An interesting story told an American student and Reddit user. Last year he invested in cryptocurrency and $5 000 and was able to turn them into $880 000. However, given the decline in the cryptocurrency market, at the moment its portfolio is estimated at $125 000. Despite this, he came up with a tax bill for $400 000.
The user reported that the transfer of $5 000 on the Coinbase exchange and started trading. In may 2017, he invested all the money in the air and it has lived up to his expectations – after a period of trading activity in December, his portfolio grew to an impressive $880 thousand.
“I signed up for this and have invested half their savings in the crypt. Kinda sounds solid, but in fact five thousand – not so much. I should have listened to the people and withdraw money in Fiat when I reached $880 thousand. But I thought you need to display after reaching the $1 million And then the market began to sink to the bottom,” says the trader.
After several unsuccessful investments in ICO and purchase various tokens, which are unlikely to ever recover in price, the trader portfolio estimated at $125 000. But the point is not to reduce the value of the portfolio, and tax liability. Exchange Coinbase has filed form 1099-K and the user now has to pay taxes on more than $400 000. However, he never withdrawal of funds from the stock exchange and does not have fixed income, so that the requirement to pay tax was a complete surprise to the trader.
“I didn’t know anything about taxes and not have to worry about them. They never not talk about it. Is my life over?”, – says the trader.
Most tips users were limited to one – to seek help from a qualified adviser regarding tax legislation.
Recall that at the end of the 2017 Federal court in California ordered the cryptocurrency exchange and wallet Coinbase to transfer Tax service of the USA (IRS) information about customers who have made transactions with cryptocurrencies more than $20 000.