How do you prevent a taxable event by moving Bitcoin? \ stacker news ~bitcoin

pull down to refresh

How do you prevent a taxable event by moving Bitcoin?

810 sats \ 31 comments \ @klk 11 Apr bitcoin

Most legistlations consider Bitcoin transaction fees a sale for “a service”. Event if you are just moving sats between your wallets. So this would be considered a taxable event.

My biggest concern is about privacy. Because if you declare that transaction, and you get an inspection where whatever tax agency wants you to prove it, you will have to disclose the transaction id which is linked to past and future addresses. Which is a crazy bad thing in terms of privacy.

And even if you coinjoined you would have the same problem with coinjoin fees which, if you had to prove, would make the coinjoin useless in the first place (at least towards the tax agency).

Am I missing something? It would be unthinkable to have to declare capital losses every time one buys groceries with fiat, and being subject to presenting your groceries ticket to prove it.

view all related items

34 sats \ 1 reply \ @anon 11 Apr

The fees are in sats and no one can link that to you if you don't:

Reuse addresses;
Reveal your wallet xPub to 3rd parties;
Don't use 3rd party explorer services.

It will require a huge effort to deanonimize txs as long as one adheres to the basic privacy principles.

Besides, assuming one needs to provide one's wallet xPub to prove an address ownership is absurd. If such necessity arises because of one's incompetence, one can sign with the address's private key, and that's that.

0 sats \ 0 replies \ @klk OP 11 Apr

I'm not talking about revealing the xPub. But if you have a tax inspection where you need to justify some income in fiat, that came from a Bitcoin sale, you can get asked to prove the sale by providing the transaction id and the bank deposit receipt.

Even if you don't reuse addresses, it's trivial to deduct what's the change address or the paying one. And that affects your privacy.

The problem here is really the fiat payment, that leaves a trace that could force you to reveal at least one transaction id.

See #940521 for the details.

42 sats \ 20 replies \ @DarthCoin 11 Apr

taxable event

LOL are you a retarded slave? Only fiat slaves pay taxes. Not bitcoiners.

0 sats \ 6 replies \ @Dkryptoenth 11 Apr

Bur after a second thought, if bitcoiners don't pay taxes, what's up with the US tax laws on whales like bitlabs? The taxes mustn't be onchain, and even onchain there are fees which could be considered tax 😉

0 sats \ 5 replies \ @DarthCoin 11 Apr

LOL another retard. Go away.

0 sats \ 4 replies \ @klk OP 11 Apr

I'm surprised by the lack of humbleness tbh. We all have to learn. And we do this thanks to others that teach us through mentoring, books, ... When you had doubts and curiosity during your learning path were you treated this way?

10 sats \ 3 replies \ @DarthCoin 11 Apr

Better learn the hard way, when somebody is slapping you in the face and telling you the truth. Only that way you can wake up and go back to read what you missed.

If you are a snowflake whining, you will never learn anything in your miserable life.

0 sats \ 1 reply \ @Dkryptoenth 11 Apr

Take it easy on @kik, not everyone has the guts to learn the gard way. Not everyone has the guts to question the already laid patterns of life even when it's uncomfortable for them. 70% of humans prefer sticking to status-quo instead of questioning what is and what's supposed to be.

view all 1 replies

0 sats \ 0 replies \ @klk OP 11 Apr

You honestly made me think and realize some stuff. I've re-read some of your guides and found answers that I hadn't care for before. But I still have a lot of open questions.

reply on another page

0 sats \ 1 reply \ @Dkryptoenth 11 Apr

I was beginning to wonder... you've got a big mouth though @DarthCoin

0 sats \ 0 replies \ @DarthCoin 11 Apr

0 sats \ 10 replies \ @klk OP 11 Apr

You are totally right. But hear my case. What if you were doing arbitrage between CEX and P2P DEX (paid in fiat). Of course coninjoining in between and separately from your stack. The profit margins are just too high and after all someone needs to add liquidity to those kind of DEXs.

Because of the fiat payments, there's a high chance the bank snitches on you and someone comes asking questions. How do you justify those? And of course there's the trace of buys in the CEX anyway. So I would like to find the cleanest way of doing this and don't particularly care about paying taxes for those gains (because the risk of not doing so is not worth it).

If it was only buying Bitcoin on P2P DEX it would be stupid to declare anything of course. But this case is different. Or am I missing something?

11 sats \ 9 replies \ @DarthCoin 11 Apr

doing arbitrage between CEX and P2P DEX (paid in fiat)

TOTAL BULLSHIT FIAT MAXIMALISM ! FUCK THAT SHIT ! That's not a case, is total idiocy. GTFO. I hope that you get taxed so hard that you will have to sell your pants for that shit.

0 sats \ 8 replies \ @klk OP 11 Apr

I don't see it that way tbh. Most people get paid in fiat. Selling BTC to them and giving the fiat to the CEX is not even close to fiat maximalism. If anything, it's Bitcoin maximalism.

So, what's the cleanest way of doing so?

11 sats \ 7 replies \ @DarthCoin 11 Apr

I don't see it that way tbh

BECAUSE YOU ARE A RETARD

10 sats \ 6 replies \ @klk OP 11 Apr

How did you get your coins then? Look, you are being super dumb but I know that you aren't. You've created a lot of helpful content and I'm sure you could educate me and other users if your replies had more depth than “you are a retard”. I got the point, now please explain why.

view all 6 replies

10 sats \ 1 reply \ @nerd2ninja 11 Apr

To be honest the tax system is an arm of law enforcement designed specifically to bypass 4th and 5th amendment protections.

First most famous example of its use was against Al Capone.

So understand your question isn't about striking a balance between maintaining privacy while following the law. Your question is about finding a flaw in the penopticon's design.

0 sats \ 0 replies \ @klk OP 11 Apr

Unfortunately you are right...

10 sats \ 0 replies \ @OT 11 Apr

Depending on which country you live in I think you have a good case with upgrading your security. I mean if it really went through the courts surely the judge would rule that since you haven't spend the bitcoin you shouldn't have to pay capital gains tax on it.

I think about this situation with coinjoined bitcoin often. If you did have to prove that you still had the UTXO, the privacy gain is now gone. Should the tax agency have to pay the fee to coin join again? I think they should, but I'm probably just dreaming.

0 sats \ 0 replies \ @Satoshi__Nakamoto 11 Apr

Drawn from another country

0 sats \ 2 replies \ @Jestopher_BTC 11 Apr

self-transfers are explicitly exempt from taxation.
you are only obligated to report buys/sells (including purchases for goods/services) for Capital gains tax, not all transfers.
the addition of Stablecoins to lightning is extremely important to inspire more bitcoin commerce in the US without the threat of capital gains tax reporting and audits.

0 sats \ 1 reply \ @klk OP 11 Apr

Sure, but what about the transaction fee? That's a “sale”. As if you were paying for the miners service of updating the ledger record. Look, I'm not trying to the defend tax laws, just to find ways around them whenever possible.