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Comment by ransom1538 | Hacker News Reader

Exactly. It is an asset. So you only disclose when you sell?

You don’t disclose assets to the IRS, only income. If you disclose your income and pay tax on it then convert it to BTC today you aren’t obliged to disclose it. In theory after you sell it you’d have a capital gain to disclose.

Not true. There are reporting requirements for certain foreign assets, including cash in overseas accounts.

Didn’t know, can you elaborate on that?

Sorry for the delay!

https://www.irs.gov/businesses/comparison-of-form-8938-and-f...

Doesn't apply to crypto. Only have to report if the crypto is sold.

I guess the implication is that you have to report foreign assets specifically because it’s not easy for the IRS to obtain records from foreign financial institutions. Since it’s also not easy for them to obtain records from a decentralized crypto-currency then the same justification exists for adding these to a list of things you must report.

The law doesn't care whether the same justification exists. A bitcoin wallet in your house in US is not a foreign asset, since those bits (that representing private keys for bitcoin addresses) are physically in the US.

Right, the existing reporting law doesn’t pertain to assets stored decentralized “institutions” only foreign ones. Presumably that is why they are talking about changing the law.

Right. Exactly. They'll have to change the law so that it does care about personal bitcoin wallets.

How do implications work? Are there lawsuits that have set a precedence?

Implications can explain lawmakers actions and encourage said lawmakers to think about revisions to laws in the future. The article was about a proposed law. If X is similar to Y in some way, and X is treated by the law in a well-defined way, then a lawmaker might consider treating Y similar to how the law treats X.

Please stop using crypto to mean cryptographic currency. Crypto has a well defined meaning.

Words can mean different things and in this case the meaning is obvious from the context.

Fair but context implies I mean CC, as another mentioned. Meaning, devoid of context, is difficult to create. So, please, keep this in mind when you're nit-picking on what you mean.

Asking someone not to use a word a certain way when it is already in popular use seems like a waste of time.

operative word: "foreign". But your bitcoin wallet can exist entirely in US.

Yes, but where does the blockchain exist?

...on my hard drive? If I am running a node, that is.

And so it may be bound by your country's laws, and by the laws of all the other countries where it also exists on hard drives, even if they are contradictory, it's potentially a legal nightmare. The current official bitcoin position on this appears to be to stick one's fingers in one's ears an go "La la la I can't hear you"

If I pay taxes on my income earned in USD, then exchange it for Euros. If the Euros had a better exchange rate to dollars later, would I have to declare a capital gain if I exchange back for USD? What if instead of exchanging I just spent the Euros?

If you are a US citizen, then yes to both questions. Trading any asset for another (which would include spending EUR for goods) creates a taxable event, on which you must declare your gain on the sold asset based on its fair market value at the time of exchange. There are exemptions for certain types of property (notably section 1031 like kind exchanges for real property).

I am not a tax attorney, and more specifically not your tax attorney, nor a certified accountant.

https://www.law.cornell.edu/uscode/text/26

What does it mean to sell? People have already generated lots of taxable event when they started diversifying into other coins for example.

Yup. That is a huge question.

It is my understanding that trading one for another, (BTC to ETH, for example), is a taxable event thus has to be reported.

Yes, exactly the way i am thinking (and probably IRS will think).

This is the way it happens for stocks and pretty much everything.

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