Author Topic: Should litecoin and other crypto be considered income?  (Read 4024 times)

Offline precrime3

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Should litecoin and other crypto be considered income?
« on: February 11, 2014, 04:11:51 AM »
Lets say I were to build a rig, and it pulled in $30 a day average in LTC. To convert it to cash would that be legal? Or is it only legal if its used for online services? Do you guys consider LTC a commodity or currency? And if how would you report that as income? I realize virtual currency is a grey area in law now, but just trying to wrap my head around this. Any feedback is welcome. Thanks!

Offline AliasSmithOrJones

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Re: Should litecoin and other crypto be considered income?
« Reply #1 on: February 11, 2014, 04:19:21 AM »
Lets say I were to build a rig, and it pulled in $30 a day average in LTC. To convert it to cash would that be legal? Or is it only legal if its used for online services? Do you guys consider LTC a commodity or currency? And if how would you report that as income? I realize virtual currency is a grey area in law now, but just trying to wrap my head around this. Any feedback is welcome. Thanks!

If you are in the USA it is income.

At least when you convert it to fiat.

End of story.

My $.02.

;)

Offline itsmenath

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Re: Should litecoin and other crypto be considered income?
« Reply #2 on: February 11, 2014, 07:18:07 AM »
Remember it's only illegal if you get caught.


Offline precrime3

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Re: Should litecoin and other crypto be considered income?
« Reply #3 on: February 11, 2014, 02:18:29 PM »
Lets say I were to build a rig, and it pulled in $30 a day average in LTC. To convert it to cash would that be legal? Or is it only legal if its used for online services? Do you guys consider LTC a commodity or currency? And if how would you report that as income? I realize virtual currency is a grey area in law now, but just trying to wrap my head around this. Any feedback is welcome. Thanks!

If you are in the USA it is income.

At least when you convert it to fiat.

End of story.

My $.02.

;)

So if I never exchanged it for USD, I would not have to report it as income?

Offline pguerrerox

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Re: Should litecoin and other crypto be considered income?
« Reply #4 on: February 11, 2014, 03:36:36 PM »
So if I never exchanged it for USD, I would not have to report it as income?
I am not in USA, but this sounds logic.

Remember it's only illegal if you get caught.
HAHAHHAAH.

Offline precrime3

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Re: Should litecoin and other crypto be considered income?
« Reply #5 on: February 11, 2014, 03:48:59 PM »
Alright. SO I'm thinking Litecoin and other crypto are considered commodity unless exchanged for fiat.

Offline AliasSmithOrJones

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Re: Should litecoin and other crypto be considered income?
« Reply #6 on: February 12, 2014, 03:56:15 AM »
Lets say I were to build a rig, and it pulled in $30 a day average in LTC. To convert it to cash would that be legal? Or is it only legal if its used for online services? Do you guys consider LTC a commodity or currency? And if how would you report that as income? I realize virtual currency is a grey area in law now, but just trying to wrap my head around this. Any feedback is welcome. Thanks!

If you are in the USA it is income.

At least when you convert it to fiat.

End of story.

My $.02.

;)

So if I never exchanged it for USD, I would not have to report it as income?

That one is up in the air right now but if there is a wasy for government to get its sticky fingers on it, it will!

My $.0s.

;)

Offline precrime3

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Re: Should litecoin and other crypto be considered income?
« Reply #7 on: February 12, 2014, 04:04:09 AM »
They probably will. Isn't there like a law or something that like if you do something that is illegal, before its made illegal its fine?

Offline AliasSmithOrJones

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Re: Should litecoin and other crypto be considered income?
« Reply #8 on: February 12, 2014, 04:36:43 AM »
They probably will. Isn't there like a law or something that like if you do something that is illegal, before its made illegal its fine?

Absolutely correct!

I refer you to the legal philosophy of Ex Post Facto:

"Latin for "from a thing done afterward." Ex post facto is most typically used to refer to a criminal law that applies retroactively, thereby criminalizing conduct that was legal when originally performed. Two clauses in the US Constitution prohibit ex post facto laws: Art 1, § 9 and Art. 1 § 10. see, e.g. Collins v. Youngblood, 497 US 37 (1990) and California Dep't of Corrections v. Morales, 514 US 499 (1995)."

http://www.law.cornell.edu/wex/ex_post_facto

;)

Offline precrime3

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Re: Should litecoin and other crypto be considered income?
« Reply #9 on: February 12, 2014, 04:39:36 AM »
Thanks man! But converting crypto to cash isn't illegal per se, but its very broadly explained in IRS sec 61, should I worry about it?

Offline AliasSmithOrJones

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Re: Should litecoin and other crypto be considered income?
« Reply #10 on: February 12, 2014, 04:44:01 AM »
Thanks man! But converting crypto to cash isn't illegal per se, but its very broadly explained in IRS sec 61, should I worry about it?

Eh, when you convert for yourself and report the fiat income, no problem.

If you convert for others, you can get into trouble real quck without the proper filings, etc.

This is why one of my corporations is both incorporated as and registered as a money transmitter, complete with Fin-CEN registration.

Be careful though.

It's a jungle out there!

My $.02.

;)

Offline precrime3

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Re: Should litecoin and other crypto be considered income?
« Reply #11 on: February 12, 2014, 04:46:14 AM »
How would you report it? Just under "gross income" ? Could I PM you? I want to get into crypto seriously, but just wanna get rid of some jitters

Offline AliasSmithOrJones

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Re: Should litecoin and other crypto be considered income?
« Reply #12 on: February 12, 2014, 04:48:58 AM »
How would you report it? Just under "gross income" ? Could I PM you? I want to get into crypto seriously, but just wanna get rid of some jitters

Sure!

PM me any time as should anyone on this forum if they think I might be able to help them!

Might take a day for me to get back to you but I never, ever leave PMs unattended!

Thank you for your consideration!

;)

Offline shyliar

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Re: Should litecoin and other crypto be considered income?
« Reply #13 on: November 14, 2015, 04:39:46 PM »
Here in Canada it is reported as a capital gains. Capital gains in Canada allows for 50 percent to be non-taxable. So for example if you cashed out and received 100k fiat, 50k would be non taxable. The other 50K would be taxable and is added to your income for the year and taxed at your personal rate of return.

If you were to put 50K into a registered retirement plan you would defer that tax until retirement. As a result you would pay zero tax in that specific year. The 50K would also continue to increase in value (untaxed) until you start withdrawing at retirement. If you have enough years and invest well the 50K could easily be doubled or tripled.

I used the above method to avoid all taxes when I cashed in some coin in 2013. It is legal and encouraged by our government.

Note: One other interesting affect is that the 50k declared as additional income also increases the amount you can put into a registered retirement account the next year by 9k (18 percent of your previous years income and carried forward for seven years).