RE: US Tax Considerations – Cryptocurrency Tax Workshop for Novices (Courtesy of the Rocky Mountain Steemit Accelerator)
This is a great thing that you are doing. I will try to attend the video feed for the seminar.
If I can make one suggestion - The main stream media and crypto influencers recently have been reporting that crypto for crypto trades starting in 2018 will not be subject to the "new" like kind exchange rules. But I think something is being overlooked which is the inherent risk in claiming like kind exchange treatment in any tax year, even pre tax reform. As almost every new coin's dev team wants us to beleive their coin is different and unique (possibly tainting the character of like kindness); and SEC will treat some ICO tokens as securities (automatic taint).
This pre-2018 risk is sometimes mentioned as an afterthought in media articles that discuss the tax reform change to 1031, but watching so many of the crypto influencer videos report it, I have seen this risk not mentioned. In my view, this could unintentionally leave an incorrect impression to a not-so-tax-savvy person that he/she won't need to worry about being taxed on 2017 crypto for crypto transactions if he/she didn't cash out (before 2018). And I wonder if people realize that valid like kind exchanges are required to be reported to the IRS as a condition in validating such treatment; so these need to be tracked either way.
Look forward to hopefully viewing your seminar.
Since so many CPAs seem to have taken the position that one can do 1031 Exchanges through 2017, I hope we will finally see 2018 rulings or court cases giving us guidance in this area. After carefully explaining the pros and cons to the client, I am going to leave it up to him/her whether to do the 1031 Exchanges.
You might find this interesting:
https://steemit.com/money/@cryptotax/cryptocurrency-like-kind-exchanges-what-can-we-learn-from-gold
I did brother.
Read it a few days ago, upvoted, and then posted link on Facebook. I had never seen a writer collect the gold coin rulings in one place, and I think you did a great job. Although I think the IRS is really splitting hairs on those gold exchanges, as you point out we have to remain aware that the Service might disallow the Crypto 1031 Exchanges using the same reasoning .
I commented somewhere else that I recall the 30-year veteran IRS agent at UCLA pointed out that the Service is looking at the bottom line of the exchange - "Deed for deed," or "Title for Title." He said this to explain why there were crazy examples of 1031 exchanges approved by the IRS.
The IRS will decide whether to split hairs with the cryptocurrencies, or follow the more general "Deed for deed" general rule. As representatives, with little IRS guidance, our job is to make the best case for the 1031 Exchanges, keeping in mind the different fates of the gold coins.
Thanks, appreciate it! I will have to look into this deed for deed concept!
I am thinking:
Blockchain code for blockchain code.
Matrix position for Matrix position.
Virtual fantasy for virtual fantasy.
Offspring of Satoshi Nakamoto for offspring of Satoshi Nakamoto.
Haha good point. For academic purposes, here is my counter: both gold and silver are offspring of the earth, but for 1031 not like-kind.
Right, but joking aside, here is where I am coming from.
I am a new Enrolled Agent who is studying for the Tax Court Exam. My job is to win the 1031 Exchange argument on Audit, in Appeals, and ultimately in Tax Court.
I am hoping that you and the Steemit community can help with reasoning that is pro like-kind exchange for cryptocurrencies.
We know the IRS opened the door by saying that virtual currencies are property, and that the new tax bill basically says no 1031 Exchanges for virtual currencies starting with tax year 2018.
We are only trying to win on 1031 Exchanges for tax years 2017 and earlier, but this is going to be a critical win. (The Service just pulled 14,000 Coinbase accounts.)
There are tax professionals posting that they are giving up on 1031s, partially because of the SEC thing.
Because I believe it may be a grave injustice for the IRS to disallow all 1031s for cryptos, I am going to stay on this.
@cryptotaxadvisor one thing to consider is how the blockchain governance models could be used to disallow 1031 exchanges based upon financial interest exclusions. Tokens which have Proof of Stake (POS ) and Delegated Proof of Stake (DPOS) could potentially be construed as financial interests. I think you may have a shot with Proof of Work (POW) coins, but POS and DPOS might be a problem.
Interesting topic that I am trying to figure out now!
@ender, please fee free to catch the broadcast on January 24. I did not anticipate this much interest, so I may have to look into another option or keep it audio only for the broadcast with materials you can download.
@cryptotax we are both on the same page as it relates to the 1031 rules. I have never felt comfortable taking a 1031 exchange on crypto-to-crypto trades for my own income tax, much less recommended it to others. The SEC ruling on the DAO only made me more entrenched in that position.
With this workshop, I don't have plans to dive too deeply, because by and large those involved with crypto through Steemit are not looking for exotic cases, or a deep dive into the tax law. They are looking for key points and basic understanding so they can understand and have some idea of the liability they could possibly have accrued.
It's not sexy, but I think it's necessary for the community as a whole.