> 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.
Because, unlike at the stock market, the government provides no assurances regarding any part of the crypto trade that is being made. When things go south, fraud happens in crypto, government is pretty much zero help in most countries of the world at most times.
I imagine if it turned out you never possessed any AMD or Nvidia stocks and all of that was just fake number on a fake piece of paper there would be serious government involvement pretty much everywhere.
Also on more practical note, a single sale of crypto can really be a 50 sales to 50 people at various prices. Calculating gain is virutally unworkable. Especially between crypto pairs where the value of one or the other isn't really known.
When you sell NVidia stock and buy AMD it's a sale and a purchase. But if somebody gave you some AMD stock for your NVIDIA stock, there's no sale or purchase and the value of each is only a guess.
That's why reasonable countries decided it's way better to tax stuff on exit to fiat, via conversion or purchase. And it works just fine. When it's crypto it remains Miki Mouse money, but when it exits to fiat and there's more of it than was put in, there's real and taxable gain.
The lack of comparable regulation isn’t a good argument for (or against) regulation. All regulation was born at some point. It’s not all-or-nothing.
You example about trading equities (gifting? sharing?) is wrong. You owe tax on trading your stock for another stock. Even if you circumvent a broker and deal in literal certificates. This is a disposition in the eyes of every major tax authority. There are very few exceptions (rollovers or corporate reorganization are some examples). Difficulty in calculating the FMV of the disposition is entirely your problem.
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).
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.
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.
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.
A single sale of crypto can really be 50 sales to 50 people at various prices. Calculating gain is virtually unworkable. Especially between crypto pairs where the value of one or the other isn't really known and changes every second and depends on particular exchange out of may you could be trading on.
When you sell NVidia stock and buy AMD it's a sale and a purchase. But if somebody gave you some AMD stock for your NVIDIA stock, there's no sale or purchase and the value of each is only a guess.
That's why reasonable countries decided it's way better to tax stuff on exit to fiat, via conversion or purchase of something other than crypto. And it works just fine. When it's crypto it remains Miki Mouse money, but when it exits to fiat and there's more of it than was put in, there's real and taxable gain.
Taxing crypto on every trade would be like taxing forex on every trade.
Your reasoning makes no sense. If you swap a stock for another you have tu use the closing price of that day as you sell/buy price respectively and you trigger a tax event.
Make a stupid rule, be surprised people are non-compliant.