> Doyle says many crypto investors mistakenly think they can sell some Bitcoin to buy some Etherium, and that making that a switch like that did not trigger an obligation to pay tax.
Make a stupid rule, be surprised people are non-compliant.
> Doyle says many crypto investors mistakenly think they can sell some Bitcoin to buy some Etherium, and that making that a switch like that did not trigger an obligation to pay tax.
Make a stupid rule, be surprised people are non-compliant.
This is a very normal rule. Which part of the world do you live in, and do you hold public equities?
Why is that a stupid rule?
If I sell Nvidia stock to buy AMD stock, I need to pay tax on my Nvidia stock gains.
Is it any different from selling TSLA, buying MSFT and triggering capital gains?
Legally no, at least in the US and NZ, but technically yes. On any stock exchange I know of, you'd sell your TSLA for cash, then use the cash to buy MSFT. On crypto exchanges there tend to be a lot of trading pairs with tokens on both sides, so cash is never involved.
not conceptually, though I don't know much about crytpo and have 2 questions:
1. can you recognize a capital loss on unregulated products like crypto and NFTs for favourable tax treatment?
2. do the exchanges (from an accounting perspective) trade directly between coins or move through a fiat (i.e. USD) currency?
So it might be more like "trading" stock directly without seeing the cash hit your account, which confuses people as to why they trigger a capital gain. The extra step of calculating the value of the source stock at the time of transaction is being missed.
> can you recognize a capital loss on unregulated products like crypto and NFTs for favourable tax treatment?
Depends on the country. The US and Canada allow it.
> do the exchanges (from an accounting perspective) trade directly between coins or move through a fiat (i.e. USD) currency?
Doesn't matter. If you swap TSLA for MSFT with someone there is still tax due.
This is absolutely standard pretty much anywhere that has a capital gains tax.
So what's a better rule that ensures those with wealth pay their fair share of taxes? All tax rules are unfair and distortionary and inefficient etc. You have to pick the least bad.
Land value tax is progressive, efficient and non-distortionary.
No it isn't. It's one of the best taxes, but it's still distortionary. It's also unfair, because it's incredibly easy to avoid. And it's also not sufficient.
this isn't really a "stupid rule" as much as a fundamental principal of accrual accounting: things go on the books at the time of the event, regardless of when money actually changes hands.
What's stupid about that?
This is how gains are taxed under most regimes? You pay the tax when you realize the value of the asset; in this case when you exchange one asset of one value (bitcoin) for another asset of a different value (etherium).