RE: US Tax Considerations – Cryptocurrency Tax Workshop for Novices (Courtesy of the Rocky Mountain Steemit Accelerator)
Right, but joking aside, here is where I am coming from.
I am a new Enrolled Agent who is studying for the Tax Court Exam. My job is to win the 1031 Exchange argument on Audit, in Appeals, and ultimately in Tax Court.
I am hoping that you and the Steemit community can help with reasoning that is pro like-kind exchange for cryptocurrencies.
We know the IRS opened the door by saying that virtual currencies are property, and that the new tax bill basically says no 1031 Exchanges for virtual currencies starting with tax year 2018.
We are only trying to win on 1031 Exchanges for tax years 2017 and earlier, but this is going to be a critical win. (The Service just pulled 14,000 Coinbase accounts.)
There are tax professionals posting that they are giving up on 1031s, partially because of the SEC thing.
Because I believe it may be a grave injustice for the IRS to disallow all 1031s for cryptos, I am going to stay on this.
@cryptotaxadvisor one thing to consider is how the blockchain governance models could be used to disallow 1031 exchanges based upon financial interest exclusions. Tokens which have Proof of Stake (POS ) and Delegated Proof of Stake (DPOS) could potentially be construed as financial interests. I think you may have a shot with Proof of Work (POW) coins, but POS and DPOS might be a problem.
Ouch LP. Since I don't understand what you just wrote, I think you just gave me a difficult homework assignment.
At the 101 Level, here is what I am thinking.
Coinbase has 11.7 million users. There you can only move between Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. If EAs could successfully argue 1031 Exchanges between those four only, that would be a great victory. (Maybe take out Bitcoin Cash, and win on the top three.)