As Idiot's Lesson In Cryptocurrency

[John_8581]

OK, I'll be the idiot. Who can teach a simpleton like me about Cryptocurrency? What is the reason to invest in Cryptocurrency? As an American wouldn't I rather strengthen my US Dollar instead of buying into Cryptocurrency? Lastly, what backs Cryptocurrency?

My best advice: Don't even get involved with it.

Because once you do, your friendly taxing agency will want to know all the nice things. When did you purchase it? Did you move it? Did you transfer it? Did you sell or exchange it? Here's the 2020 tax return. It's on the 2021 tax return as well. They've been asking about it since 2019 on Schedule 1, Form 1040.

It's been on the front of the Form 1040 since the 2020 tax year.

Once you answer the question, "yes" ... Yikes!

The reason - it's very hard to determine your basis or cost, especially if you bought it years ago and now have exchanged or sold it. With no active markets or companies tracking it, your basis could also be disputed especially with the Internal Revenue Service. That means with no basis or cost, anything realized on an exchange or sale, is all gain.

Gain = Ordinary Income (normal tax rates - short term) held less than a year or Capital Gain (at a lower tax rate probably 20% - long term) held for one year or more. Income = Tax.

More on this:

https://www.cnbc.com/2021/12/15/the...um-dogecoin-transactions-this-tax-season.html

 

[Mr. Daystar]

I think when this crypto currency thing first started, so many people jumped on it as a way to hide their assets, they sent the IRS off the deep end trying to figure out how they could, and would get their unfair share, Now the mere mention of it, red flags you into the deep dark dungeons of the auditors.

Lets face it, they're tricky and evil, they get to tax us twice already, (when we make it, and then spend it), and if they could find a third way, the filthy cocksuckers would do it.