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.

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I know this is an old thread now, but I haven’t seen a solution to how one word go about exporting the needed information from Incognito to file taxes. @abduraman, Cointracker looks like a decent service, but how would you export a CSV of transaction history from Incognito to be able to import into Cointracker (or any other service like this)?

Unfortunately, Incognito hasn’t such a service yet. However, you may fill in the transaction history (its CSV format exists in Cointracker’s website) manually and import it into your Cointracker account.

Thanks for the info @abduraman. Yes a few of these services allow you to manually input information, which definitely makes it easier than doing yourself from scratch. But I feel like it still will be very challenging to input manually if using such things as provide or being a validator. There would be so many little transactions to input especially with compounding interest every hour… Or perhaps some countries have different tax laws, but I think for USA and Canada they want to track all transactions and have that converted to your local currency…

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@Support
Can we prioritize ability to export our transaction history? Some of us want to pay our taxes and be compliant. Or some of of just like to download the histories for our records.

Thanks!! :heart:

It looks like bitcoin not incognito would serve you better for tax and history compliance. This privacy stuff seems counter to what you’re wanting.

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Privacy doesn’t mean we don’t want records. In 2020 it’s silly that we have to resort to a pen and paper method of writing down our transactions when using Incognito.

It’s already in the roadmap, I’m just wondering if it can be a sprint in the next few months.

If you don’t want to keep records, that’s up to you. But quite obviously there are tons of users that do want records for various reasons.

The the information is already recorded in the Incognito wallet, the question is whether these can be exported to a CSV file so that it can be used to generate tax forms with 3rd party tools as desired by the user. I wouldn’t expect that this would compromise the privacy of those outside of the individual doing the export as it wouldn’t include source or destination of transfers. If there is something that I’m overlooking in terms of privacy let me know!

I think that most people would have funds from a source that has some KYC so there would be some potential for governmental visibility. I think it may be a bit short sighted to assume that everyone has the luxury of having funds to use within Incognito that they don’t have some obligation or liability to report on.

I would love for nothing more than to ignore my taxes but it’s an inevitable evil… Also I think it would be ideal to not need to distract the core team with this given the aggressive roadmap. Is there any way this this can be accomplished outside of the core team? I’m willing to consider helping work on developing something like this if need be.

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Good luck with your privacy coin tax reporting / record keeping feature I’ll be watching to see the popularity growth in this development.
This could be a game changer for Monero. :+1:

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I am really having this problem right now. I am honestly perplexed as to how to report my Incognito trades to the IRS on my tax return. I have literally thousands of tiny trades across over 12 different wallets. It would take me dozens of hours to try and manually record each transaction and then I think Id also need to find out what the USD amount was equal to for each transaction to see how much I gained or lost in the trade.

I’m feeling totally stuck right now and have ceased any and all trades for 2021 until I can figure out a better solution so that Im not in this situation next January as well.

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