Let's talk about Cryptocurrencies

[dino7c]

I love seeing people all salty about Bitcoin

[desiboy]

Not sure if this is the right place to post this question, but how do I calculate my cryptocurrency capital gains when filing my taxes? I bought 0.5 bitcoin ($8k) a few months ago, and then later diversified into a few different altcoins on different exchanges. It is theoretically worth approx. $20k on paper. Now if I cash out a portion of my portfolio (10%), how do I report that to CRA?
Thanks!

[accord1999]

Originally Posted by desiboy

Not sure if this is the right place to post this question, but how do I calculate my cryptocurrency capital gains when filing my taxes? I bought 0.5 bitcoin ($8k) a few months ago, and then later diversified into a few different altcoins on different exchanges. It is theoretically worth approx. $20k on paper. Now if I cash out a portion of my portfolio (10%), how do I report that to CRA?
Thanks!

In theory, you're probably supposed to treat each transaction, even the ones where you buy one coin with another, as a taxable event and record the profit or loss.

But in practice (especially with small dollar amounts), you could probably get away with only considering the transaction to fiat currency. In which case, the cost base for your portfolio is $8K. If you sell 10% of your portfolio, then your gain is $2000-($8K*10%).

[Krovikan]

Originally Posted by accord1999

In theory, you're probably supposed to treat each transaction, even the ones where you buy one coin with another, as a taxable event and record the profit or loss.

But in practice (especially with small dollar amounts), you could probably get away with only considering the transaction to fiat currency. In which case, the cost base for your portfolio is $8K. If you sell 10% of your portfolio, then your gain is $2000-($8K*10%).

That is the US, from my researcher it's similar to a barter transaction, which is considered a capital gain

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[Canehdianman]

Red across the board today.

Hope you took those profits yesterday, desiboy.

[Tron_fdc]

http://www.cbc.ca/news/business/bitc...says-1.1395075

https://turbotax.intuit.ca/tips/how-...come-taxes-333

[photon]

I assume it's the same when you mined the coins yourself?

[Krovikan]

Originally Posted by photon

I assume it's the same when you mined the coins yourself?

My assumption is withdrawals - minus equipment cost = capital gains

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[Canehdianman]

Originally Posted by Krovikan

My assumption is withdrawals - minus equipment cost = capital gains

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I'm not sure that would be the case. I think the CRA might view mining as a commercial venture (with an expectation of profit).

http://www.canadiantaxlitigation.com...d-transactions

I haven't really reviewed it yet. Mostly because I haven't made any profits as of yet (and I don't mine).

[Krovikan]

Originally Posted by Canehdianman

I'm not sure that would be the case. I think the CRA might view mining as a commercial venture (with an expectation of profit).

http://www.canadiantaxlitigation.com...d-transactions

I haven't really reviewed it yet. Mostly because I haven't made any profits as of yet (and I don't mine).

I've read it can be considered either a commercial venture or a hobby.

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[photon]

Either way mining seems like it would be claimed as straight income rather than a capital gain?

[Krovikan]

Originally Posted by photon

Either way mining seems like it would be claimed as straight income rather than a capital gain?

So you pay income on the value at the time of mining and capital gains for holding? Seems overly complicated.

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[BananaPancakes]

Looks like Mastercard may have started blocking transactions from Coinbase.

If this is true, this is the exact reason why cryptocurrencies are needed in the first place. As the world becomes increasingly cashless, do we really want banks/credit card companies deciding what we can and cannot buy?

[Fuzz]

I guess that depends on Coinbases reputation. Are users doing lots of charge backs to Mastercard?

Interesting that you bring up if "we really want banks/credit card companies deciding what we can and cannot buy?"

https://cointelegraph.com/news/coinb...their-bitcoins

[desiboy]

Originally Posted by Canehdianman

Red across the board today.

Hope you took those profits yesterday, desiboy.

Arghh I wish! Been a brutal 24hrs!


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[BananaPancakes]

Originally Posted by Fuzz

I guess that depends on Coinbases reputation. Are users doing lots of charge backs to Mastercard?

Interesting that you bring up if "we really want banks/credit card companies deciding what we can and cannot buy?"

https://cointelegraph.com/news/coinb...their-bitcoins

I would assume they do this because they don't want to be associated with illegal activity (gambling, drugs, fraud, etc). According to their support page, they ask you to withdraw your crypto into your own wallet, which you should be doing in the first place anyway. This prevents them from tracking as well.

But yeah, the end goal of is to have no companies/third parties/intermediaries between our money, and value is transferred peer-to-peer.

I don't want Coinbase between my money either, but until decentralized exchanges are mainstream we are stuck dealing with what we have.

[Canehdianman]

Originally Posted by BananaPancakes

I would assume they do this because they don't want to be associated with illegal activity (gambling, drugs, fraud, etc). According to their support page, they ask you to withdraw your crypto into your own wallet, which you should be doing in the first place anyway. This prevents them from tracking as well.

But yeah, the end goal of is to have no companies/third parties/intermediaries between our money, and value is transferred peer-to-peer.

I don't want Coinbase between my money either, but until decentralized exchanges are mainstream we are stuck dealing with what we have.

From the article"

"Coinbase explains that the company is only trying to stay in compliance with federal anti-money laundering regulations and drug laws. We understand that any company has a fiduciary responsibility to protect the company for its shareholders. But it appears that Coinbase has crossed the line by not only tracking coins purchased through its service, but also tracking how users spend their Bitcoins after withdrawing them from their Coinbase wallets."

[BananaPancakes]

Oh wow, yeah I missed that. I'm not sure how that'd be technically possible, but if that's true you'd probably want to exchange your withdrawn crypto into a high privacy coin like Monero.

[desiboy]

Originally Posted by BananaPancakes

Oh wow, yeah I missed that. I'm not sure how that'd be technically possible, but if that's true you'd probably want to exchange your withdrawn crypto into a high privacy coin like Monero.

If I'm only dealing with a few grand which is spread across multiple exchanges, does it make sense to put them each into offline wallets? My goal is to pretty much treat these as short or long term stocks and cash out once in a while.


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[Canehdianman]

Originally Posted by desiboy

If I'm only dealing with a few grand which is spread across multiple exchanges, does it make sense to put them each into offline wallets? My goal is to pretty much treat these as short or long term stocks and cash out once in a while.


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It's up to you, but I keep my ETH in cold storage (offline, secured with a paper wallet that is stored securely in 2 different places). There have been several exchanges hacked in the past and who knows when my home computer could become vulnerable to a breach. I find cold storage to be safest.

What is your risk tolerance?