Hi Forreal, this was recently discussed internally, in fact, and a feature suggestion was submitted. Just so you know that there are many of us who agree that such accounting would be of value to all stakeholders.
2 Likes
@jwiegley Iâm wondering what the implementation status of this is. Is it prioritized for one of the upcoming releases, like Chromium or Carbon?
I think we need to have some pinboard where we can track the status updates of motion proposals that have been approved by the IC community. Right now, itâs pretty haphazard.
2 Likes
Hi @jzxchiang
A status update on the work and prioritization of the various features planned for the NNS and SNS is given here.
Trying to understand what this is going to look like come tax time 2022. I saw the new crypto boxes, however, in 2021 1040ez it only asked if i bought or sold any crypto⌠then it asked me to upload my API documents from exchanges or through a spread to add into the form. I did not see anything for staking rewards. I did see mining rewards⌠I could be mistaken/ it could not have been on the 1040ez and is on 1040 (which Iâll file this year). Personally, I am not trying to trick the IRS, I just want to know what is/ is not a taxable event so I can act according.
If maturity in general acts as a taxable event it may create FUD in US buyers within the next few months up until around 2023 tbh⌠because staking would be subjected to being taxed just by having it staked in the first place⌠unless they stake it and NEVER accrue maturity and just are holding it in there. However, if maturity only causes a taxable event when a person adds it into their neuron or is spawned into a new one then it could incentivize US users to use their maturity in the IC ecosystem rather than create a taxable event and merge or spawn a new neuron. Also, what is going to tell neuron holders how much they accrued this year so they can report it to the IRS? Some of us (like myself) are not in this to avoid taxation. In fact, if I make good money after my 12-year stake is up then Iâll gladly pay taxes on anything I sell. What I want to find out before I spawn, merge, or add too much into my long-term neuron is âwhat is the IRS going to consider a taxable eventâ.
IMHO I agree that if this is not executed with the communityâs careful consideration of US buyers then it could* become future FUD because the US community is really taking off (especially with node hosts) and therefore might want to be considered by the entire community a bit more (even if they live outside these areas) because of the substantial amount of node hosts going to be receiving their rewards. Personally, I would hope to incentive these new node providers into staking but make it possible to stake and not be completely confused on how to report. Not to evade taxation but literally what gets reported and when. If it becomes a clear-cut rule on staking and what to keep track of/ report each tax season, then people (or data centers) can become accustomed to it. Right now, itâs honestly not ANY blockchains fault. Itâs literally the IRS IMHO. The USA needs to get their shit together and start making moves in one direction or another honestly. They allow hyper elitists to get comfortable in their positions while users and developers literally scramble to keep them running and getting paid. Then once the bankrupt projects file and everyone gets into their positions for the next run, and itâll create more chaos when markets go backkkk up, and then around tax time the government can ride in on their âwhite horseâ theyâll throw their final say to the public and make bank off taxes in 2022 because they were not clear until you file and they already gotcha. THEN in 2023 everyone will know, and markets will re freaken adjust. If you canât tell Iâm over this issue and want diffinitve answers lol
There is no FUD of any kind in this kind of topic. Taxes are reality and we have to cope with this no matter what. It is up to each individual to manage as they feel.
Right now, Dfinity think that if you mint some rewards from the maturity, it is a taxable event. If they would not think so, they would not make any changes. You can also see many neurons that donât mint their rewards and leave them as maturity. Some people have acknowledged this was because they fear of triggering a taxable event. As of now, if you leave your reward as maturity, you cannot compound your maturity and loose some rewards.
Now, they want make these maturity to participate to the compounding of rewards while leaving as maturity, thinking this way will not trigger any tax.
This said, maybe you should spend few hundred of $ and seek for a crypto tax accountant or specialist and find out from him (or them) if he feel receiving maturity would be taxable or not when left as maturity.
If you do, feel free to share.
According to my own accountant, all form of rewards are taxable with the value it has each day I receive it, maturity or mint tokens. He also told me that if the IC system was to give me a car or a movie ticket as rewards, all of these were taxable at the day of reception, no matter the form
I am not saying my accountant is right. But I feel better following his very safe advice.
It is a pain in the butt. I hate it. But I also donât want have any problems with the tax man. So we have to choose for the least painfull option.
1 Like
Yeah, I agree life, death, and taxes will always create FUD for sure. With that being said, I really am at a point of accepting in terms of my willingness to adhere to any 100% established rules. I appreciate the feedback on what you have found when speaking to your own accountant. I think itâs solid advice. Although there are a few areas this doesnât consider. For example, if we go back to the proposal Domonic posted⌠He says there are parameters that would make it impossible to actually track that way. For example, if every day we are given rewards, from your accountantâs standpoint every day we would experience a taxable event. However, the price of ICP is volatile and can change at any second. Therefore, it would be impossible to actually track how much you need to report each day. I do agree that we should preemptively consider our maturity as a taxable event. However, like dom said the ICP ledger actually only registers maturity as a newly minted ICP when it is spawned or merged. Therefore, the maturity if left alone would quite actually not count as a taxable event. I believe there is a HUGE communication barrier between upper-level cryptographers and average users that in some ways continues the confusion. IMO you are right (your accountant would be) absolutely, however, people keep going back to it being about shady individuals trying to bypass the IRS and other entities when it actuality it is and it is not as big of a problem currently. What the issue is that there is (as it stands today) no way to actually calculate how much your daily rewards are on a given day, only because crypto prices are, well⌠a moody rollercoaster on steroids.
Now with this being said, if it becomes clear that regulators want users to hold their maturity until tax time and then we could do what we want with the rewards within that timeframe, and perhaps they could use a 30 Moving average, however, even that could be risky, cause if everyone files and itâs dipped then the next month boom it really might make things⌠tricky⌠not impossible. I think the proposal Domonic submitted was actually a solid tactical fix, however, the community is much larger than US users, so with IC being a democracy, we cannot just go with the cash cow if users truly vote otherwise. SO, it really gets muddied trying to communicate to ALL communities involved the why and actual incentive behind it without making it look or appear to be favoring one country over another (completely understandable). However, the USA has the most upcoming node providers and perhaps could end up with substantial voting power within a few years. All of this could change. It could also change in 2023 when the government finally shows up and gives at least a definitive answer on wth we are supposed to do.
All in all, at the end of the day I am going to seek a local tax consultant (in my area) and I am going to be very forward, upfront, show my documents and really work with them on proving the most accurate information. To me, this is not evading taxation. If anything I would get a bit of a discount on my taxes right now lol It is me doing my due diligence with this because I am going to be involved for at least 12 years. Obviously, it is worth the time, and money spent. Even if perhaps the first five years I struggle it isnât about the destination. Itâs the journey. SO I will try and share what I find out this year. BUT it really will only pertain to my area, my state, and my county even. So, what works for me may not work for everyone else. That is why these headlines have all the regulators like âwe need clear-cut rules hereâ. Because you cannot (sadly) track it the way you described it (unfortunately).