Re: Will people be selling after the 1st of the year for tax benefits?
Do bitcoin profits count for taxes if you only have usd on an exchange but haven't withdrawn? Bitcoin is very risky - I could make another trade tomorrow and lose it all or the exchanges could shut down and run away with the funds, get seized, or get hacked, and I could lose everything that way. This type of exchange risk isn't there in the stock market. The money I have on exchange is like imaginary cloud money goxbux disneydollars etc that could all be lost - I don't see it as real money that I've actually made yet. So I don't think taxes should need to be paid anyway until you actually withdraw USD back to a bank. What do you guys think?
In fact I lost money from BitFloor - can I deduct that?
In fact I lost money from BitFloor - can I deduct that?
Many people think this but it is wrong per US law. Any transactions are considered taxable, it doesn't matter if you withdrawal the funds or not. Poker players on Stars or Tilt asked many of the same questions who were in a very similar situation.
Think of it as day trading. You add funds to ETrade. You buy and sell Tesla stock. You make money on some trades, you lose some. You never withdrawal funds. You still owe taxes on all the trades.
Now of course how does the IRS track offshore trading platforms...that should be the next question...ie, they can't. The US tax system is mainly based on the honor system. Until you get audited of course!
I think you're right. However, in my case and in the case of many others, we made just a few transactions and held for a good part after that. So the few times I bought in low and made money and then lost because I kept buying and the price went down, I am about even on completed transactions. However, the early purchases I have kept and haven't cashed out so they are not yet realized gains since I have not transacted them after first buying them.