Best way to cash out 50k in btc (without upsetting taxman) _ Bitcoin price of bitcoin

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I got a 10k loan from a family friend, turned it into 50k. I just have it sitting in a wallet rn.

How do I cash it out without the taxman getting angry?

I made thousands and thousands of exchanges, I don’t have access to them all.The price of bitcoin

Is there a way to just pay a flat 20% or something? Or less even? I’m not really rich, if there was a simple way to consolidate all my trades into a simple I started with 10k, now I have 50k, tax me 20% on 40k I would do it.

I never even considered it tbh, people rarely mentioned taxes and always talked about multiple thousands in gains.

I honestly have no fucking clue on how to report this. Most money I made through alt coins, what was the value of those trades? Different exchanges had different values and I dunno, how is this different from taxing pokemon cards?

I know the usual talk to a cpa and I also plan on doing that but how would I do that with the least amount of fingerprints so I can’t get screwed over for something simple.

Thanks!

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The hell does one even tax that.The price of bitcoin

You need to keep a record of all the trades you ever made.

The price is calculated at the cost price and the sale price using one of two ways to calculate the difference, (first in first out) or (last in, first out).

You will have to pay the maximum tax rate even if you have 0 income other than bitcoin since you traded actively. You can expect to owe 12,5k in federal taxes now with 50k gains, and maybe some state/local taxes, even if you do not sell any bitcoin.

You may want to consider getting professional help with the accounting and taxation since you have run a large operation.

The easiest way to calculate the total tax is total cost of buying the initial bitcoin, and the total you have in bitcoin today, but you still need to account for every trade you made if they ask for it, why they may do since it is such a large amount and you did active trading.The price of bitcoin

If BTC flops, and you sell, you will get symmetrical tax breaks, but they can only be realized 3k every year.

Buy 2 BTC for 1000 dollar each.

Sell 1 BTC for 11000 dollar, you pay 25% tax, 2.5k

New year

Sell last 1 BTC for 100 dollar, you get 25% of 900 dollars back, 225 dollars in tax breaks.

If you put 1000 dollars into bitcoin, trade actively so you have 100k in bitcoin, you pay 25k in taxes that year.

If you paid with your bitcoin you now have 75k in bitcoin that you have paid taxes on, if the price crashes to 1000 dollar you get back around 19k in taxes.

If you had paid the taxes in cash you would get back around 25k in taxes if bitcoin crashed.

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My suggestion is that you calculate the amount you invested in USD/BTC against the % of the USD you took out of your investments and “cashed out.”

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It won’t be precise, since you technically MAY have triggered taxable events when you sold appreciated coin for another coin. My advice is to ignore that part right now … Audit percentages are low and the code says that you can avoid penalties if you took a reasonable approach. (see the IRS’s limited explainer on bitcoin where they mention that.)

Example: you invested $10k even for 10 BTC, then traded like a madman. If you sold out 5 BTC to buy $75k in christmas gifts, I would claim an appreciation of $70k and pay tax on that.

This system might turn out to be technically “wrong” in ignoring coin-coin trades and ignores the “first in first out” concept (google it), but it’s probably close enough to being ok that even in the unlikely chance of an audit, you won’t get dinged that hard. Even then, the IRS, which still uses fax machines, will have a hard time figuring it out.The price of bitcoin

When you eventually turn your crypto into cash/goodies, you’ll pay the taxes, although coin/coin trades might trigger that sooner. It’s a gamble, but I’d just let that part slide. With all the people who will be committing outright tax fraud, paying your cap gains in ‘17 or ‘19 seems unlikely to be that big of a deal.

Long term appreciation over a year s usually better than short, since capital gains are usually better than ordinary income. The lower the bracket, the far happier you will be.

Read up. Maybe an accountant but YMMV. Use turbotax which is excellent and cheap. Pay your taxes on gains you pulled out. Hodl the rest.

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The thing is morally, I would work with and give the IRS like 10-20%.

I’ve never had a need to cash out USD until now. I have other holdings but in all honesty I’m not worried about those because those are like ghosts, keys are safe, no one is touching them or knows about them.The price of bitcoin

I’ve been using the gains to just pay for gift cards and games n stuff.

Day trading isn’t as hard as ppl make it out to be, patience is really all you need, especially as volatile as cyprto is.

40% is ridiculous to tax someone, that’s almost half of their money. Unless I have billions, I would never pay that. My personal situation is irrelevant to how ridiculous 40% tax on someone making below millions is.

Its also ridiculous because its taxing the trades AND the cash out.

I consulted with the only people that even knew about cyrpto at the time and they literally just never paid taxes on theirs. At least the ones I knew, in discussions, it was always a super grey area with no definitive answer.

That’s why I’m asking now.

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