Flare ( $FLR ) AIRDROP for US CITIZENS who hold $XRP.....
IS taxable per IRS Rev.Ruling 2019-24
irs.gov/pub/irs-drop/r…
This ruling is authoritative guidance for the same factual circumstances outlined in the ruling, which fits the same factual circumstance $FLR is airdropped.
IS taxable per IRS Rev.Ruling 2019-24
irs.gov/pub/irs-drop/r…
This ruling is authoritative guidance for the same factual circumstances outlined in the ruling, which fits the same factual circumstance $FLR is airdropped.
So here's what happens if FLR Airdropped right now?
1) $FLR trading price at time you receive ability to send it is the FMV you recognize as taxable gain.
Ex. 10,000 FLR @ $2 = $20,000 Taxable Value.
Your basis in your coins are now $2/FLR
shortly $FLR goes to $10, you sell
1) $FLR trading price at time you receive ability to send it is the FMV you recognize as taxable gain.
Ex. 10,000 FLR @ $2 = $20,000 Taxable Value.
Your basis in your coins are now $2/FLR
shortly $FLR goes to $10, you sell
$10*10,000 =
$100,000- Selling Price
- 20,000 (your basis you were taxed on already) = $80,000 STCG taxed at ordinary income rates.
Hold for 1 year 1 day after airdrop =$80,000 LTCG taxed at preferential tax rates max 20% (+3.8% if you are subject to Net Investment Income Tax)
$100,000- Selling Price
- 20,000 (your basis you were taxed on already) = $80,000 STCG taxed at ordinary income rates.
Hold for 1 year 1 day after airdrop =$80,000 LTCG taxed at preferential tax rates max 20% (+3.8% if you are subject to Net Investment Income Tax)
What everyone is worried about is getting hit with the ordinary income tax, and then $FLR having a heavy fluctuation in price downward.
So in that case , $2 FLR *10,000 FLR = $20,000... again.
You still have $20,000 basis in your $FLR!
So in that case , $2 FLR *10,000 FLR = $20,000... again.
You still have $20,000 basis in your $FLR!
For simplicity, if it goes to $0, and you give it away.....
you have a STCL of $20,000 which you can deduct against any ST/LTCGs (up to the full amount) or ordinary income up to $3,000/year.
ST= Short Term
LT= Long Term
CG= Capital Gains
The worst case for Flare $FLR tax?
👇
you have a STCL of $20,000 which you can deduct against any ST/LTCGs (up to the full amount) or ordinary income up to $3,000/year.
ST= Short Term
LT= Long Term
CG= Capital Gains
The worst case for Flare $FLR tax?
👇
If you don't have any other LT/STCG's to offset the losses in the current year or future years (they rollover), you must drag out deducting it $3,000/year every year for the next 7 years.
Obviously this is when talking to a tax professional is needed, as you may want to....
Obviously this is when talking to a tax professional is needed, as you may want to....
go against the Revenue Ruling by filing form 8275
https://twitter.com/JTheAccountant/status/1384675491190169600?s=20
The other issue we have is determining what the FMV is, for hardforks the IRS issued a memorandum (non authoritative guidance) which stated it's at the time the block split..... $0 FMV for most every case!.. which goes to show IRS doesn't understand yet
https://twitter.com/JTheAccountant/status/1381110922572410885?s=20
So what is the airdrop price for $FLR?
If on an exchange:
The price on the exchange you get airdropped to, at the time you are airdropped (constructively received).
If on a private wallet:
Aggregate market data at time of receipt.
If on an exchange:
The price on the exchange you get airdropped to, at the time you are airdropped (constructively received).
If on a private wallet:
Aggregate market data at time of receipt.
If anyone is curious where this term "Constructive Receipt" comes from it's tax court precedent.
Interesting case involving a NFL (Packers🧀) player receiving a Corvette as a gift, and the IRS wanted him to recognize tax @ FMV , but he didn't pick it up
en.wikipedia.org/wiki/Construct….
Interesting case involving a NFL (Packers🧀) player receiving a Corvette as a gift, and the IRS wanted him to recognize tax @ FMV , but he didn't pick it up
en.wikipedia.org/wiki/Construct….
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