Tax implications regarding crypto assets
I want to buy a Ducati Panigale worth $20k and then a Huracan Spyder for $250k and an extra $50k for modding both. The total is around $300k. I am doing all my trades on defi and there is no way to track all the different transactions etc. I want to make the purchase during the bull season when BTC breaks the current ATH and normies start FOMOing onto crypto. What's the best way to go about it? I will transfer $350k worth of BTC to coinbase. Withdraw to cash and then pay $50k on taxes? How will this work?
Check which tier bracket you are in when it comes to taxes (%). $50k might not be enough. It will be more like 25-37% of $350k. You’re right, it’s difficult to track the number of transactions on Defi. But if you transfer money out of coinbase, I believe coinbase provides the IRS with that record/transaction. I also recommend doing multiple wire transfers (not the whole $350k at once). Sometimes coinbase will freeze the transfer if they feel something fishy is going on. Hopefully your bank is crypto friendly, but if not, I may just give them a heads up that you’re expecting large lumps of money may be wired in. Of course you can choose not to report your taxes from your crypto gains. If these were smaller transactions you may get away with it. But something like $350k will raise eye brows.
Are you planning to claim zero basis for these gains? That’s usually a conservative strategy when you don’t know the basis. But IRS could come back asking for proof that you actually did own these BTC in 2009. And if you mined these in 2009 , did you report it as income in your 2009 tax return?
“I don't think the IRS has the resources to audit or track Crypto stuff..” F around and find out…. Pay your taxes.
Good luck with the tax evasion son. IRS likes those kinds cars.
Multiple errors here: 1) buying Lambo - HFBK 2) ignoring taxes - IRS can ruin your life, not worth the risk
Sell your crypto off exchange; direct to a number of individuals. Otherwise, enjoy fat taxes
Coinbase reports to IRS.
I know. I am going to transfer crypto I mined into CB. Pay taxes and buy the things. The gains happened prior to CB.
Make an NFT and buy it from yourself for $350k. NFT market is crazy. Resell to some chump if you want to profit in addition to simply evading taxes. FWIW IRS does not fuck around
Just pay some taxes and pray you don’t get audited. Assuming you had real gains you’d owe a shit ton more than 50K. Most of your returns are probably short term meaning you’d owe ordinary income tax on them, so closer to 25-34% depending on your bracket.
I don't think the IRS has the resources to audit or track Crypto stuff.. I still want to do the right thing and pay as much is reasonable. $50k on $350k gains is reasonable I feel. what If I mined them in 2009 and just now cashed the BTC out?
There isn't much to track for the IRS. It's on you to prove cost basis. If you don't, they will tax at 37% of the spent amount. If you mined in 2009 then your cost basis is 0 and your tax is 20%.