According to Coindance Historical Market Caps, the market capitalization of the cryptocurrency marketplace grew from $15,470,000,000 in Calendar Year 2016 to $235,716,000,000 in 2017. In a single year, the market cap grew just over 14x, rewarding investors and speculators in the cryptocurrency market with spectacular returns. Unfortunately, this has not escaped notice by Congress or the Internal Revenue Service.
In September 2016, the Treasury Inspector General for Tax Administration (TIGTA) released a scathing report showing the Internal Revenue Service failed to collect nearly $9 billion in backup withholding tax in Fiscal Tax Year 2013.
In a follow-up report released September 2016, TIGTA audited the IRS strategy and enforcement actions focused on illegal activities and income tax avoidance through virtual currency transactions and provided some recommendations to the IRS to improve collections and enforcement in this area. As a consequence of this follow up report, in November 2016 the Internal Revenue Service served Coinbase a "John Doe" Summons, effectively demanding the identities of all US persons who conducted transactions between January 1, 2013, and December 31, 2015. While Coinbase fought this action in the US District Court, in the end, Coinbase lost its bid against the IRS to prevent the “John Doe” summons, but did manage to limit the scope of the demand.
What remains clear is additional scrutiny from the Internal Revenue Service will be applied to any who participate in the cryptocurrency economy moving forward.
Topics Which Will Be Covered
The focus of this workshop will be for the novice investor and Steemit blogger who is looking to understand what their potential tax obligations and reporting requirements (at a very basic level) are under US Tax law. This workshop will not be state specific, but rather focus on the Federal Tax obligations on a broad level. Some of the topics which will be covered during this one hour workshop will be:
- I earned some STEEM and SBD rewards from my post. Do I have to pay tax on any earnings?
- I traded some crypto for fiat. Do I have any to pay tax and if so how do I calculate it?
- I decided to trade some STEEM for another crypto. Do I have to pay any tax or report anything?
- How can I reduce the amount of tax I have to pay trading cryptocurrencies?
- …and more.
When and Where the Workshop Will Take Place
The Cryptocurrencies Tax Work Shop for Novices will take place on Wednesday, January 24 from 7:00 PM – 8:00 PM (MST) at The Parker Library (LOFT Room). This workshop is free, but the room has a 12 person capacity, so I would ask any who wish to attend in person to please RSVP. Please, Direct Message me on Discord at lpfaust#8848 to reserve your space. It will be first come, first served.
For those who will be unable to attend (or those in states outside Colorado), I will be broadcasting the workshop over the Rocky Mountain Steemit Discord Channel. Please RSVP for that as well in the event the number of people interested exceeds the server capacity (for video), and alternative arrangements must be made for the broadcast. Please, Direct Message me on Discord at lpfaust#8848 to reserve.
I would encourage everyone to check out the Rocky Mountain Steemit Discord channel when you have a free moment. It’s one of the most active and regular Steemit Meetups, and members have been actively supporting and helping to grow sister organizations in the US.
If you find yourself traveling to the Denver or Colorado Springs region soon and would like to join an upcoming Meetup, we’d love to have you.
Wanna broadcast it on mspwaves? Talk to me in Discord
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@aggroed I'd definitely like to have that conversation. I will be out of town on business until Thursday. Let me get back to you when I return and see about putting this together. I will DM you on Discord as well.
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@lpfaust,
Tax for Crypto, US has very strict Tax rules, ops now they are trying to tax on crypto! Actually I don't think it might not happen in my country for a decade :D But it will, yeah after they see the success of US Tax rules, they will implement them here too! (I am from Sri Lanka) So, this is a great news and unfortunately I can't attend to this event (workshop). So, I wish you will update us about the event as well! Thank you very much for sharing such valuable update to all crypto lovers!
Wish you a happy new year and Steem ON!
Cheers~
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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.
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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.
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You might find this interesting:
https://steemit.com/money/@cryptotax/cryptocurrency-like-kind-exchanges-what-can-we-learn-from-gold
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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.
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Thanks, appreciate it! I will have to look into this deed for deed concept!
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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.
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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.
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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.
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Interesting topic that I am trying to figure out now!
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@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.
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@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.
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I just RSVP'd. Thank you for doing this!
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@geke I got you down for a spot. See you there.
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Now this is going to be the event of the year !!
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@blazing not so certain about that. I think (on a personal level) if my pitch to run a panel at Denver Comic Con is accepted, that will be my event for the year. Wish me luck is all I can say as I pitch mainstream creatives to jump into the world of cryptocurrency.
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all the best :)
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So there⚡
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See you there, my friend.
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I'm really glad you're doing this. It's a real mess trying to figure these things out, and with crypto as new as it is, I imagine taking your records to H and R Block or something doesn't exactly guarantee it's being done right.
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@jrhughes glad to do this for the community as a whole.
In terms of your local H & R Block, I would imagine it would really come down to a question of whether or not one of their tax experts has decided to focus their practice into this area. When I started trading my first Bitcoin in 2013, it became a niche for me simply because of my own needs - there was no client demand at that time.
Nowadays, cryptocurrencies are becoming somewhat more "mainstream" with crypto experts everywhere. I'd be surprised if H & R Block did not have at least a cursory class on taxation of cryptos for their tax pros. Personally I'm not advocating for or against H & R Block. Find a tax advisor you can trust and is licensed (CPA or EA). That's my opinion.
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Outstanding thing you're doing, wish I was able to attend. Not sure if I can attend the RMSD either, but I'll try. This is important info and I'm honestly irritated now that I've learned I may have to pay taxes once I trade one crypto for another. Not sure why that triggers Uncle Sam getting a cut of your fiat.
I'm sure you'll be touching on that, so I hope it will be recorded and available to watch after the fact. I'm sorely unfamiliar with my tax liabilities and wrongly assumed I wouldn't need to worry about it until I sold into fiat... which seems logical, but not how it works because nothing about how our federal government deals with money is logical.
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@aksounder thanks for the interest and I’m sorry you cannot make it to the workshop. Originally I did not intend on recording the Workshop, but I may look into it after I return from a business trip later next week.
Honestly, I did not expect this much interest around a tax workshop.
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Thanks. I'm very interested, as it seems many others are. It would be great to understand my tax liability when it comes to Steemit payouts. It doesn't make sense or seem fair if I have to pay taxes as income on a curie upvoted post at the time of payout if SBD is worth $10 USD, and while I leave that payout in my wallet over the next two months SBD drops back to $1 USD. That "income" now won't even cover the taxes I have to pay from earning it.
The fact I don't know the answer to this scenario makes me very interested in your talk. I'll try to make it online. Putting it on my calendar!
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Thanks for the information.
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Thank you for the important information about the seminar, a number of issues are very interesting, especially in the field of taxation and how this will affect the Steemit and all participants. Keep us informed of this seminar @lpfaust!
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invest in gold I would say when you cash out earnings :) but better hodl because we're expecting a pricesurge
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@lpfaust sir...
Digital money can make us rich to deal with ourselves. I genuinely trust that. Be that as it may, what I additionally accept is that it will influence us to sufficiently fit to serve the penniless also.
It is absolutely difficult for all to give. Every one is battling in their own specific manners. In any case, that is the magnificence of life is it not? One who has seen the intense time will identify towards the one enduring. Such a one when independent can promptly consider helping other people. When I put in endeavors to gain, I should put in little endeavors along to share.
One might be poor out of absence of education, another might be expected life's weight of overwhelming obligations, another might be out of sheer apathy and some might be not able meet the sudden needs of life. In any case, the truth of the matter is same. They all need assistance. From numerous points of view it can be tended to....
Cheers~~~
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Cryptocurrency make people rich within a very few days..the main theme of us govt is if they orderd tax about the crypto ..they get a huge money as a tax for govt and in us most of the people are trading in crypto field by just sitting in the house ..if tax involved in transions lot of peoples bare to invest money and some aecurity also provieded by the govt to our cryptocurency..thank you for sharing usefull info with us...@ipfaust
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i hope you will share about it later how it went i would love to know the input from there
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they are arranging a workshop on this wow must be a good time for those who will attend this and will learn quite a lot
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tax on crypto will be a good thing instead of banning them as many countries has did it
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here you have answered to most of my questions..thanks alot for this great info..very helpful :)
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@lpfaust - Sir fortunately it didn't happen in my country yet... But I have learn a good lesson from your article... It can be happened here, so this is a very useful & a valuable workshop Sir... You always come up with valuable updates... Thank you & happy new year Sir...
+W+
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useful update & thanks @lpfaust
@resteemia
reteemed & upvoted & commented & followed
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what changes they have done i am not aware about it dammm
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so, govt. want tax from crypto! first govt. have to open a legal trade for crypto, then ask for tax.
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Do not spam my comments thread. If you would like to promote your post, please DM me over at steemit.chat
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