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CSC Exit Strategy..

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On 9/23/2018 at 2:40 AM, RonSwanson said:

Accountant here¬†ūüôč‚Äć‚ôāÔłŹ¬†located in the US.¬† You don't get taxed on purchasing cryptos.¬† You get taxed on the sell, if¬†you sold it at a gain.¬† If you sell it at a loss, you can realize that loss when doing your taxes.¬† Just purchasing though has no tax implications.

Thanks. i knew that but got carried away haha

So... 1M CSC = 100 BTC = $1M USD

You sell your CSC for BTC.  With a $10k BTC value, you get 100 BTC in exchange for your 1M CSC.  Since 100BTC = $1M, the IRS wants you to pay taxes on the $1M that you just made.  


You now have a historic cost of $1M USD for your 100BTC.  If you immediately sell that 100BTC for USD, you're only going to get $1M USD out of it.  So your gain is $0.  Without a realized gain, there's no taxable event.  

HMMMM. interesting. time to talk to my accountant. I'm reading what you're saying, and APPRECIATE it.. but i don't get it fully.

i sold capital gains (CSC > BTC)... thats a taxable event.

I then sell BTC > CASH... thats a taxable event.. which in my unprofessional mind, the IRS is going to want taxes from that too. 

im not doubting you, just talking it out... so if this were the case, all investors have to do is sell for capital gains... oh wait.. it just clicked. HAHA

 

The BRM itself isn't for gambling... it's like the wallet you would keep when walking into a real casino. The BRM would hold your cash and your identify, just like a real wallet in a physical location. But it will be able to link to your bank account so you can transfer funds in and out of it. You'd have to go through a verification process to use it, but it will likely be easier and cheaper, than going through an exchange.

So if i end up wth $1  million in CSC, and i put that in the BRM, the hopes is that you can walk into a casino and cash out there? BEH! i hate not knowing things.

thanks again!

 

Edited by MegaNerd

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29 minutes ago, MegaNerd said:

 

i sold capital gains (CSC > BTC)... thats a taxable event.

I then sell BTC > CASH... thats a taxable event.. which in my unprofessional mind, the IRS is going to want taxes from that too. 

im not doubting you, just talking it out... so if this were the case, all investors have to do is sell for capital gains... oh wait.. it just clicked. HAHA

 

enzteLS.jpg

The Gain/Loss column should say Realized Gain/Loss, but I didn't want to take the time to change it and re-upload the image lol.

But I think the visual representation of seeing the funds move might help.  As long as the secondary transaction takes place immediately, there shouldn't be any tax implications.  Now, if you were to hold your $1M in BTC for a period of time and sell it for $1.5M USD, then you would have additional taxes on the $500k.  But as long as you're doing it all at once, you'll just see capital gains taxes on the original sell-off of your CSC.

Edited by RonSwanson
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1 hour ago, RonSwanson said:

i sold capital gains (CSC > BTC)... thats a taxable event.

I then sell BTC > CASH... thats a taxable event.. which in my unprofessional mind, the IRS is going to want taxes from that too. 

im not doubting you, just talking it out... so if this were the case, all investors have to do is sell for capital gains... oh wait.. it just clicked. HAHA

 

enzteLS.jpg

The Gain/Loss column should say Realized Gain/Loss, but I didn't want to take the time to change it and re-upload the image lol.

But I think the visual representation of seeing the funds move might help.  As long as the secondary transaction takes place immediately, there shouldn't be any tax implications.  Now, if you were to hold your $1M in BTC for a period of time and sell it for $1.5M USD, then you would have additional taxes on the $500k.  But as long as you're doing it all at once, you'll just see capital gains taxes on the original sell-off of your CSC.

INTERESTING. thanks for taking the time to do that.

of course in my mind I'm wondering, what if you sell CSC > BTC when BTC is worth $10,000, but because the price fluctuates so much, you end up selling BTC > Cash seconds later for slightly higher or lower? its impossible to sell for exactly $1 million.

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2 hours ago, MegaNerd said:

INTERESTING. thanks for taking the time to do that.

of course in my mind I'm wondering, what if you sell CSC > BTC when BTC is worth $10,000, but because the price fluctuates so much, you end up selling BTC > Cash seconds later for slightly higher or lower? its impossible to sell for exactly $1 million.

 

In that case, there would be a taxable event! I mean, we do know how slow and volatile BTC is lol. 

A website like CoinTracking.info would help you with that, but in reality, if you reported $1M in capital gains, the IRS wouldn't dig into ledger transactions to determine if you misreported another few thousand bucks.  On the other hand... if you're working off the Takers book, because you're doing everything immediately, you'd actually take a Loss on the secondary transaction, since there's a gap between the Buy/Sell open orders.

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1 minute ago, RonSwanson said:

In that case, there would be a taxable event! I mean, we do know how slow and volatile BTC is lol. 

A website like CoinTracking.info would help you with that, but in reality, if you reported $1M in capital gains, the IRS wouldn't dig into ledger transactions to determine if you misreported another few thousand bucks.  On the other hand... if you're working off the Takers book, because you're doing everything immediately, you'd actually take a Loss on the secondary transaction, since there's a gap between the Buy/Sell open orders.

so what you're saying is when I'm ready, i can hire you to be my tax guy? if CSC goes where we hope it goes, a plane ticket to your area would cost pennies (assuming you're in the USA)

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5 minutes ago, RonSwanson said:

In that case, there would be a taxable event! I mean, we do know how slow and volatile BTC is lol. 

A website like CoinTracking.info would help you with that, but in reality, if you reported $1M in capital gains, the IRS wouldn't dig into ledger transactions to determine if you misreported another few thousand bucks.  On the other hand... if you're working off the Takers book, because you're doing everything immediately, you'd actually take a Loss on the secondary transaction, since there's a gap between the Buy/Sell open orders.

this is where it starts to get iffy. if the IRS sees you pulled in a million dollars, i would assume they would pull out all stops to figure out if you reported properly.... to including checking down to the penny. there are several articles out there on the IRS cracking down big time because the majority of crypto investors are NOT reporting.

so many questions. 

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7 minutes ago, MegaNerd said:

so what you're saying is when I'm ready, i can hire you to be my tax guy? if CSC goes where we hope it goes, a plane ticket to your area would cost pennies (assuming you're in the USA)

lol I got out of the personal tax game a few years ago... but when it's time... I'll be going to CliftonLarsonAllen. They're on the forefront of the crypto industry when it comes to tax and accounting implications.
 

1 minute ago, MegaNerd said:

this is where it starts to get iffy. if the IRS sees you pulled in a million dollars, i would assume they would pull out all stops to figure out if you reported properly.... to including checking down to the penny. there are several articles out there on the IRS cracking down big time because the majority of crypto investors are NOT reporting.

so many questions. 

While the argument makes sense, at the end of the day, the IRS really just doesn't have the manpower or expertise to analyze ledger activity.  Could they?  Yep.  Would I lose sleep over it? Nah.  

Plus, by the time we're at these values, the BRM will be active and we won't have to worry about it :wink:

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On 9/24/2018 at 8:45 PM, RonSwanson said:

lol I got out of the personal tax game a few years ago... but when it's time... I'll be going to CliftonLarsonAllenÔĽŅ. They're on the forefront of the crypto industry when it comes to tax and accounting implications.
 

While the argument makes sense, at the end of the day, the IRS really just doesn't have the manpower or expertise to analyze ledger activity.  Could they?  Yep.  Would I lose sleep over it? Nah.  

Plus, by the time we're at these values, the BRM will be active and we won't have to worry about it :wink:

thanks.

CliftonLarsonAllen you say? ill look them up. when I'm ready ill hire you to go with me to my appointment. just be sure you have at least a Ron Swanson mustache

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1 hour ago, MegaNerd said:

thanks.

CliftonLarsonAllen you say? ill look them up. when I'm ready ill hire you to go with me to my appointment. just be sure you have at least a Ron Swanson mustache

Yep! They're a great company.  

No mustache... but I do have a pretty large beard lol

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On 9/20/2018 at 2:35 PM, MegaNerd said:

Anyone have actual plans in place to sell when CSC reaches higher prices? 

if you own CSC and convert to BTC, you'll get taxed. but then you get taxed again if you convert BTC to fiat.

taxed twice? me no likey 

the double taxation isn't really a problem, you're only taxed on profits/losses. so if you convert to BTC then sell your BTC into fiat that same day how much is your BTC really going to appreciate? 

the fact that you can't go CSC into fiat yet is a pain.  But consider this:

you own 1 million CSC you bought for $.000400ea

CSC goes to $1 even (stablecoin).

You convert CSC to BTC at $20k/btc. 

you now own 50 bitcoins.

You send your bitcoins to a bitcoin/fiat exchange and sell your bitcoin into fiat.

Bitcoin at time of transaction has increased slightly to $20,130ea. You sell them all for $1,006,500. Yes you owe taxes on
 

CSC profit for $999,600 (minus buying/selling fees) and

BTC profit for $6,500 (minus buying/selling fees).

I mean honestly it could go the exact opposite route and if the bitcoin dropped to $19870ea then you'd have a small write off instead of tax liability. 

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On 9/24/2018 at 1:17 PM, RonSwanson said:

i sold capital gains (CSC > BTC)... thats a taxable event.

I then sell BTC > CASH... thats a taxable event.. which in my unprofessional mind, the IRS is going to want taxes from that too. 

im not doubting you, just talking it out... so if this were the case, all investors have to do is sell for capital gains... oh wait.. it just clicked. HAHA

 

enzteLS.jpg

The Gain/Loss column should say Realized Gain/Loss, but I didn't want to take the time to change it and re-upload the image lol.

But I think the visual representation of seeing the funds move might help.  As long as the secondary transaction takes place immediately, there shouldn't be any tax implications.  Now, if you were to hold your $1M in BTC for a period of time and sell it for $1.5M USD, then you would have additional taxes on the $500k.  But as long as you're doing it all at once, you'll just see capital gains taxes on the original sell-off of your CSC.

ah, you said the same thing lol. 

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4 hours ago, RegalChicken said:

the double taxation isn't really a problem, you're only taxed on profits/losses. so if you convert to BTC then sell your BTC into fiat that same day how much is your BTC really going to appreciate? 

the fact that you can't go CSC into fiat yet is a pain.  But consider this:

you own 1 million CSC you bought for $.000400ea

CSC goes to $1 even (stablecoin).

You convert CSC to BTC at $20k/btc. 

you now own 50 bitcoins.

You send your bitcoins to a bitcoin/fiat exchange and sell your bitcoin into fiat.

Bitcoin at time of transaction has increased slightly to $20,130ea. You sell them all for $1,006,500. Yes you owe taxes on
 

CSC profit for $999,600 (minus buying/selling fees) and

BTC profit for $6,500 (minus buying/selling fees).

I mean honestly it could go the exact opposite route and if the bitcoin dropped to $19870ea then you'd have a small write off instead of tax liability. 

thanks a lot. reading this on top of what what @RonSwanson said cleared it up.

it sounds like it may be worth selling for BTC when its actually dropped in price!? that way its a write off :JC_thinking:

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8 minutes ago, MegaNerd said:

thanks a lot. reading this on top of what what @RonSwanson said cleared it up.

it sounds like it may be worth selling for BTC when its actually dropped in price!? that way its a write off :JC_thinking:

The write off is only worth it if you can't afford the taxes... I'd keep the profit and plan for the tax expense instead :wink:

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On 9/27/2018 at 8:48 PM, MegaNerd said:

thanks a lot. reading this on top of what what @RonSwanson said cleared it up.

it sounds like it may be worth selling for BTC when its actually dropped in price!? that way its a write off :JC_thinking:

 

On 9/27/2018 at 9:01 PM, RonSwanson said:

The write off is only worth it if you can't afford the taxes... I'd keep the profit and plan for the tax expense instead :wink:

I think so to, because one can only benefit from a percentage of the loss tax-wise (I believe 37% is the max marginal tax rate in the US, 42% in Germany, where I live.)

However, there's a handful of scenarios I can think of, where tax-loss harvesting could be beneficial. E.g. let's say I bought a s**tcoin and loose confidence in it. Within a year I loose 95% of the principal. The tax breaks from selling within a years time are higher, than after (marginal tax rate vs. capital gains tax rate).

Since in most parts of the world, after a holding period of one year, the tax rates are significantly lower, holding a DA for over a year is good advice in most cases. In the US capital gains tax is between 0 and 20 %, depending on your marginal tax rate I believe. In Germany the tax rate for DA after a year is 0% currently, if you aren't a business or haven't lent them for interest. :biggrin: My tax guys don't expect this to last.

With that in mind, my CSC exit strategy is the same as it is with my other cryptos: hodl for at least a year, sell when greed is sufficiently satisfied.

Edited by Muellhart

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On 9/30/2018 at 6:13 AM, Muellhart said:

With that in mind, my CSC exit strategy is the same as it is with my other cryptos: hodl for at least a year, sell when greed is sufficiently satisfied.

i think we're going to be holding for much longer than a year before we can sell :classic_laugh:

Edited by MegaNerd

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55 minutes ago, MegaNerd said:

i think we're going to be holding for much longer than a year before we can sell :classic_laugh:

Not me @MegaNerd ...

30 cents by March 1st 2019 ! Bookit! :curtsey:

 

Cindy Lou Who 

 

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Just now, CindyLou said:

Not me @MegaNerd ...

30 cents by March 1st 2019 ! Bookit! :curtsey:

 

Cindy Lou Who 

 

Why do u think it will be 30 cent? 

 

(I still hope u are right :Laie_16:)

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Just now, Ikketje said:

Why do u think it will be 30 cent? 

 

(I still hope u are right :Laie_16:)

Hi @Ikketje

 

50% gut feeling... the other 50%, any three of these things:

* The release of the sand box success

* A payment processor is named (Worldpay)

* A repeat bull market similar to last year, will lift all digital assets

* B I N A N C E or other large exchange announced

* A few Casino operators start accepting CSC

* The word gets out in the crypto space of CSC's potential 

 

Finally, just MY sheer desire and good vibes will make this happen!

30 x 3-1-19 :dance4:

 

Cyn-ful

 

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8 hours ago, CindyLou said:

FinallyÔĽŅ, just MY sheer desire and good vibes will make this happen!ÔĽŅ

Cyn, you should have led with this. To leave the most important bit for last, just isn't fair!!! :banana:

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10 hours ago, CindyLou said:

30 cents by March 1st 2019 ! Bookit!¬†:curtsey:ÔĽŅ

But my stack is still sooo small.  Puuhhllllleeeeaaassseeee   wait for me.

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5 hours ago, Honeybee said:

But my stack is still sooo small.  Puuhhllllleeeeaaassseeee   wait for me.

Oh, you still have a little time @Honeybee 

Keep gathering that nectar, making honey, next year we make Money! :ok:

Cyn-bee

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On 10/3/2018 at 3:42 PM, CindyLou said:

Not me @MegaNerd ...

30 cents by March 1st 2019 ! Bookit! :curtsey:

 

Cindy Lou Who 

 

i hope so! it won't happen. but i hope so. :classic_biggrin:

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