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Wow. Bitcoin is almost $1,500

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Homerboy

Lifer
Mar 1, 2000
29,189
2,900
126
https://www.npr.org/sections/thetwo-way/2018/01/24/580259163/50-cent-i-forgot-taking-700-bitcoins-for-2014-album-stake-is-now-worth-millions?utm_content=66293684&utm_medium=social&utm_source=facebook


When 50 Cent agreed to accept bitcoin for purchases of his 2014 album, Animal Ambition, a unit of the cryptocurrency was already worth hundreds of dollars — but the value of those sales has since skyrocketed and the rapper's bitcoin holding is now reportedly worth more than $7.5 million.

"Not Bad for a kid from South Side, I'm so proud of me," 50 Cent wrote in an Instagram post citing TMZ's story about his unexpected windfall. Alongside emojis of a sack of money and a person holding up their hands in a "What?" pose, he added, "LOL."

In an additional comment that could either amaze or exasperate people who would love to find a pile of money, 50 Cent added, "I'm a keep it real. I forgot I did that s***."

TMZ reports that Animal Ambition brought the rapper around 700 bitcoins — worth several hundred thousand dollars at the time and around $7.7 million at today's rate.

The story of 50 Cent's bitcoin windfall is emerging just a few years after the rapper filed for bankruptcy protection under his given name, Curtis Jackson. As NPR reported in 2016, "He says he's broke, but he posted Instagram photos showing piles of cash in a refrigerator."

Reddit. As International Business Times reports, he talked about accepting bitcoin as a way to "stay with times."

Even in 2014, bitcoin's price was fluctuating wildly, vulnerable to news of government clampdowns and hackers' attacks on exchanges. The currency's value had topped $1,000 in 2013; when 50 Cent's album came out in the summer of 2014, one bitcoin was worth more than $600. Today, a bitcoin is worth more than $11,000. Last month, it nearly reached $20,000.

50 Cent released Animal Ambition through his G-Unit Records, along with Virgin's Caroline Records. His fifth album, it fell far short of the huge sales figures of his first album, Get Rich or Die Tryin'. But in a twist, one partial explanation for that slump — the digitizing of a medium that was once exclusively material — also helps explain why its proceeds are now worth millions, as bitcoin's value has risen to stratospheric heights.

Animal Ambition included songs such as the now-ironically-named "Chase the Paper." 50 Cent described it to Complex magazine as being about prosperity and entrepreneurial energy.

In an update on the album's bitcoin proceeds this week, Complex noted, "50 has proven his business acumen time and time again. It's how he got rich and didn't die trying."
 

Zeze

Lifer
Mar 4, 2011
10,318
513
126
Cryto Currency, singlehandedly saving the tax preparation industry.
It really is. It's straight up ambiguous.

I heard someone say on reddit that IRS is just starting to flesh out rules for crypto - an org letter went out or some crap.

In the meanwhile, I'm not effin' with IRS. I'm gonna report all trades.
 

Ns1

No Lifer
Jun 17, 2001
55,399
1,510
126
better buy stock in hrblock now so that way I can enjoy that 100000% increase when they publicly claim they are crypto experts.
 

Yakk

Golden Member
May 28, 2016
1,574
272
81
better buy stock in hrblock now so that way I can enjoy that 100000% increase when they publicly claim they are crypto experts.
Until the government declares their interpretation was wrong and they will need to cover all of their client issues and face a class acton lawsuit on top of it.

It's vague enough, they could also err on the side of caution and have their clients overpay on everything.

Neither looks appealing imo.
 

Zeze

Lifer
Mar 4, 2011
10,318
513
126
Until the government declares their interpretation was wrong and they will need to cover all of their client issues and face a class acton lawsuit on top of it.

It's vague enough, they could also err on the side of caution and have their clients overpay on everything.

Neither looks appealing imo.
Yea I'd rather overpay out of caution now than IRS assfack you because they can do whatever the fack they want, their mistake or not.

I don't want full tax of total capital (instead of gains) + 80% penalty + fees.

This happened to me once for cashing out my company stocks for mere $3000 and I forgot to report it. They hit me with $25,000 tax bill and said, "prove it otherwise". All I had to do is visit H&R Block and it was resolved in 40 mins.

That's IRS' approach. They put the burden of proof on You.
 

Ns1

No Lifer
Jun 17, 2001
55,399
1,510
126
You mean Intuit.... the company that owns TurboTax.
based on my experience in accounting, people with significant trading volume aren't doing that shit by themselves in TurboTax - they're just printing long lists of transactions and handing it off to their accountant.
 
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Reactions: Zeze

momeNt

Diamond Member
Jan 26, 2011
9,299
349
126
Essentially, you're saying that if you buy a coin for fiat and then trade that coin for another coin, you have to pay tax on that? That seems... odd. I guess I don't get why you pay tax when you're not transferring back to fiat. You're really just trading one commodity for another that are effectively at equal value at the time. In other words, if 1 FakeCoin = .001 BTC, and I spend .1 BTC on buying FakeCoin, I get 100 FakeCoin. I haven't "gained" anything as at the time, the values are equivalent. I don't technically gain anything until I sell it for fiat.
Oh wow I definitely did not mean to say that. From what I understand, the gain is only realized once it is back in USD. Exchanging crypto A for crypto B has not been clarified yet as somebody else already said.
 

Aikouka

Lifer
Nov 27, 2001
29,677
500
126
Oh wow I definitely did not mean to say that. From what I understand, the gain is only realized once it is back in USD. Exchanging crypto A for crypto B has not been clarified yet as somebody else already said.
Ah, okay... whew. That's what I expected it to be. Although, I haven't spent any fiat on coins anyway. :p
 

Zeze

Lifer
Mar 4, 2011
10,318
513
126
Oh wow I definitely did not mean to say that. From what I understand, the gain is only realized once it is back in USD. Exchanging crypto A for crypto B has not been clarified yet as somebody else already said.
Uhhd I would be very careful about this.
 

fleshconsumed

Diamond Member
Feb 21, 2002
5,952
1,262
136
Oh wow I definitely did not mean to say that. From what I understand, the gain is only realized once it is back in USD. Exchanging crypto A for crypto B has not been clarified yet as somebody else already said.
AFAIK the like to like kind exchange has been restricted to real estate in the new tax bill. Meaning it is no longer applicable to crypto and exchanging for different crypto would qualify as taxable event. The only question is if this treatment is retroactive to the beginning of 2017, to the date the new tax bill has been signed, or if the new rules take effect on 1/1/2018.
 

momeNt

Diamond Member
Jan 26, 2011
9,299
349
126
AFAIK the like to like kind exchange has been restricted to real estate in the new tax bill. Meaning it is no longer applicable to crypto and exchanging for different crypto would qualify as taxable event. The only question is if this treatment is retroactive to the beginning of 2017, to the date the new tax bill has been signed, or if the new rules take effect on 1/1/2018.
Uhhd I would be very careful about this.
Ah, okay... whew. That's what I expected it to be. Although, I haven't spent any fiat on coins anyway. :p
The only IRS guidance issued yet that I am aware of is the capital gains on USD -> Crypto -> USD and mining income tax. Everything else has not been formally addressed by IRS. But you are right, it most definitely looks to be a taxable event. When I posted previously, although I did not mean to say that, it most likely will be correct, but still has not formally been addressed >.<
 

destrekor

Lifer
Nov 18, 2005
28,762
343
126
I'd almost prefer it to remain just USD -> Crypto -> USD, and crypto-for-crypto trades are sort of ignored, especially when determining direct USD value for historical trades is going to be a royal pain in the ass.

But at the same rate, having a way to see both capital gains and losses with crypto-to-crypto trades would go a long way for some when it is time to reduce tax burden. Say you sell BTC for ETH, and then ETH's relative USD value drops (or even ETH itself trades lower against BTC). Just how much and what is considered a loss or gain when you sell it back for fewer BTC than you paid for them, but BTC happens to have a higher USD value at the time you sell the BTC for USD. Now though, that was a crypto:crypto trade, and that trade would be a loss which can be deducted against gains. You hold and sell later and make a decent gain in the same tax year, if you are only taxing USD trades then all your gains are taxed; if, however, you can count the loss from the BTC->ETH->BTC trade, you can reduce your taxable gains. That's going to matter for a lot of people I reckon, but I don't know if I care enough to want that, I think I just love the idea of having a very simple process for counting gains.
 

pete6032

Diamond Member
Dec 3, 2010
4,972
833
126
So if you exchange bitcoin for ethereum or ripple you have to figure out whether the exchange increased the USD value of your Crypto holdings?
 

destrekor

Lifer
Nov 18, 2005
28,762
343
126
So if you exchange bitcoin for ethereum or ripple you have to figure out whether the exchange increased the USD value of your Crypto holdings?
That *may* be the case for trades performed this year (taxes due April 2019 for tax year 2018). But trading done last year that will be going on taxes coming due, I don't think you would have to. [note: not a tax professional]
 

Zeze

Lifer
Mar 4, 2011
10,318
513
126
So if you exchange bitcoin for ethereum or ripple you have to figure out whether the exchange increased the USD value of your Crypto holdings?
Pretty much. And you just have to make the best out of what you have (Coinbase or Binance transaction history and time of value), and enter it all in a nice schedule in a table.
 

Zeze

Lifer
Mar 4, 2011
10,318
513
126
That *may* be the case for trades performed this year (taxes due April 2019 for tax year 2018). But trading done last year that will be going on taxes coming due, I don't think you would have to. [note: not a tax professional]
Again, I did talk to 2 CPAs just today. Both confirmed for 2017 they're taxable events and you must report.
 

Red Squirrel

No Lifer
May 24, 2003
58,145
8,064
126
www.uovalor.com
The issue with this tax stuff is that there is no forms or any documents that get sent to your mail. If they want to tax it, then they should make it work like every other taxable thing, and make it so at the end of the year you get a paper in the mail to give to your tax person. It's ridiculous that they expect people to do all the work. But not surprising, as it's a good opportunity to be able to fine people for mistakes. I honestly have no clue what I'm even suppose to do. My tax person won't be able to help much either if I have nothing to even give her. Heck I doubt she even knows what bitcoin is lol.

Depending how crazy the tax situation gets though it will probably just kill off crypto completely as it won't be worth using.

I've heard mixed things for Canada, some say it's already taxable some say it's not, so I'm just going to wait it out. I'm keeping track of all my costs for mining, since if they do end up wanting to tax mining then I'm just going to open a business so I can write off my costs.
 

destrekor

Lifer
Nov 18, 2005
28,762
343
126
Again, I did talk to 2 CPAs just today. Both confirmed for 2017 they're taxable events and you must report.
I'll wait for the IRS to weigh in. I'm convinced these things should be different though as these aren't ordinary assets. Rules need to specifically mention them, and if they decide they are as you suggest they are, then the codes should be updated to reflect that, specifically mentioning whatever they want to call the asset category. Previous tax code never mentioned it, so everyone rushing to make sense of tax code is erring on the side of caution, someone at every step of the way basically thinking CYA (cover your ass). The government is rarely one to turn down extra money if given the opportunity so I wouldn't expect refunds in the event of overpaying for crypto trades. But of course not paying on certain trades could wind up with an audit, thus the CYA attitude. No CPA wants to be sued because they convinced someone to be overcharged. Thus why I think this absolutely deserves official clarification.

Thoughts?
 

destrekor

Lifer
Nov 18, 2005
28,762
343
126
i highly doubt you'll get a 1099 though
We won't, we haven't yet and cryptos have been around for some time (and some have already been reporting their trades for tax purposes). Which makes this all the worse because we are left in the dark as to how to perfectly quantify the trades, and without any official forms, that's going to a royal PIA. Everyone who is reporting is probably going on the CYA, err on the side of caution route.
 

DrMrLordX

Lifer
Apr 27, 2000
16,787
5,771
136
I will tell you what I know about the IRS and their attitudes towards crypto. I am not a CPA, so follow this advice at your own risk, and do your own research.

Prior to the 2014 guidance, the IRS had no position on crypto. Trades made and closed on any date prior to the effective date of the IRS guidance are probably not taxable. Check with a CPA if you're confused about this. Bottom line, if you sold Bitcoin for USD or some other fiat currency before the guidance date, the IRS will probably not know about it or really care.

The guidance itself is here:

https://www.irs.gov/pub/irs-drop/n-14-21.pdf

It goes on to loosely define "virtual currency" and "convertible virtual currency", offering up a reference to another document which allegedly disambiguates the terminology. Good luck arguing that your crypto token of choice is not covered by either of those concepts.

If you mine it

The IRS expects you to treat mining rewards as "property" received from some party - the mining pool, or the blockchain, or whoever. You must include the value of the tokens you receive as mining rewards as income, based on the value of the tokens when you received them into any of your wallets.

if you trade it

Any time you move tokens out of an account your control and into one that someone else controls, it is a taxable event. That could mean paying BTC for computer hardware or selling ETH on an exchange, or even sending some NEO to a friend as a tip. You calculate the gain based on the difference in price between when you received the tokens and when you sold them. You add that value to your taxable income for the tax year during which you generated the taxable event. If you held the tokens for more than a year prior to selling them, you get to claim "long term" capital gains for that income.

FIFO and trading

Whenever you generate a taxable event by moving tokens, you must treat the transaction as if you moved the oldest (longest held) tokens first: for example, if you bought 2 ETH, 1 for $20 in early 2017 and one for $500 in late 2017, and wanted to sell 1 ETH a few days later when the price dipped to $480, you would have to treat the sale as selling the $20 ETH token for tax purposes. You would still have to report the gain of $460 despite your intention of selling only the "new" token.

How this is handled with separate wallets is . . . confusing, and probably one of those "ask a CPA" type of situations. It gets even worse when you consider that people can make purchases of fractions of a single token.

like kind exchange

"Like kind" exchanges require a special filing status to be tax-exempt (see form 8824: https://www.irs.gov/forms-pubs/form-8824-like-kind-exchangesand-section-1043-conflict-of-interest-sales) and it was never established firmly that they could be applied to crypto-to-crypto exchanges in tax year 2017 or prior. Some CPAs say yes this works, others say no it does not. The most recent tax law closed that loophole, so for tax year 2018 and later, you will NOT be able to apply "like kind" to crypto.

If you want to try applying "like kind" status to your crypto-to-crypto exchanges and filing with the IRS, go ahead and try. It might blow up in your face. This year is the last year that that will work anyway.

In conclusion, the rules on reporting ARE out there. It's really hard to follow the rules without 1099s and such, but you have to do it anyway. Or just pay the IRS some amount of money and hope they don't come after you. The main thing is: pay them. Do not make them come after you by winding up with a bunch of cash in your bank account(s) without sending them their money. If you are off in your payments, the closer you are to the correct amount, the better; in fact, I think if you're within 10% of what they consider to be the correct amount, there isn't even a penalty. You just have to come up with the rest or successfully argue that you shouldn't owe them so much (good luck).

If you thnk your crypto-to-crypto trades are going to fly under the radar . . . also, good luck! Unless you are dealing with OTC trades using traceless crypto like XMR, there's probably a public record of the trade somewhere. All they have to do is associate the wallet addresses to you. The NSA has spent years perfecting the collection of public data/metadata to build profiles on people. You think the IRS isn't going to appropriate those techniques for themselves wherever possible?

edit: OH! I forgot two things that now apply big-time to crypto, since there are probably some newly-minted crypto millionaires out there, including on this forum.

You now have to worry about quarterly filing and the ACA Medicare tax. Joy!

filing quarterly

I'm not going to go into all the details of who does or does not have to file quarterly, but you can read the following to decide whether it applies to you:

https://quickbooks.intuit.com/r/taxes/pay-quarterly-taxes/

https://www.irs.gov/faqs/estimated-tax/individuals/individuals

(pick your poison)

Basically, if you expect to owe $1k or more from the sale of crypto within a given quarter, then you need to make a quarterly filing on that income, using form 1040-ES when you make a final filing by April 2018.

Also notice the payment schedule!

1st payment April 18, 2017
2nd payment June 15, 2017
3rd payment Sept. 15, 2017
4th payment Jan. 16, 2018
(exception: you can actually pay by January 31st without penalty if you file your entire 2017 return by that date)

You may have noticed that we are past ALL those due dates, with the one above exception for people who sold in the last quarter of 2017 and plan to file by the end of this month. So that means a lot of your are probably late. The penalty for late payment is 5% per month to a maximum of 25% for late payment. Get on it, crypto millionaires!

Use IRS form 1040-V to make payments:

https://www.irs.gov/pub/irs-pdf/f1040v.pdf

ACA Medicare tax

At least through 2017, and probably into the future, there is a 3.8% tax on individual income in excess of $200k for singles, $250k for married couples, and $125k for individuals married-filing-separately. Regardless of any other tax liability for your crypto gains, you have to add in your cap gains from crypto to whatever other income you made in calculating this tax. Some of you made a lot of money in 2017 on crypto, so it may apply to you.
 
Last edited:

destrekor

Lifer
Nov 18, 2005
28,762
343
126
edit: OH! I forgot two things that now apply big-time to crypto, since there are probably some newly-minted crypto millionaires out there, including on this forum.

You now have to worry about quarterly filing and the ACA Medicare tax. Joy!

filing quarterly

I'm not going to go into all the details of who does or does not have to file quarterly, but you can read the following to decide whether it applies to you:

https://quickbooks.intuit.com/r/taxes/pay-quarterly-taxes/

https://www.irs.gov/faqs/estimated-tax/individuals/individuals

(pick your poison)

Basically, if you expect to owe $1k or more from the sale of crypto within a given quarter, then you need to make a quarterly filing on that income, using form 1040-ES when you make a final filing by April 2018.

Also notice the payment schedule!



(exception: you can actually pay by January 31st without penalty if you file your entire 2017 return by that date)

You may have noticed that we are past ALL those due dates, with the one above exception for people who sold in the last quarter of 2017 and plan to file by the end of this month. So that means a lot of your are probably late. The penalty for late payment is 5% per month to a maximum of 25% for late payment. Get on it, crypto millionaires!

Use IRS form 1040-V to make payments:

https://www.irs.gov/pub/irs-pdf/f1040v.pdf

ACA Medicare tax

At least through 2017, and probably into the future, there is a 3.8% tax on individual income in excess of $200k for singles, $250k for married couples, and $125k for individuals married-filing-separately. Regardless of any other tax liability for your crypto gains, you have to add in your cap gains from crypto to whatever other income you made in calculating this tax. Some of you made a lot of money in 2017 on crypto, so it may apply to you.

I wish I had that problem.
 

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