So tax season is here in the US. I’ve never had to file anything except a basic tax return. I just want to make sure of something here. I’ve only ever bought cryptos and held them. I haven’t cashed anything out. As long as I haven’t cashed anything out I don’t have to worry about anything right? I can just file the normal return? I ask here because my normal tax guy probably doesn’t know anything about cyptos.
Facing the same problem, but different jurisdiction. Also only bought, didn’t sell.
I think you’re ok as long as your country doesn’t tax capital gains or commodities (like houses) as some European countries do.
My understanding is that tax liability arises only when you cash out
Think of postage stamps - you buy a load, and their value goes up - but according to whom? Ebay? The local stamp club? So long as you retain your postage stamps in an album, exterior or perceived value is immaterial
Change in value - as it affects you (as you are filling in the tax return) - only occurs when you sell. What stamps/coins other people sell for in the meantime is neither here nor there
So, keep records of every purchase you make of Peercoin. When you sell, you will need to declare any amount of profit over the tax-free allowance. But, until you sell, you need not be concerned
As long as you didn’t turn them into cash, even on an exchange, you’re good.
If you did they would be considered capital gains, either short or long term if you held them for a year.
What if I used BitInstant to buy and send Bitcoins to my btc-e account, but somehow I ended up losing all my receipts? I used the moneygram machine at the local CVS and used cash. There’s probably no record, except for my btc-e transaction history.
Tax laws are not retroactive, and since there is no way to definitively say prove that you didn’t mine the coins that you own (block chain forensics aren’t that great), I expect that you could use a $0.00 basis for future reporting without too much of a problem.
You were in early enough that the difference would be negligible, compared to your long-term profits.
Standard disclaimer about me not being a lawyer and to talk to your local crypto-accountant (when one becomes available in the next few years).
If you mined for coins, then I do not know whether capital gains tax applies, since you never bought them in the first place - what tax applies, if any, is outside of my knowledge (although I would be surprised if no taxed applied)
If your scenario is that you paid cash, and never had any records, then I think it should still be possible to make a good estimate. E.g. try and establish the date you bought BTC, and see what the market price was at that time, and calculate the likely cost
The objective here is to reconstruct the Truth to the best of your ability, and to substantiate that as far as possible with whatever evidence is available
If you mined for coins, then I do not know whether capital gains tax applies, since you never bought them in the first place - what tax applies, if any, is outside of my knowledge (although I would be surprised if no taxed applied)
Capital gains would factor in if you sold the coins for any amount of a fiat currency, which is assessed at the time of sale. My comment was actually intended to address the issue of using your peercoins in a non-“sale” situation; for instance, if you were to use 100 peercoin in the future to buy a car valued at $25,000. Depending on where you live, you’re likely required to take the “cost” of the asset you traded for the car and use that for any sales or duty tax purposes.
As far as I know, in North America you can only be taxed on the capital gains realized upon sale of the asset.
Rationally this makes sense. Otherwise you could (conceivably) get into a situation where you buy a stock very low, pay taxes year after year as it achieves a high value, and then suffer when the stock price crashes and you lose all the accumulated value.
if you have to realise a capital gain become a resident of a zero tax capital gains country, e.g. new zealand, the realise your gain.
+1
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Becoming a resident of one of those zero-tax capital gains countries isn’t cheap. 
I’m happy to realise your capital gains being resident of New Zealand 
a resident for tax purposes means you need to work there for a period of time is the easiest way I think, though that in itself is hard, got to get the job etc
What about coins gained through PoS? Should they be reported (as you would normally do with stock dividends / savings account interest?) What would the basis of the new coins be? ($0?) I’ve avoided PoS minting because I keep my holdings in a cold wallet, but I’d like to start when cold-locking is available and I’ve worried about this. Has anyone else thought about this or have an opinion? Thanks.
Interesting question indeed. PoS might be different again from PoW (taxed as work?). Guess as you say PoS should be treated the same as interest on stocks, but I think you can also argue that it was a payment for a service delivered to the network (having your wallet on-line creating blocks).
Interesting times for the accountant and the tax man.
POS is reward from your work – you choose to let your wallet do payment processing and keep the network running. It’s very efficient compared with the work in POW, but still work. You don’t automatically get POS reward if you don’t support the operations of the network.
What if you bought BTC , then bought PPC with BTC? Would this be considered a realized gain/taxable event or would it be considered a like-kind exchange?
Pos reward is like acting as your own central bank it is not interest since it is not paid by somebody else to you neither it is dividend. It is the emission of new coins into your wallet. So it is what a central bank does. Depending on the country you live in it may be taxable if you sell all your coins.
The question you have to ask yourself is are you “liable”? More than likely, if you are an American individual (not a business, but a people) you may not have to pay anything. Paying individual federal income tax may be 100% voluntary. However, if you voluntarily pay and file, then you better make sure you do it right or they may come after you. They may not force you to file though because it is against the Constitution to force you - you are protected under the 5th amendment.
And watch (starts at 4 minutes in) http://www.youtube.com/watch?v=HHP_doQ7jXI
(disclaimer: I am not a tax professional and am not giving any advice. Do your own research and consult your own legal council)