Has anyone thought about or done any research on the tax implications for when we exchange our MaidSafeCoins for Safecoins?
I really hope MaidSafe to Safe coin will be passive. From tax point of view if I do not move MAIDSAFE, nobody can prove I sold them. Burning MaidSafe in transaction is the worst option. The best would be if MaidSafe take BTC blockchain copy at some fixed block number and credit everyone with safecoin without actually having to move MAIDSAFE coin. People could claim SafeCoin with their btc private keys. Everyone will win. They can make it automatic without requiring people to actually move their MaidSafe coins. People will not have to pay btc fees, many will save on taxes and MaidSafe will get rid of old token in a single step.
That would mean by US law I would have to hold my Safecoin for at least a year before selling them to get the lower capital tax rate.
Another thing to consider is, every time I spend Safecoin on the network for example store a file, make a blog post, upload a video, or send and email that would be considered a capital gains taxable event.
Well - all this paperwork will be a nightmare - I really begin to become unsure if it would be good if safe succeeds
Well - on the other hand - no money for coin now means no paper work later 🤷 everyone wins
It is simple. If you do not move your MiadSafe coin and you get SafeCoin just based on you private keys from BTC address, then you just received anonymous coins. If maidsafe company does it in private and do not publish which maidsafe coins were claimed and which not than all governments can do nothing. They can’t prove you own Safecoin and it is anonymous. From that moment it is up to you, if you want to do legal taxes or not. Since it is expected that Safe coin will be pumped and dumped during transition event from tax point of view it is very likely that you will have to pay taxes at very pumped transition price and coins after dump will have much lover value. It can easily happen that taxes in some countries will eat all the value of coins and even more. Imagine there is 40% tax. Maidsafe pumps from 0.5 to 5. than it is exchanged at $5 for Safecoin, pricr dumps than and you have to pay tax for sale at $5, and your coins are let say at 2. You did not trade, you are just fucked up by system and you can do nothing about that. In many countries crypro trading loses are not lovering taxes. People from those countries can easily end up in jail just by buying Maid, holding it and exchanging for safe coin. Instead of profit there will be only taxes.
Another question, would Safecoin be considered a crypto currency like bitcoin or a virtual currency like World of Warcraft golf or Second Life Linden Dollar, both are taxes differently.
This is true until I sell some Safecoin on an exchange for US Dollars and my bank reports money being deposited into my account to the IRS. And since there is no paper trail how am I going to convince the IRS not to throw me in jail?
Why would you sell it on exchange. You can buy almost anything with it, starting with PUTs and ending at least with any service on Safenetwork.
Why would I sell it on an exchange? Top of my of head, you can’t buy a car, a house, or any other large purchase with Safecoin. So, an exchange would be necessary.
Safecoin is anonymous, so is monero or any BTC you buy with safecoin on decentralised exchange. You will be able to get any crypto you want anonymously. Well maybe for US citizen who wants to buy lambo it does not make much difference. US tax laws allow you to lover your taxes from trading loses. But many countries in EU does not allow you to lover taxes on trading loses. So for you maybe it is not that important, but for me and many others the way how transition will be done is a question of risking ending up in a jail.
Are you looking for answers on whether you are obliged to report any gains from your crypto investments? The answer is yes. You bought your Maidsafe coin with bitcoin. That is a taxable event. For the purposes of this discussion, when your Maidsafecoin gets converted to safecoin that is also a taxable event. This difference is that taxable event will not/should not result in a tax liability because it’s one for one.
Let’s say you paid one dollar for bitcoin, and when you bought Maidsafecoin Bitcoin was $100 … this is now a taxable event. Based on the fact that you made $99 on the bitcoin.
The govt doesn’t care that you have some untraceable asset. You are obliged to report.
To clarify, your Maidsafecoin was worth $1.00 and it was converted to safecoin which also had a value of $1.00, so while it’s a taxable event, there is no gain or loss.
If you bought Maid for. 0.5 and it is converted for Safe at 1 than you have to pay taxes for 0.5. And this is big problem, especially if price will pump and dump later after transition. You can easily end up with transition price at $5 and than it can and probably will dump. This whole transition is a nightmare.
I accept that there is an obligation to report. I’m just curious on what is the correct way to report. I’m not a big fan of getting in trouble with the IRS.
Not exactly true. Gain will be determined by the price you bought MSC and the price you exchanged MSC for Safecoin. If you bought MSC at $0.5 and exchanged it for Safecoin valued at $1, then there is a $0.5 gain. But, how does one determine the price of Safecoin at that time? Is it based on the current exchange rate of MSC or does Safecoin have no value, as there will be no exchanges that exchange Safecoin at that time?
If it is the latter, then I would think it was exchanged at a loss. But, I don’t think the tax man will want to see it that way.
Maidsafecoin is a proxy for safecoin. This is well documented.
Not unlike a stock splitting or consolidating.
It’s definitely a gray situation, at best, at least for those in the US. I could definitely see the IRS sending some mean letters to people to pay taxes on the “sale” of MaidSafe. It would be unfortunate, but worst case scenario, one could just not transition their MaidSafe until they intend to sell, anyway.
Just exchange your safecoin into Bitcoin and use a Bitcoin credit card?