It follows the same rules as uncategorized property:
USD value at time of receipt for income taxes, USD value at time of disposition and the delta for capital taxes.
The nature of the transaction’s purpose determines where/how it is accounted for. Just like with usd its up to you to determine if a transaction was a deductible expense, capital gains/loss, charitable contribution, a non-tax event like an in-kind investment, bond/credit/borrowing, income, vesting… its not different enough to really be having this conversation to be honest, but I’ve heard it all over the past decade so fire away.
I just make notes of the usd value transferred at the time, to simplify things when filing taxes. But the block explorers often show usd dollar values at time of transaction and time now so its easy to have a record to look at as well.
Some exchanges are beginning to attempt doing this for people, making tax forms like stock brokerages make tax forms, but they all assume people are buying and selling crypto on their platform instead of earning it directly off platform. Swing and a miss there, but lets check back in 5 years.
This finally seems like a legitimate use of crypto, thanks for the patience. What’s the main benefit for your case of using crypto over wiring fiat currencies?
I/We have large inventory of crypto balances more frequently than fiat.
So I think you have to switch your frame of reference here. I’m not doing cumbersome things to get crypto and then send it to someone. I do cumbersome things to get and send fiat where having permission to transfer it is even a factor.
Fiat users are pretty interesting in that they typically have never been in a circumstance to accept a large payment or a volume of payments. Even though when I use fiat I am able to send to only the banked population within a banking walled garden, most of them dont even know how to accept payment. “Wire?ABA?Ach?IBAN?SWIFT? Why is my Zelle/Venmo/Paypal frozen the one time I did something important to me?” Native crypto users are exempted from this. Even brokerage accounts for stock investing are walled gardens.
Per institution, per account type, there are varying degrees of online wire transfer convenience, many times with an unclear daily or monthly wire limit. As people can acquire goods, services, and invest with their crypto, many people just choose that path available to them and don’t swap back to fiat. If they are also paid in fiat then they use that to pay for the things that require payment in fiat, but people are willing to build balances in this parallel borderless ecosystem as well.
USD value at time of receipt for income taxes, USD value at time of disposition and the delta for capital taxes.
The nature of the transaction’s purpose determines where/how it is accounted for. Just like with usd its up to you to determine if a transaction was a deductible expense, capital gains/loss, charitable contribution, a non-tax event like an in-kind investment, bond/credit/borrowing, income, vesting… its not different enough to really be having this conversation to be honest, but I’ve heard it all over the past decade so fire away.
I just make notes of the usd value transferred at the time, to simplify things when filing taxes. But the block explorers often show usd dollar values at time of transaction and time now so its easy to have a record to look at as well.
Some exchanges are beginning to attempt doing this for people, making tax forms like stock brokerages make tax forms, but they all assume people are buying and selling crypto on their platform instead of earning it directly off platform. Swing and a miss there, but lets check back in 5 years.