Tax Implications for Exchanging MaidSafeCoin for Safecoin


#21

Just a note: what is taxable, when it becomes taxable, and how much tax is due depends on which jurisdiction / country applies.

Most of this topic seems to be talking about the US from what I can see, but since it isn’t stated, and isn’t official tax advice I recommend who owns MaidSafeCoin to treat it with caution and do your own research! :slight_smile:


#22

This is a good reason to wait at least 3-5 years or more to exchange most of the MaidSafeCoins. It might need a court case to get resolved.

Hope the conversion of maidsafecoins to safecoins doesn’t have to be done in a very short time like only a couple years.


#23

Common sense would dictate that exchanging MaidSafeCoin for SafeCoins is not a taxable event since you’re not actually selling your MaidSafeCoins and realizing gains, unfortunately common sense is not among the things that politicians and government officials are known for.


#24

That is why I propose to do it automatically without requiting doing OMNI transaction. If I receive Safe coin just based on my private keys associated with my OMNI address I did not move or sell my OMNI token so there is not a taxable event at all. Until I do not move my OMNI token I did not created taxable event in any jurisdiction.


#25

but then you would be receiving something of value (safecoin) for free which would be taxable in some jurisidctions


#26

I see it more like buying top-up credit in the form of a code for a pay-as-you go mobile phone. the code is a proxy for usable credit. its not a taxable event when i text the code in to receive the credit on my account.


#27

It will be taxable event if you do not want to. It is up to you if you want to sale your new Safe coin and than you can do taxes the same way as if you moved your maidsafe coin to burn address. But if you do not want to, or you live in a country with different tax laws than nobody can force you to pay taxes unless you decide to do so. This is the main difference, if it is done without moving maidsafe coin than taxes are not forced. It is up to you when and how you sale your new Safe coin. But if you have to move MaidSafe coin to convert to save coin you are forced to pay taxes on it. You have no choice. You can even end up in a jail if you are not aware that you have to pay taxes for it.


#28

Yes SAFEcoin is like prepaying for usage credit. If used for that.

But if one sells their SAFEcoin for cash or BTC then that is a event that should be recorded.

While you have MIAD/SAFEcoin then it is pre-purchase of resource and not assets.

My uneducated opinion and I am no tax accountant/lawyer

In Australia I guess we are lucky in a sense that the tax return does not need to explain the source of the gains, only that they occurred and the final amounts. You still need to have the figures if an Audit occurs, but if you attempt to do the right thing then the ATO is usually fair.


#29

If your not selling for a profit theres no tax.

Its a replacement coin for one already owned.

No profit = no tax.


#30

As it was clear from the start that maidsafecoin Ian just a proxy token for SAFECoin, I would ben surprised if this triggers a tax event. They are essentially one and the same, but the token just hasn’t been substituted yet.


#31

That’s simply not true, though, at least in the US. If, for example, you exchanged your MAID for BTC, you pay taxes on your gains from MAID at the point of “sale”. If the US sees the transfer of MAID to Safecoin as an exchange, like they would to exchange it for BTC, then you have to pay taxes on your gains at that point.

It is an interesting argument that one prepaid for resources, since Safecoin will be a utility token, but it would still likely resort in a court case at the very least. I, for one, would not like to spend my gains fighting the IRS on whether I owe them money.


#32

But BTC is a different asset with a different price, Safecoin is a replacement for Maidsafecoin. Safecoin and Maidsafecoin will have the same price when the convertion happens because they represent the same asset. It would be great if @SwissPrivateBanker could join this conversation because he seems to have quite good skills when it comes to taxes.


#33

Who should execute that ? In Austria you only have to pay income tax, if you want to realize your coins in EUR. If you are able to prove your coins are longer than one year on the same address, you dont have to pay income tax.


#34

While I agree with you, this is the IRS we are talking about. I doubt they have a deep understanding of the inner workings of all these cryptocurrencies. To them, it is an exchange of assets. Now, you could probably take them to court, and win, because the argument is sound. However, I think the IRS will go after people, especially for those that keep their funds on exchanges like Poloniex, which are required to report transactions to the IRS. For those of us with our coins off exchanges, it becomes a point of whether or not we should report it.


#35

Exchanging MaidSafeCoin for SafeCoin is akin to going to the bank and depositing a dollar to your bank account, you then change your dollar bill into an electronic dollar in the bank’s systems. It’s just another representation of the same thing. Now, how to ensure tax authorities see it the same way…


#36

It is not easy to know the correct answer, hopefully someone can afford contact a tax auditor, tax lawyer or simply call IRS and ask them, soon or when things get closer to release.


#37

I am not a US tax specialist.

I think there will actually be a massive discrepancy in price during the migration between maidsafecoin and safecoin. Safecoin will be a new protocole, something exchanges will have never seen before and they will spend weeks figuring out how to actually list it.
The first transactions on exchange might trade 10x compared to maidsafecoin price in my opinion when eventually it hits the market.

If the switch between maidsafecoin and safecoin is a swap, a lot of jurisdictions will consider it as an actual trade, and it will be taxed, capital gains will be due.
Tax authorities will consider the 2 coins as two different cryptocurrencies for sure, and they will argue you were active and not passive investor who held to it.

I think the idea of claiming safecoins thanks to your btc private key is a fantastic idea.


#38

Yeah I really do hope they can implement the swap without a burn or actual omni transaction for those of us with omni wallets. I am not sure how it can be done, maybe a secured webapp where we input our wallet details/private keys and such and we just get the safe-coin and it keeps track of those coins that have been converted vs not? Would be ideal although the central attack point sort of scares me. Maybe an app ON the first safe network can do it securely :slight_smile: !


#39

But that’s a ridiculous amount of work for the exchanges. They would have to lock trades on MAID, deploy their Safecoin exchange mechanism (however that is going to work), and then individually confirm the private keys per account.


#40

not at all.

maidcoins are pooled on exchange, in cold wallet.
just one private key for the whole. so that would be easy.