6 Ways to Avoid Capital Gains Tax on Your Bitcoin Transactions | How can I avoid paying taxes on Bitcoin?

It's been a guard year for Bitcoin from a pinnacle cost of over $19,000 to an ensuing low of under $6,000 dollars. With numerous speculators hoping to money out, there is developing worries about assessment liabilities from their exchanging exercises.

In 2014, the Internal Revenue Service (IRS) gave direction for US citizens in regards to the treatment of cryptographic money — Cryptocurrencies are to be treated as a capital resource. This capital additions rules apply for any increase or misfortune, making an assessable occasion for possibly every digital money exchange.

What are Taxable Events?

All things considered, all cryptographic money exchanges will be treated as an assessable occasion; some being treated as pay and others being treated as a capital increase or misfortune.
This can include:

• Exchanging Cryptocurrency: Buying and selling digital currency can produce a capital addition or misfortune. Luckily, misfortunes can be utilized to counterbalance gains.
• Coin/Token Exchanges: Exchanging between digital currencies. For instance, buying Ripple for Bitcoin would be viewed as an assessable occasion.
• Selling Bitcoin for Fiat: When changing over cryptographic money once more into fiat (USD or other sovereign cash) this is treated as an assessable occasion creating a capital increase/misfortune.
• Getting Cryptocurrency (as an installment): If a digital currency is gotten in return for an item or administration or a pay/wage (it is treated as standard salary) the estimation of the exchange is determined at the reasonable market at the hour of receipt.
• Air drops: Treated as customary pay dependent on the estimation of digital currency upon the arrival of the airdrop. Additionally, at time of trade there will be a capital increase assessable occasion.
• Trading Bitcoin for something of significant worth: This is an assessable occasion and may produce a capital addition or misfortune.
• Digital currency Mining: Mining is viewed as standard salary (controlled by the honest evaluation on the day the coin/token was mined)

The general standard is any exchange including digital currency is viewed as an assessable occasion (for US charge purposes).

Be that as it may, further explanation by the IRS is required as there isn't a lot of direction given a considerable lot of the extraordinary highlights of cryptographic money, (for example, how to treat a chain split or fork).

American Institute of Certified Public Accountants (AICPA) has mentioned on two separate events explanation past Notice 2014–21.

Indeed, even the American Bar Association's Tax Section tended to in a letter to the IRS requesting further explanation:
In particular, we demand extra direction that will address… new issues that are important to the 2017 expense year, for example, chain parts, forks that have emerged resulting to the arrival of the first notification

In this way, until further direction is given by the IRS, it's protected to expect that most all digital money exchanges trigger an assessable occasion.

6 Ways to Avoid Capital Gains Tax on Your Cryptocurrency Transactions:

1. Gifting

It's conceivable to "blessing" (or part with) your digital money to a companion or relative consistently (for a lifetime) without producing an assessable occasion.

In 2018, its workable for people to blessing up to $15,000 without recording the exchange. On the off chance that the sum is above $15,000, at that point a blessing expense form would should be filled (the yearly gifting rejection limit is $15,000 per person).
Did you realize that US residents can blessing up to $11.2 million for each lifetime?

One final point on Gifting — when the beneficiary liquidates out (sells the crypto), the assessable estimation of the blessing is controlled by the market an incentive on the day the gifting occurred.

2. Self Directed IRA

Many brilliant speculators are exploiting the pattern to utilize their retirement designs as a vehicle for charge conceded or tax-exempt (on account of a Roth IRA) cryptographic money contributing utilizing their Self-Directed IRA or Solo 401(k).

Since the IRS treats cryptographic forms of money, for example, Bitcoins, as a capital resource and capital resources are permitted to be overseen by IRS's, such retirement accounts are allowed to purchase, sell, or hold digital currencies.

Buying cryptographic money with a Self-Directed IRA or Solo 401(k) plan has become exceptionally mainstream since all pay and restores stream into the retirement account without setting off an assessable occasion. The expenses are either conceded until conveyance or on account of a Roth IRA, tax-exempt.

On the off chance that you purchase your digital money inside a ROTH, you pay zero assessment on the capital increases earned in the record.

3. Seaward Corporation

Another choice is to frame a seaward IRA LLC and open a universal financial balance under this structure. The IRC is put into the seaward LLC which enables you to be the chief of the LLC and all the assets under the record.

On the off chance that you are dealing with the assets under your own seaward IRC, there are IRS rules which should be followed which incorporate not getting from the record and regarding venture choices as would an expert speculation guide.

4. Worldwide Life Insurance Policy

You can likewise decrease or dispose of capital increases charge by setting up a universal life coverage arrangement (least speculation of $2.5 million) that will buy the cryptographic money.
The Offshore Private Placement Life Insurance can be supported with any measure of cash and there are no commitments points of confinement or dissemination necessities.

The duty treatment of a private arrangement strategy is comparable in nature to a customary IRA where assessment is conceded until either dispensing or the approach is finished off.

A decent advantage of a private arrangement strategy is if the approach is held until the individual's demise, the digital currency is passed to the beneficiaries tax exempt.

The beneficiaries get the coins at the market cost on the date of passing and pay zero duty on the gratefulness while they were held in the extra security approach.

5. Become a Resident of Puerto Rico

Handfuls or business visionaries and cryptographic money financial specialists have set up residency in the Caribbean island of Puerto Rico to exploit its valuable duty framework.
All US residents must compensation charge on overall salary… with one special case — Puerto Rico sourced pay is barred from US Tax (as per IRC Section 933).

To qualify, you would should be inhabitant of the region which requires going through at any rate 183 days per year (or increasingly) living on the island.

Since the domain is barred from Federal tax assessment, Puerto Rico is allowed to make their own expense laws for occupants.

Puerto Rico sourced salary is viewed as any capital increase or business pay earned by an occupant of the region that meets all requirements for Act 20 or Act 22. More insights about Act 20 and Act 22 can be found here.

6. Surrender US Citizenship

Regularly thought to be an alternative after all other options have run out, you might be shocked to hear that more individuals than any time in recent memory are repudiating their US citizenship.
A year ago was another record year for citizenship reunification.

Notable famous people are additionally going this course and the rundown incorporates vocalist Tina Turner, military craftsman and entertainer Jet Li and fellow benefactor of Facebook, Eduardo Saverin to give some examples.

When US citizenship is revoked the IRS never again has any rights over your pay. Be that as it may, you'll need a second visa right now (you will be viewed as stateless) and be not able to travel anyplace or even leave the US.

At long last, there might be a "leave charge" forced that would should be paid before ostracizing.

The IRS is Targeting Crypto

The IRS served a "John Doe" summons (the most exceedingly terrible kind) to Coinbase for it's client rundown of financial specialists who have exchange worth more than $20,000 in 2015.

In 2015, just 900 citizens announced capital increases/misfortunes to the IRS which has lead them to presume numerous digital money clients have been sidestepping charges by not revealing.
This is additionally upheld by ongoing assessments that about 5% of all Americans currently possess Bitcoin.

On the off chance that you are keen on proceeding to contribute and exchange with cryptographic money, it's judicious to have a strong duty minimization plan and procedure set up to guarantee you are charge agreeable regardless of where on the planet you live — particularly in the event that you are a US resident.

Exchange Safe,