can't you completely avoid capital gains taxes by taking out defi loans?
Ultra high net-worth individuals often take asset backed loans instead of selling their stocks/assets for cash since that is a taxable event. Often times these asset backed loans are VERY low interest (~2%) at places such as interactivebrokers.com/en/home.php.
These asset backed loans are not taxable.
So then, if for example, chainlink hits $100 and you have 10k link >deposit your 10k link in aave or a similar platform ($1m total value). > take out a USDC loan with a reasonable health factor (lets say 1:4 so you borrow $250k) > send the $250k usdc to coinbase, sell for cold hard cash > put your cash in dividend yielding stocks > pay back your $250k aave loan at 7% interest rate with your dividends over 5-10 years > pay 0% capital gains taxes
I don't think there's anything more to it. I've arrived to the same plan. Utilize debt to grow portfolio in the safest possible way. Less risky than pissing away on gibs.
Nathan Cox
Seriously, I don't see a single flaw. You get liquid cash without losing exposure to crypto assets youre long term bullish on, pay 0% taxes, its completely legal and the interest rates are fairly low (WAYYYY lower than the taxes you would pay to cash out)
Austin Cook
Yes
Kayden Moore
No tax when selling usdc on cuckbase?
Brody Perry
Nope, theres nothing to tax, youre selling usdc for usd, its 1:1. Unless usdc happens to be above $1 when you sell, but thats rare and its only ever off by 1 cent or so
Jaxson Lopez
Yeah this works well for real assets like stocks, but it’s unreasonable for highly volatile assets like crypto. Just buy low sell high.
Mason Brown
No, because there was no gain in value between the time you received the USDC and when you sold it on cuckbase. You would still pay capital gains on the money you make once you buy dividend stocks and sell some of those gains to pay off the loan.
Elijah Ross
You would still pay capital gains on the dividend stocks, but you’re right that you would avoid a huge capital gains tax if you sold your whole stack. Plus you’d have to buy back your stack.
Wyatt Gomez
...and if chainlink fall in price, even for a second, you get liquidated and lose all your linkies?
Oliver King
What about the fees you’d have to pay cuckbase when selling? Do you eat those or can you write them off?
Landon Evans
Hence why he said only to borrow against a quarter of your stack, so you could keep the rest on the sidelines as collateral if needed.
Michael Russell
write off, you can also write off gas fees which someone smarter than I could exploit
Justin Fisher
aave loans are a taxable event in the uk since technically you trade link tokens for aLink tokens.
Sorry to hear fren. I thought the US was more cucked but apparently not.
Aaron Baker
you can sell on coinbase pro for lower fees, or even gemini paying capital gains on your dividend stock is better than paying cap gains twice when you sell your crypto and then when you sell your stock/get dividend payouts. 1 link = 1alink = same price $. That should not be taxable
Brandon Miller
>selling a coin for cash This is where you get taxed
Parker Cox
Can you not read? At no point are you selling your coins
Jackson Young
it is absolutely taxable. Doesn't matter if the price is the same since presumably the value on the other side of a trade is always equal at the time of the trade
token to token =tax.
Justin Brooks
It's taxed as if the exchange was LINK-->USD-->aLINK
Caleb Sullivan
Aren't you only taxed on gains? Hence capital GAINS or short term GAINS. Lmao.
Ryan Williams
In the eyes of the IRS you realized your gains from your initial investment when you "sold" your LINK for aLINK. See
Zachary Diaz
Before I start >your jurisdiction/local laws may vary When you get the USDC, regardless of the mechanism of how you do that, you have acquired an asset. The price you PAID (not the market price) is the cost of the aquisition. The price you receive when you sell the asset is the capital gain. In this instance, you acquire an asset for one of the following costs: a) the quantity of LINK paid in exchange for the token b) the promise of future repayment (i.e. zero upfront) In scenario a), your capital gains tax is equal to the cost of your (possibly multiple) investment(s) in LINK minus the USD price of the token(s) you receive in exchange. The difference between the two will result in either a capital gain or a capital loss - in either case, this is added to your taxable income for that financial year and you will therefore be liable for either refund or further tax payment. In scenario b), your acquisition of the token is $0 and therefore the moment you sell the USDC asset you add to your annual income the entire value of the USD you recieve in return, therefore your taxable capital gain is 100% of the return price
Matthew King
yes but you supposedly realize any gains you made by doing a token to token transfer. Basically UK treats the fiat as just another shitcoin already, kinda bullish in that way I guess.
Adrian Diaz
Yes, I can read. You should too
Benjamin Cox
honestly, the problem comes two years down the line when there's literally thousands of new millionaires trying this. myself, i have 15k link and some other stack and i have no idea how it will work. i'm a stupid smooth brain, however, i just think the irs will say x amount of money went into 'crytpo' and y amount came out. pay me z and that's the end of it. no way around it.
i also don't get how there's no kyc involved when lending protocols like aave have control of your assets. isn't that custodial? so, what happens if you put your 1M usd as collateral on a platform that allows over collateralized loans. you don't get taxed on cashing out 5million? no fucking way man, no way.
anyways, i'm hoping for the x in y out pay the profits in tax route. there's no way they're gonna have set regulations for defi lending protocols and such. it's far too complicated for them
William Fisher
you stupid nigger the cost of acquisition is the price of USD you paid for the link AT THE TIME YOU ACQUIRED THEM. Once you swap them for USD or USDT or whatever shitcoin at their price now you are realising your gains.
literally just read the gov guidelines that is how it works in the UK
Zachary Mitchell
>since technically
No nor true. HMRC might try to push that but a half decent tax lawyer would get that thrown out in about 5 minutes.
Anthony Bennett
Tax shills in this thread.
Reminder to make the decision to pay zero tax under any circumstances and then work backwards from there.
Jace Myers
Reading comprehension isn't your strong suit, clearly. Try again.
James Turner
Hello tax shill. Please fuck off back to your grubby little office. Crypto was designed to avoid tax liability legally
Loans are tax free.
Logan Ortiz
>HMRC might try to push that wtf are you talking about man HMRC literally just states the law that got voted in last year. they're voting on raising CG tax to 40% this november, im sure your fancy tax lawyer can render that decision void as well lmao
Bentley Bennett
does anybody know if the irs asks for proof of revenue or like where i got the money to initially invest from by any chance?
Jeremiah Rivera
It's a secured loan, not taxable. USDC to USD is 1:1 or close enough that there will be no gains, especially not after paying gas and loan origination fees. They'll either have to fuck up the entire system and rewrite everything or it's a way to semi cash out small amounts under a million without paying taxes. I'm going to be self-employed llc and paying income tax on my steaking so they should be happy I'm not trying to call it dividends or some shit. This is just so I can max out my 401k and IRA. They should not make taxes so complicated if they actually just want a simple in-out-our cut type of exchange. I'm doing just like all the other big boys and paying only what I owe, otherwise what's the point of making so much money that tax strategies become a consideration? If they gave a shit they would have rewrote the tax code decades ago.
Benjamin Hernandez
yeah, you're explaining Usdt to usd, which isn't the relevant part. the relevant part is what you bought link at and the tax already happens at conversion to usdt, not at cashing out
even more relevant, it also happens when going into aave
now reread the thread and YOU can try again
Levi Hall
I am not a tax shill - I just know what the law in my jurisdiction is. I fucking hate the tax office and consider them to be parasites. Know your enemy. I am developing a business solution to help people like OP convert their crypto for a much better price than what your local tax office will charge, but I need more time to acquire capital and continue tax research before I can unveil the project. I will present it here at that time, so we can thereby all enrich our ourselves and collectively raise our middle fingers at local government officials.
Aaron Kelly
>if chainlink hits $100
So many of you are absolutely obsessed with this shit coin
Nicholas Young
Strike two. Actually read what I wrote and not what you think I wrote. I won't respond to you again.
Ian Cook
token to token is a taxable event. and literally any crypto token is regarded as currency in the eyes of current tax law
this is literally on the site holy shit people
Luis Nguyen
You mean like money laundering? Technically yes, if you got 500k in cash you might get away with it under additional income but it will stand out if you are audited. At the end of the day irs just wants their cut, they love drug dealers. FBI, DEA, and your state authorities have a very different viewpoint though, and IRS is not interested in protecting you even if you pay taxes. Getting robbed by the irs is not even half of the game here as the disgusting chimera known as government has many mouths to feed. You can't always get away with feeding just one. That's why I'm paranoid and make sure everything is squeaky clean. Why bother with drugs when shitcoins pay so much more anyway? Crime used to pay but the real pioneers are hustling on the digital front now. Nothing is worth risking jail time. Freedom is the whole reason I want money in the first place.
