More Than Finances

All about cryptocurrency, all the time.

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What Are the Legalities of Gifting Cryptocurrencies?

What are the legalities of gifting cryptocurrencies? The first thing to remember about the legalities of cryptocurrency is that there is a potential tax burden for those who buy, sell, and trade in virtual currency, and the IRS’ rules are NOT the same as other, more traditional investments. And that is the focus of this article — the IRS rules for gifting cryptocurrencies. Why? Because that’s the area where those who use Bitcoin, Ethereum, and others are most likely to get into trouble if the rules are not fully understood.

What follows should not be construed as tax advice. The only advice you should take on taxes should come from a trained tax professional or the IRS itself. What follows is for informational purposes only.

Legalities Of Gifting Cryptocurrencies

It is legal to give cryptocurrency as a gift. It is legal to receive cryptocurrency as a gift. The laws of America are not the only ones that may come into play in these situations–if you are doing a transaction with an overseas buyer, seller, gifter, or giftee, the laws of that person’s country may also affect your transaction. You should take care to learn what international laws may affect your gift or transaction BEFORE you initiate it.

Are Cryptocurrency Gifts Income?

The IRS does NOT define cryptocurrency as money. It defines Bitcoin and others as PROPERTY, and that is a very important distinction to make. However, you may earn income from cryptocurrency which is taxable. If you sell Bitcoin and receive actual legal tender in exchange for it, that legal tender or the digital equivalent of it may be subject to taxation. Failure to report these sales and the income they generate is actionable–don’t tempt fate by failing to report.

There are other nuances–from the IRS official site, we learn that determining the tax liability for virtual currency received as a bona fide gift “differs depending on whether you will have a gain or a loss when you sell or dispose of it.”

IRS rules say that when determining whether a taxpayer has a certain gain, “your basis is equal to the donor’s basis, plus any gift tax the donor paid on the gift.” For determining a loss, “your basis is equal to the lesser of the donor’s basis or the fair market value of the virtual currency at the time you received the gift.” The IRS reminds taxpayers that in cases where you do not have any documentation “to substantiate the donor’s basis”, the IRs says your basis is zero. 

Don’t forget the crucial IRS advice about receiving a gift of virtual currency. “If you receive virtual currency as a bona fide gift, you will not recognize income until you sell, exchange, or otherwise dispose of that virtual currency”. As mentioned above, it is the recipient’s duty to report such income.

If you are not sure how these issues affect your financial bottom line. Ask a tax expert for help determining what portions of the IRS rules apply to you when gifting cryptocurrencies or receiving them as a gift.

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Why Is Segwit Adoption Rate Bullish?

Why is the SegWit adoption rate bullish

Why is the SegWit adoption rate bullish? Some sources report there is data that indicates a growing number of all Bitcoin transactions are using Segregated Witness or SegWit. That number is as high as 66% according to multiple reports.

There are three main benefits to using SegWit. Segregated Witness is described by CoinTelegraph.com as a “soft work protocol that changes the method of storing data” proposed in 2015 as a way to address scalability issues for Bitcoin.

How SegWit Works

SegWit operates by “segregation of the digital signature from the transactions data”. CoinTelegraph’s description of the process reminds, “digital signature is 65 percent of transaction” and removing that from the data “will increase Bitcoin’s blockchain maximum size from 1MB to a little under 4MB”.

SegWit innovations have also improved security–it was possible before to alter the digital signatures on transactions but under SegWit such signatures are no longer part of the data. No corruption is possible (in this specific context) when the signatures simply aren’t available to modify.

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The IRS Is Watching Cryptocurrency Traders

tax cryptocurrency

Does the IRS tax cryptocurrency? Yes, they DO. And if you trade in cryptocurrency, don’t lie to the IRS about it–or ignore their communication with you regarding such cryptocurrency issues.

That’s the latest word from a variety of sources including the Internal Revenue Service itself, which reminds traders, “Virtual currency transactions are taxable by law just like transactions in any other property. Taxpayers transacting in virtual currency may have to report those transactions on their tax returns.”

You read that correctly, consumers are being advised that when the IRS chooses to tax cryptocurrency, they do so with an eye on extra scrutiny on those perceived to be flaunting the rules.

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How to Make a Cryptocurrency Wallet

how to make a crypocurrency wallet

Do you want to learn how to make a cryptocurrency wallet? Storing cryptocurrency is an important part of using it, and newcomers to Bitcoin, Ethereum, and other currencies quickly learn having a cryptocurrency wallet isn’t the only major consideration–finding a service provider you trust is also an important detail.

Before You Make a Cryptocurrency Wallet

Those new to digital currency should not expect to code their own crypto-wallet. You will need to find a third-party provider and finding one you trust will be a major issue. When you search for online articles explaining how to make these wallets, oftentimes you’ll find authors encouraging you to use one provider or another. Should you take their word for it?

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How Do Online Installment Loans Work?

Given the current economic conditions, saving can be a difficult task. Statistics show that approximately 69% of Americans have less than a $1,000 in their account. In trying circumstances, one might need to take out large sums of money and that’s were online installment loans come into play. Read More