House Democrats contend the $15 per hour minimum wage bill will lift workers who have not seen the benefits of a strong economy.Politicsread more
Microsoft beat on top and bottom lines but Azure growth slowed.Technologyread more
Trump said the USS Boxer destroyed Iran's drone in the Strait of Hormuz on Thursday in a "defensive action."Politicsread more
Stocks erased earlier losses, but the rise was kept in check as Wall Street digested a mixed batch of corporate earnings results.US Marketsread more
The Philadelphia Fed saw its primary gauge measuring the sector jump from 0.3 in June to 21.8, far better than Wall Street estimates of 5 and the highest in a year.Economyread more
"It's better to take preventative measures than to wait for disaster to unfold," Williams told the annual meeting of the Central Bank Research Association.The Fedread more
The fact that interest rates are relatively low makes the idea of a so-called insurance rate cut later this month an attractive option for the Fed.Market Insiderread more
Video of the event does not show the president disagreeing with his supporters. Instead, it shows that Trump paused as the chant began, allowing his supporters to continue...Politicsread more
President Trump said he's looking at the JEDI Contract that will be awarded to Microsoft or Amazon.Technologyread more
Business advocacy organizations sharply criticized the House of Representatives for passing a bill to raise the minimum wage to $15, saying it would be a costly job killer.Politicsread more
Wealthy clients liquidate some investments every year to cover their tax bill, so presumably this was higher than what Morgan Stanley has seen previously.Financeread more
With bitcoin's meteoric rise in value, some investors are wondering if using it to purchase another digital asset means they can delay paying taxes on their gains.
Under the Republican tax bill expected to be voted on next week, the answer is no.
Because the IRS views bitcoin as property rather than a currency for tax purposes, there's been discussion about whether a certain kind of transaction known as a 1031 exchange can apply to bitcoin and its brethren.
A 1031 exchange allows taxpayers to exchange one type of asset for a similar one, thereby postponing capital gains taxes. The asset also must be used for business or investment purposes and meet other requirements.
In simple terms, such an exchange can result in getting taxed at a lower rate when the new asset is eventually sold.
"Some people think, 'I'm taking my bitcoin, which the IRS has deemed to be property, swapping it for another property and doing it for investment reasons,' so it sounds like it could be a 1031 exchange," said Evan Fox, tax manager at New York accounting firm Berdon. "I think it's a stretch."
While tax professionals have been waiting for further guidance from the IRS on whether digital assets like bitcoin, ethereum and litecoin qualify for such swaps, a provision in the tax bill renders the question moot because it explicitly limits 1031 exchanges to real estate.
It's no wonder that cryptocurrency investors would be exploring ways to minimize their tax bill. So far this year, bitcoin has surged to more than $16,000 as of Thursday morning from $997 (and from less than a dollar in 2010). For investors who have unloaded it this year — whether by cashing out, purchasing goods and services or using it to buy other digital assets — there's a good chance you owe taxes on your gains. (Click on chart below to enlarge.)
For investments held less than a year, gains are considered short term and taxed as ordinary income. Depending on your bracket for 2017, that could range from a tax rate of 10 percent to 39.6 percent.
Any bitcoin you sold or spent after owning it for more than one year is taxed as a long-term gain. Taxable rates on those gains range from 0 to 20 percent, with higher-income households paying the highest rate.
Unlike many other investments, investors in digital assets like bitcoin typically do not receive a Form 1099 that shows their taxable gains, meaning that self-reporting is necessary. When a 1099 is issued by a bank or brokerage to an investor, it also goes to the IRS.
Fox cautions that just because you don't receive that form, or you move your investment from one crypto asset to another, it would be foolhardy to assume you can hide your gains from the IRS forever.
"If you put money into the cryptocurrency space, and you decide to buy [another digital asset], and you one day monetize it and show up with a $2 million house, the IRS is not stupid," Fox said. "Money doesn't just appear out of nowhere."
Along with other federal agencies, the IRS has ramped up efforts to get a handle on the burgeoning world of cryptocurrencies. Since 2015, it has employed a company, Chainalysis, to help it track and analyze bitcoin transactions, according to various published reports.
Evans also said that because the IRS has three years to conduct an audit, it could be a while before you're 2017 tax return is questioned.
"If a few years from now the IRS is able to decode what happened, and you made a significant amount of money in 2017 and didn't report it, you'll face interest and penalties that have been accruing," Evans said. "It might be a risk some people want to take, but there are some bad consequences if you get caught."
In an examination of tax returns from 2013 to 2015, the IRS found that in each year only about 800 taxpayers claimed bitcoin gains. During that time, it rose to $430 from about $13.
"It's going to be interesting to see how much reporting occurs this year," Fox said.
More from Personal Finance: