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December 1st, 2021 you buy $1000 worth of Coin1 with cash. It pumps 100x. Dec 31st, 2021 you’re up $99k, don’t sell but trade it all directly for Coin2. Jan 1st, 2022 Coin2 gets hacked and loses 99% of its value. April 18th, 2022 taxes are due for 2021. How much do you owe?

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@LukeDashjr@BitcoinHackers.org on Mastodon

@LukeDashjr

Apr 20

Even if all 3 events occurred the same week in 2021, you owe taxes on $99k This is how the IRS ended up with 100% of my bcash-bought bitcoins

Jesse Powell

@jespow

Replying to

@LukeDashjr

yes, but at least you could realize a $99k offsetting loss in the year by selling Coin2, eliminating the tax burden.

7:43 AM · Apr 20, 2022Twitter Web App

Replying to

and

Great !

Telegram: Contact @musk_prize

Replying to

and

Taxing unrealized capital gains <> realized capital loss? 🤔

Jesse Powell

@jespow

Apr 20

You had realized gain of $99k when you traded Coin1 for Coin2. You can have a realized loss of $99k when you trade/sell Coin2 for anything else. Problem comes up when you can't take the loss deduction in the year you have the gain. So, you could end up with a bill you can't pay

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Replying to

and

In Sweden we can only offset 70% of the losses for each trade so here we are fucked regardless.

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