Quote from: sparkystacey on March 12, 2018, 10:43:54 PM

Quote from: stevegee58 on March 08, 2018, 03:37:32 PM

What does property tax have to do with anything? Property tax is real estate tax. You don't get taxed anywhere I know of for crypto holdings.

Traders usually incorporate in states with no income tax. Some trader friends of mine incorporated in Nevada. No income tax, cheap to incorporate.

Currently tokens (vs security regulated coins) are considered property and taxed as such. It's weird for sure, but that is how the government is approaching it. So, if you raised $5M in an ICO, you would get a property tax bill on that. It's prohibitory for some companies, so there is lots of effort around treating tokens as "gift cards" for deferred income but still they are usually taxed under property schedules.

Wyoming (also on this list) just passed some really good legislation to allow companies operating with tokens to proceed without an unnecessary tax burden. https://bitcoinmagazine.com/articles/wyoming-blockchain-bill-rockets-ahead-signing/

Hi Stacey,

I apologize but I think you should check into the taxation of Bitcoin in your jurisdiction. Maybe you're somewhere that I'm not aware of the tax law, but in the United States, Bitcoin is treated as a capital asset, which yes, is "property". It is not, however, subject to what is commonly referred to as "property tax". Property tax, assessed at the state/county/local level, is assessed on real estate, land and improvements to land (i.e. buildings).

At the Federal level, Bitcoin is taxed as a capital asset, which means that gains are subject to capital gains taxes. A smart tax advisor would structure things in a few creative ways to achieve a minimum of taxation.

As far as an ICO, if they (the ICO issuer/startup business) was smart in how they structured their entity/entities, they wouldn't pay any taxes on incoming investment. Again, this varies depending on if the crypto asset is considered a security pursuant to Howey and/or any other applicable exemptions from the Securities Act. A token that represents prepaid usage might have to be treated differently, but again, I can think of a few interesting ways to structure things to avoid/minimize taxation, which any competent tax professional would advise.

Of course, I am not a tax professional and you should seek one for guidance specific to your circumstances. Talk to your doctor about Bitcoin.

One last thing, we need tax policy to reflect Bitcoin and other cryptocurrencies as currency, true tokens as prepaid services, and Securities Act applicable tokens as, well, securities. IRS is forming an advisory committee shortly that is going to examine this issue in the context of their existing statutory authority, when they publish the nominations notice in the Federal Register, I'll let all of you know. We have to stay on top of this stuff. Plus get some revisions to the laws.

Best regards,
Ben