Taxes Taxes Taxes
This has been on my mind as this is the first year I have not filed by April 15th, let alone months early. I typically get a refund so I like to file early. This year I will again, what has kept me from filing has been the new crypto question. I know many in the community are anti tax, and may take a different route. My view is one of risk aversion, not lying on federal form, and letting them take their pound of flesh from my profits.
While I have little to no activity for 2020, it was a year of holding extra cash reserves and HODL all coins from prior years, I don't really have any transactions to report. I will have some CoinBase courses I took that that made me a tiny bit, that have grown, but to date, I still hold what I earned.
I have no real issues filing this years taxes, other than I need to grab a history and look up some prices and say I earned $150 in 2020.
Prior Years
Honestly, have not had to worry much in the past, I bought high and sold low in prior years, actually creating a losses at least on paper. Until the change the wash rule to apply to property, I found ways to reset what little gains I may have had, or at least close enough not to worry much. Not including it actually hurt me = since it actually would have gotten me a bigger return, but would have cost my days to try to find it all. Lots of strange and closed exchanges = no idea how I could even find the Trx anymore if I tried.
IRS Guidance - It's clear as mud
I know they came out and classified Crypto as an asset - and have claimed each transaction is a taxable even. That sounds fine if I am trading, pretty easy to pull the logs and work backwards even if it is all based on SATS and not USD. Will make for interesting situations where I lost USD but Gained SATS. Honestly that sounds like a win for me for the long term.
Even if I used it to buy something, I can understand the logic, but as far as the cost basis, what a PITA considering I have no inventory system to identify FIFO prices, not to mention fractions of fractions - good grief.
But Now What?
How does all of this apply systems like HIVE and LEO that are Proof Of Stake / Proof Of Brain?
- Curation Amounts?
- Post Rewards - HP vs HIVE
Starting on the simple questions. How can you really track HIVE? I have looked and it appears most of the resources are a 7 to 30 view. With way too much detail to really use well. The only thing I have have started to do is take snapshots of my account from time to time and record the amount the account holds. I can back into a average price if needed. I can track the prices on an exchange and pay the amount I earned. Seems ok, unless I make any transactions not related to blogging or curation.
LEO Token?? How Can you Track It
Granted this is not an issue for me for last year. And given my current LP, not really anything that I can mess up with such small amounts, but what tools give me curation, or post earnings without manually tracking them all. It seems a bit crazy to manually track posts. Are 2nd layer and below solutions really even crypto for the IRS? I assume they want money for anything that can be claimed to have value, but there is no real exchange for most of these.
If I trade HIVE for LEO - that is now taxable, and will mess up my snap shots. How can anyone actually track this mess.
If I sell my POB for HIVE - how could I ever find a cost basis for POB?
Are there any real tools out there. I know many of you are earning real money with LEO or HIVE, how do you track it?
CUB and other DeFi
This has gotten me to ponder how I can manage to track CUB or other DEFI platforms if I go down that route. How can you track investment costs, to ROI in CUB, and if you farm Impairment losses.
I Hope They Clear It Up
As we move forward with tokenomics, we will need better guidance. The guidance they gave does not apply well to POS with curation rewards across several layers of tokens not listed on an exchange outside of Hive Engine. I know they claim earnings from WoW and other non listed assets were considered taxable, but tracking the cost basis is confusing and unclear.
I hope one of you whales out there printing LEO, POB, HIVE and CUB like mad are also on top of all your tax guidance and can point me in the right direction for better resources and education material.
sincerely,
This post NOT financial advise, it contains my personal opinion and experience and is intended for educational purposes. Perform your own research and analysis prior to making investment decisions.