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Comment by Cyberdog | Hacker News Reader

It illustrates how ludicrous the idea of being taxed for a fork is (along with taxes on crypto not exchanged for fiat in general). I had never even heard of most of the forks discussed in this article. Were I a holder of BTC, how am I supposed to pay taxes on the "wealth" "generated" from forks I didn't even know existed?

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The idea of crypto taxation (besides forks) is same as stocks. Thus, selling crypto for fiat is same as selling crypto to buy another crypto tax wise.

Taxation in general is not a happy event, but it is consistent in this case.

Once again - you expect people to somehow magically track the value on 20 hard forks in 2017, many are scam / not listed on US sites / unclear value, and on the 50 hard forks in 2018? Not possible - not feasible - and goes counter to what many EAs and CPAs are advising their clients. People need to stop giving "couch" advise without considering the consequences.

Best effort. If you went the lengths to "cash it out" because it was free money, you should pay someone to keep track of it for you, if you don't intend to.

Wasn't the whole point of bitcoin that it was auditable? IF you know and want to use a fork for something, you can figure out the exact price fork has happened.

IF you don't know, you have plausible deniability.

Responded somewhere else; but to be fair hard forks should be unrealized gain with 0 cap gains. IF/when someone wants to cash out is when they should pay the tax. It resolves the bad actor issue with scam coins; meets the need to pay tax on gains and ultimately saves everyone in bitcoin land (or other crypto for that matter) from inadvertently not declaring income. It's a win win for everyone; including the IRS. This is the most common sense approach and it stuns me that many of the couch / tax advisers are positioning otherwise.

I agree with this, and i hope this is how hard forks are taxed. It makes sense to me.

Also, many cryptos' primary use case is a replacement for fiat that isn't centrally controlled. Saying that you shouldn't pay taxes on crypto to crypto is similar to saying that you shouldn't pay taxes at all.

Tax avoidance is one of the benefits of using cryptocurrency as a currency. Yeah, I'll say it.

But what is bitcoin except a database plus some math equations? By "owning" bitcoin, you have a cryptographic key which lets you do certain operations on the database. At what point does this all get abstracted far enough from real money that it becomes ludicrous to tax it?

Obviously, the US government and most cryptocurrency users have widely differing opinions on that.

Most cryptocurrency users are chasing their own moon. I agree that it's not practical to do book keeping if you want to buy real world goods with crypto (you cannot keep calculating capital gains everytime you buy a coffee with it), but that's not the common use today _anyway_.

This is also the exact reason why it's taxed the way its taxed. There's no way government is gonna let you build wealth without paying taxes.

Private key is surely a database password that lets you do certain operations, but that exact feature make it an asset. As long as you can buy "things" that has value with it, it's a capital you need to pay taxes on.

It's hard, but it's what it is.

I personally think cryptocurrency is more interesting as a currency than as an investment. I want "Satoshi's vision" to catch on.

But you're right, the reality is that many are using it as an investment instead, so now, I suppose, it's being regulated like one. Unfortunately, at the same time that we solve some of the problems making usage as a currency impractical (even if one of those solutions is just Bitcoin Core becoming an outdated relic), regulations treating it as an investment will hamper its adoption.

Oh well. I have faith the tech will win in the end.

I am all for parts of satoshis vision. I wish it was somehow universally accepted, so i could give my dollars and get them burned (legally, somehow), and can keep transacting with my digital coin.

With the same logic, my stocks in my brokerage is an entry in the database where i hold the password. I don't ever recall owning a paper stock, for example.

If i keep it in the brokerage, without withdrawing the cash, why do i pay taxes? That sounds stupid right? Then the next thing you know, people sell each other stocks in exchange for goods.

"Plumbing service stock" on a broker, if you buy it, you get legal right to have plumbing service at your house free of charge. This way you can keep everything in brokerages. Of course there are flaws with the argument, but saying "crypto to crypto isn't taxable" ignores the fact that USD taxation happens based on USD.

PS: while i said usd, i mistakenly wrote USDT, which was very ironic haha.

This seems to be a greater indictment of taxation in general rather than the notion of an asset created to represent something of value in the market. An unscrupulous state actor could manipulate this system to their advantage.

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