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Hey dad, did you enjoy your day of marking?

No, I ran the numbers on what living on Bitcoin could look like, where each month you put all your money into Bitcoin (well actually liquid to deal with cost basis issues) and then sell as expenses come in (mortgage, food, travel, fun). See my graph of Dollar value of saving where the orange line is saving in Bitcoin.

But what happens if the price of bitcoin goes down in a month? (This is made up so bare with me)

Claim the loss back in taxes the next year. 😎 yes in 2018 you were able to claim nearly a #bitcoin back in losses.

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Discussion

Good Life Seek 11mo ago

Can you please say more about liquid and cost basis? You mean the Liquid side chain and taxes? How is this helpful? Thanks.

Dug 11mo ago

Yeah like the side chain, so, bear with me, but going from btc to liquid is a trade. Meaning that rather than when you buy something with bitcoin and incurring taxes on your bitcoin cost base, you’d only incur a price different from when you bought the liquid (a month or so). If the price dipped a lot from your purchase you could log a loss. If you were spending btc, you would likely only be able to log a loss if price went below the cost basis of a first in first out buy (which could be years ago). I do my taxes and based on what I know, this makes sense to me, but not heard others say this though so “not tax advice, I’m not an accountant” 🫡🙌

Good Life Seek 11mo ago

Thanks a lot for the explanation.

Follow up question, if I may: when you exchange Bitcoin for Liquid, e.g., using Bolt Exchange, isn't it, from a tax perspective, selling Bitcoin?

Just trying to understand.

Dug 11mo ago

You’re using the network to transfer value so I think it is not a taxable event, if the value of the bitcoin didn’t change, but if you can find an exchange that allows you to buy liquid btc with cash, this grey area wouldn’t be an issue

Dug 11mo ago

Grey area not in terms of legal and not legal, but just the part that is not perfectly clear.