compared to the beginning of the day. As I said, donât take that as true, just what I think happens!
Having said all that, Iâm not a tax expert and things do change all the time, and cryptocurrency etc are a new area, so I really donât know how all this will actually be treated. My understanding is that tax advisors donât yet know either. They have their theories and expectations, and often they disagree between each other, so only time will tell.
Planning for the worst is probably advisable, expect to pay the full rate of tax on all your gains and you should be fine, then anything less will seem like a bonus. Oh, and use up any allowances you have available (for example a capital gains allowance which applies in some countries).
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Nothing like options. This has always been a pre-purchase and stated as that in the ICO if I read correctly.
But you are correct and I have tried to make it clear that it does in the end depend on the country.
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I have had some thoughts similar to you @happybeing about how to compare SAFE with for example options. My thoughts is that the conversion from Maidsafecoin to SAfecoin probably should be seen in a similar way to convertible stocks and here is the way I think of it.
Options:
"An option gives the holder the right to purchase property at a specified price that is good until a certain date â the expiration date. If the option is not exercised before the expiration date, then it ceases to exist, it becomes worthless. The person who grants the option is known as the option writer or grantor, while the person who receives the option in exchange for a payment â the premium â is the option holder, or grantee.
When an option holder closes a transaction, then there is a capital gain or loss if the underlying asset is a capital asset; otherwise, it is an ordinary gain or loss. If the holder held an option for a capital asset for longer than 1 year, then the closing transaction will be a long-term capital gain or loss; otherwise, it is short term."
Short example (Tried to keep it simple, this example excludes the premium): When exercising a call option on expiration date, strike was 100 and on expiration date the price is 120, the buyer of the call recives 120-100 x amount and makes an instant profit of 20 x amount, which is taxable.
Convertibles:
"When a convertible bond or a convertible preferred stock is converted into the common stock of the same corporation, then no gain or loss is recognized as long as the conversion feature was one of the characteristics of the bond or preferred stock when it was purchased.
The tax basis of the converted stock is equal to the tax basis of the convertible security. However, if there is a cash payment that is required for the conversion, then both the holding period and the tax basis of the acquired stock must be apportioned between the portion attributed to the original purchase of the convertible security and the cash paid for the conversion to stock.
The conversion of the bond to the common stock is not a taxable event, regardless of the fair market value of the stock when the conversion takes place. However, although a bondholder can choose either to amortize a premium paid for a bond or to add it to its basis, no amortization is allowed for that part of the premium that was paid for the conversion feature."
No âstate income taxâ does not mean no âcapital gains taxâ. Wyoming and other states (like your old Florida) that have no state income tax still have capital gains tax. But my friend, donât listen to me, contact the IRS directly. They will tell you âfor freeâ all you need to know about taxation. And much to the surprise of some on this forum, reporting income IS obligatory. Those that donât think so are either in prison, are getting ready for prison, or are broke from paying attorneys to keep them out of prison. Taxation pays for the many public services that are necessary to live and raise a family in a safe and secure society.
I agree that public monies are wasted by many and understand there are corrupt political regimes, but the alternative is worse.
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Lucky countries which have this rule already.
If one exchange will have at time of first day of new Safecoinsa price same as MAID, than no taxes If you will no wait for price encrease in next days and change it imidiatelly.
It also could be price set on same price on some page (not even exchange) and you may say that this was only price at that moment when you change MAID to Safecoin.
Should be working like this in our country.
Yeah @Mendrit cool such laws exist but there is no Maid/USD or Maid/EUR pair so you have to exchange your Maid for BTC and then you have to wait another year 
If I would make profits where I have to think about taxes 
I wouldnât realize my coins in my homeland. Would go to the next authority give them my citizenship back and would go to an caribbean island where I have to pay exactly 0.00% taxes.