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NFT / Non-Fungible Token / Crypto Art - "We're legit, we're legit," they cried, until the IRS agreed

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James Yochum, CPA @JTheAccountant · Nov 5 H.R.3684 Infrastructure bill passed. James Yochum, CPA @JTheAccountant · Nov 5 Reading closer they have added “Digital Assets" into 6050i which me that any individual who receives $10,000 or more in crypto MUST rej Digital Assets are now covered securities. to the IRS. Reporting will be ushered in for all crypto brokers to report to IRS data on activity from 1/1-12/31/23 of all crypto transfers to other non US brokers (private wallets/offshore) ment as cash for purposes of section 60 (d) of such Code is amended by striking iragraph (1), by striking the period at and inserting", and", and by insert the following new paragraph: digital asset (as defined in section -.יי.( ce.--The amendments made by this section ired to be filed, and statements requir ember 31, 2023. :ruction.--Nothing in this section or the iis section shall be construed to create riod prior to the effective date of sucl sect to-- ier any person is a broker under section al Revenue Code of 1986, or ier any digital asset is property which :urity under section 6045(g) (3) (B) of su More In File #XRP #SEC #Ripple TA uy uuuany u Cn TUuwAVI quirement for Certain Transfers of Digital Ass ate.--The anendments made by this section shal ct to Reporting.--Any broker, with respect to quired to be filed, and statements required to not part of a sale or exchange executed by suc cenber 31, 2023. lendar year of a covered security which is a dstruction.-Nothing in this section or the nt maintained by such broker to an account whi this section shall be construed to create any or an address not associated with, a person th period prior to the effective date of such r has reason to know is also a broker, shall nspect to-- endar year, in such form as determined by the ther any person is a broker under section 6045 the information otherwise required to be furni rnal Revenue Code of 1986, or nsfers subject to subsection (a).. (B) Reporting penalties.--Section 6724(d) (1) ( ecurity under section 6845(g) (3) (B) of such Co h Code is amended by striking "or" at the en use (xxv), by striking "and at the end of CTION OF EMPLOYEE RETENTION CREDIT FOR EMPLOYER vi), and by inserting after clause (xxvi) the CT TO CLOSURE DUE TO COVID-19. lowing new clause: IRC Section 60501 requires that any person engaged in a trade or business that receives cash in excess of $10,000 in a single transaction or in related transactions must file Form 8300 POF, Report of Cash Payments Over $10,000 Received in a Trade or Business. ther any digital asset is property which is a Return to List of FAQS CON OF EMPLOYEE RETENTION CREDIT FOR EMPI TO CLOSURE DUE TO COVID-19. *(xxvii) section 6045A(d) (relating --Section 3134 of the Internal Revenue Code of returns for certain digital assets),". atment as cash for purposes of section 6050i.-subsection (c) (5)-- 0I(d) of such Code is amended by striking an (A) in subparagraph (A), by adding paragraph (1), by striking the period at the e, 2) and inserting ", and', and by inserting a (B) in subparagraph (B), by striking , and' 2) the following new paragraph: ny digital asset (as defined in section D)).'". and' at Page Last Reviewed or Updated: 01-Jul-2021 -Section 3134 of the Internal Revenue Co - Share 8 Print ibsection (c) (5)-- end and inserting a period, and (C) by striking subparagraph (C), and subsection (n), by striking"January 1, 2022 A) in subparagraph (A), by adding and The andmnntenda huthie catinnhal O 145 O 1.5K O 26 27 318 694 1.1Kר James Yochum, CPA @JTheAccountant This is a huge damn deal for the #NFT space. You've got 15 days to report this information on Form 8300 and violation of 6050i is a felony. A Felony for selling NFTS, because digital asset is now concerned as "cash" for this provision. Insane. 11:54 PM · Nov 5, 2021 · Twitter Web App *guys selling and trading NFTS* what the f---, the IRS is making me report my digital assets as assets! that's insane! since when are there regulations on sales of securities! riseofthecommonwoodpile i feel this is kinda nerd s--- so i should briefly (over)explain (mostly because it's a very big L for crypto losers). so essentially, before now, anyone making money off crypto trading (or just NFTS specifically) was in this kinda...grey area in terms of regulation and taxation, and the anonymized nature of cryptocurrency means that most people were straight up not reporting that money as earnings (or NFTS as assets), especially not if it was never converted back into non- cryptocurrency. this meant that, if you were dealing in crypto, you could (and i'm HUGELY over-simplifying) dodge the vast majority of regulations and requirements (and taxes) that someone making a similar amount of money in USD would deal with. after this new regulation, if you receive US $10,000 or more in cryptocurrency, you must now report it to the IRS as a cash asset, and if you don't, that is a felony. So this is very funny, to me, for two reasons. One is that now, if a crypto-bro wants to not commit a felony, they have to un-anonymize their wallet, so they can no longer trade as an anon. They would be trading under their name (assuming they're trading $10,000 or more, per year i believe if i read right). This defeats some of the major uses it was being used to launder money, of cryptocurrency, especially and it means your identity on the blockchain would now become knowledge people would have access to, and track all future and past trades you have made on the blockchain. the second and funnier thing is what this does to NFTS. a cash asset is any asset which can be easily converted into cash within three months. according to this new regulation, you available cash assets would now include your NFTS (assuming they're valuable enough etc. etc.), and you would be expected to borrow and pay obligations based off of that information. so if a collector came to make good on their loan to you, they would be considering your NFT as a cash asset that can be used to pay them, but of course *selling NFTS is a f------ scam*. They're *not* cash assets, because outside of very specific circumstances, those $50,000 NFTS are not bought up again for the same or higher value. many (it's hard to know exactly how many, but this exact thing i'm about to describe has been documented a bunch of times in this space) NFTS have their values inflated purely through insider trading, in a scam that goes (in its simplest form) something like: person 1 makes an NFT, and person 1 sells the NFT to person 2 for a very high amount of crypto, some amount of which is given back to person 2 in another, altered form so as to not be traceable as just trading money back and forth. this causes the NFT to become "worth" that amount of money that was paid for it (this is also how most of the real world art market works too!). Do this to like 5 of an artist's NFTS, and suddenly it looks like that artist's work is worth X amount of money, despite no one having actually *paid* that much for it really, but now that the value of their work appears to be high, it can be sold to rubes for that high amount for real now. which is all a way to say that, if you are said rube, and you just bought a s----- picture of a monkey smoking a joint for $75,000, that is now considered cash you can access within three months when it comes to paying debtors (or anything else that involves how much cash and assets you have on hand, including how much you pay in taxes), even though, if you tried to sell it, no one would buy it for that much. so people will be expecting you to have money you do not actually have the ability to access. Not only that, but you would have had to un-anonymize you wallet's identity on the blockchain to buy the monkey, so everyone knows who the rube is. it owns ok? it owns. f--- this is a terrible explanation. i'm bad at explaining econ s--- and probably got 50 things wrong go away

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qx1511

qx1511

Nov 13, 2021 at 10:23AM EST

NFT stans wished for NFTs to be legit and they got their wish. And so the monkey's paw curls another finger…

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David "Garsedj" Touchdown

David "Garsedj" Touchdown

Nov 14, 2021 at 07:49AM EST

+56

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