Governance - IRS 1099 What it means for incognito

Creating a thread to discuss governance, laws, and potential implications for incognito.

I made a joke about the IRS requesting a crypto 1099, but apparently I’m so far behind that this wasn’t a joke.

Since this is going on and it’s an evolving industry, I though we could post what could this mean for incognito?

Are there concerns that due to the privacy nature of this platform that the IRS or other gov agencies will develop laws around crypto tracking?

As of now once shielded, does this mean any profits or crypto made on incognito are still hidden until the crypto is sent out of the incognito wallet?

  • I.e. no one knows if you if you have pUSDC or PRV, so they can’t tell if you’ve made profits or not?

Has anyone here planned on filing a 1099 on crypto that’s in incognito right now for 2020 or crypto on other platforms for that matter?

If this thread is already going on somewhere else apologies please delete or route to the current discussion

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I had planned on filing the 1099s provided for my external wallets for what I transfer out of incognito. Anything I leave in a didn’t plan to file until I transferred. Other wise I feel like I’d pay taxes twice on it? Not sure.

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Somehow it only makes sense to me when I pay taxes over fiat. As long as the crypto is in the crypto world, it is just bits and bytes. Once I transfer it to my bank, then it is fiat and in some cases taxable.

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Since different jurisdictions have different tax laws some are are not required to report depending on transaction details. I asked for a complete Transaction history option in a thread a few weeks ago for this reason.

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Once you recognize a profit is when I would report it.
To me if I leave the PRV there for 20 years and never touch it, I have not recognized a profit. It’s the same as a person’s net worth. Jeff Bezos is worth millions in his net worth, but capital gains tax etc. set aside. The government may want your interest numbers, similar to a bank.
Most of us don’t make enough in interest through the year in our menial bank savings accounts so we never report. Hint: I think it’s $10 in interest you have to report.

Regardless of my off shooting ramble. Once I pull my money out of incognito I will pull the numbers and say this is what was crypto, now it’s USD and this was my interest. Otherwise I have not made any money. If I was a day trader moving crypto here and there, big money pusher then yeah, but me taking $20 a paycheck and staking it and leaving it there to secure the network is :man_shrugging:t3:

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Interesting, thanks. @WallStreetGuy90 @Jerry_Watson

A second thought comes out of that:
If you are paying for the VPS to run a node for those 20 years can you write those fees off as an expense against profits or is that only if you set up your crypto portfolio as a “business”?

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My time as a small business owner allowed me to write off a vast amount. You do not have to be LLC’d or anything, but I do believe that tax write offs only work for businesses.
Examples: me chillin at home with my nodes working, using electricity that I pay for etc., no business or anything associated would not be allowed to write off anything for taxes any more than my microwave being plugged in or my laptop which have electrical costs.

Now, in the future after I finish building my net zero energy efficient home on my land (13.2 acres :sunglasses:) I am going to name a business called A&J’s Solar Farm and Ranch. It will have animals on it, solar panels that I plan on contracting out and my crypto devices. I’ll register my small business and bingo bango my node electrical costs AND square footage will be written off when I do my taxes.

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Just read this to my wife and I am dying… :rofl: this sounds like me and my 5 year plan. I might be asking to visit in a few months!

I’ve talked about 3 things in my household to my wife for a year; solar, substantial land property (ideally with a stream, I want a micro hydro generator), and crypto. But you are livin it haha

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Baha I’ll let you know how it’s going!

There is a startup company (Cointracker) specialized in crypto tax. Afaik, it is just for USA. I use it for tracking my portfolio, which is a free feature. There are different paid plans for tax reporting. FYI

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This is interesting. I know we are required to report and even on my taxes this year the form asked me if I had traded cryptocurrency.

How to do this, I’m not sure.
With my regular stock market trading, sure I could report capital gains, but I also report capital losses and get a tax break for those if it happens. I don’t know how to actually track my capital gains/losses 100% accurately between the pDex, staking, block rewards, etc.

Not reporting doesn’t sound like a great idea if they decide to do internal audits at some point and crack down on Crypto trading - just because the crypto is ‘private’ inside the app/pdex, the government could easily subpoena you for your private key and access to your app if they have reason to believe you’re withholding assets.