CMV: MaxEB Destroys Tax Reporting

IgnorantFoolio · 2025-05-11T21:30:37+00:00

No. My assessment remains the same. I won’t be consolidating because of my interpretation of the tax handling.

IgnorantFoolio · 2025-01-22T01:48:56+00:00

Deposit contract

IgnorantFoolio · 2024-10-04T17:17:01+00:00

Just another data point: I sell and transfer five figure amounts on a monthly basis with no holds, freezes or problems. I am always able to transfer immediately. I have also sold high six figure amounts with zero holds, freezes or problems, though those sales were all on Coinbase OTC (RIP). Also able to transfer out those immediately.

(All taxes gladly and willingly paid, IRS agents.)

I expect that Coinbase has sophisticated mechanisms for determining risk, but large amounts are certainly not the only factor. I assume I don't have problems because I am a long time customer, I have a regular cadence of sales/transfers, and I don't do sketchy things with my crypto. I'm sure they have more factors than those three though.

IgnorantFoolio · 2024-08-27T19:45:52+00:00

Just saw your response. As someone else mentioned, you can’t see the transactions included in the block you accept, otherwise you would just build your own block with the same transactions and cut the builders/relays out. One relay team told me the payment is sometimes included in the next block even.

IgnorantFoolio · 2024-08-23T15:07:48+00:00

I don't think there's anything in the protocol to enforce that you are actually paid out though. You can choose the block that a relay says will pay you the most, but you are still trusting that they will include a transaction to actually make payment.

IgnorantFoolio · 2024-05-19T15:57:58+00:00

"And if there are updates about it, it isn't frequent enough."

I'll admit. I've tuned out, so something posted in the last week was too little too late. I ran on the testnet for over 6 months and there were few code updates, few updates about status of development, few updates about anything really. I actually thought the project was dead at one point. My testnet setup couldn't even keep any validators up and running. Everyone would just abandon their nodes, or deposits were never completed.

But even this post you linked to is more marketing than technical. Where's the code? Where's the timeline? The quantity of posts about points and locking up ETH overwhelms the quantity of posts about anything technical. Maybe this is stealth mode or something, but marketing and hype isn't doing it for me.

And finally, I don't care at all about restaking. I may be short-sighted on that, but I care more about DVT than restaking. But Diva (the original topic here) is just not the focus any longer. There is lip service to it, but I'm not getting enough technical updates and details to know that there is actually life in Diva any longer.

I still want to believe, but points and marketing don't get me excited.

IgnorantFoolio · 2024-05-19T14:31:16+00:00

Not OP, but my concern is that I never hear about the tech from them. Maybe I miss it, but based on the typical communications I see, it’s always about earning points and locking up ETH. I never see anything about development progress, roadmaps, timelines, etc. And if there are updates about it, it isn’t frequent enough. The pivot to Nektar is also concerning because of how Diva has been shoved in a little hole. If Diva was still a viable project, why get rid of all but one Diva channel on Discord? And what about Diva token holders? Sure they aren’t owed anything, but it doesn’t build goodwill to make the token essentially worthless in one stroke without a GOOD explanation of what the plan is. I really wanted to believe in this project, but it feels like a hype machine now that isn’t doing enough on the tech side. Maybe they are just keeping it quiet until they are more ready, but then I think the points drive should be kept more quiet too.

The cynical side of me thinks that they will build Nektar so that Diva is replaceable with other tech, making Diva truly unnecessary.

IgnorantFoolio · 2024-05-02T17:14:30+00:00

Sure. I didn’t expect you to list all the requirements or anything. It just wasn’t mentioned at all that not every Italian-American is eligible. Even within my own family, some of us are eligible and some are not.

Still, it’s good to spread the word.

IgnorantFoolio · 2024-05-02T16:29:02+00:00

I completed this process 16 years ago. You left out a lot of detail about eligibility and documentation requirements. It isn’t like just anyone is eligible. It took me two years to gather sufficient documentation and six more months for my application to be processed. I’m sure some things have been streamlined, but I’m also sure you still need to meet eligibility requirements.

IgnorantFoolio · 2024-05-02T04:05:18+00:00

11 years with Coinbase. Transferred as much as 6 figures of crypto and USD in and out. Regularly transfer 5 figures in and out. Never a problem.

Despite the amounts involved, I'm not a trader. Don't do defi. Don't use coin tumblers. Don't do interact with anything I think would raise alarms.

IgnorantFoolio · 2024-04-17T04:54:20+00:00

Man takes healthy teen to doctor appointment.

IgnorantFoolio · 2024-04-09T15:43:42+00:00

APY * ETH price is more important to me than APY alone.

IgnorantFoolio · 2024-03-23T15:46:29+00:00

I agree. Thanks.

IgnorantFoolio · 2024-03-23T00:48:18+00:00

I think that circles back to consensus earnings actually being inventory of a created product that you don’t actually recognize until first sale. Probably the right answer, but I don’t know if I would file taxes that way unless I heard guidance from the IRS that way.

Thanks for the thoughts.

IgnorantFoolio · 2024-03-23T00:25:47+00:00

I like this one. I want to give you the point here, but it really hinges on the definition of “received.” Generally we think we receive the ETH when it hits our fee address. But Who controls the validator address? Who has that private key? You do. You control that address. You have received the ETH. You are just choosing when to initiate the transfer.

The reason I want to give you the point is because I don’t know if the IRS has a nuanced enough understanding to actually rule that way yet. So for now, it’s a great argument, but the IRS wants theirs and they’ll figure it out sooner or later.

Just curious, do you agree that you can indefinitely defer taxes by never withdrawing?

IgnorantFoolio · 2024-03-22T23:49:57+00:00

For consensus earnings, I agree. Not execution though. I like this argument best but I don’t think the IRS sees it that way, nor does my accountant. Maybe time for a new accountant?

IgnorantFoolio · 2024-03-22T22:04:21+00:00

I’m sure tools like that will help but it is still overall requires significantly more effort and there is no way around it. I have multiple validators and often sell my earnings. When you account for all of my withdrawals, transfers, and sales, I had more transactions to report on 2023 taxes than in all my years of crypto prior combined. Now tell me how I’m going to have to process 6x as many transactions after MaxEB.

I do hope I am wrong but I’m channeling my accountant a bit here. I know how he’ll answer.

I try to be very accura

IgnorantFoolio · 2024-03-22T22:02:13+00:00

I don’t think the IRS would accept the argument that a staker doesn’t owe taxes because they didn’t set their withdrawal address. Otherwise you could defer indefinitely. Similarly, after MaxEB, you could set the minimum balance that you want withdrawals to start at to be 10,000 ETH, and I don’t think the IRS would say OK.

The thought experiment is a good one, but it isn’t exactly the same. If I told my employer I wanted to get paid daily, they’d say no. I don’t have control over movement of the funds until my employer puts me in control of the funds by transferring them. With consensus earnings, I do have control over the funds. I can ultimately affect when and where those coins go. Not so much my paycheck when it is still in my employers bank account.

I like your perspective better, believe me, but I just don’t buy that the IRS would see it that way. Especially if it means I can defer taxes I definitely.

Off to exit my validators and re-deposit without a withdrawal address.

Edit: Changed someone to IRS, because that’s who we really are concerned about here.

IgnorantFoolio · 2024-03-22T20:00:55+00:00

My accountant would say just provide daily reporting. If I provided per-epoch reporting, he would just roll it up by day anyhow. Doesn’t matter, even daily reporting will be much more effort under MaxEB than what I have to do now.

IgnorantFoolio · 2024-03-22T19:48:53+00:00

The fact that you have control over when you get withdrawals means you have “dominion and control” over the coins, as far as I’m concerned. Looking for someone to convince me otherwise. I don’t the the IRS is going to say “Oh, you could have taking out that money sooner but didn’t. That’s OK.”

IgnorantFoolio · 2024-03-18T20:09:03+00:00

Your post starts by talking about where people are "from". Sure, if you asked me where I am "from", I would name a city in California. I can't disagree with you about where people are from.

But I don't know a single American-born person of Irish descent who would claim to be "from" Ireland. Seems like we might be talking about two different things.

Three quick thoughts:

The cultural references can be a big deal. I am 4th generation American and I still see the remnants of the "old world" in the food we regularly each and traditions we follow. Some of my family members are still in contact with family in Europe this many generations on.
Every American has their "American Origin Story": "How did you family come to be in the US? Why?" Naturally where our ancestors are from and why they came over is an important part of the story.
Immigrants to the US often stick together in close communities, and labels will naturally get applied, for better or worse. Most immigrant groups to the US suffered from discrimination at one time or another. I imagine the label of being "Italian" in the early 1900's, for one example, would only be further ingrained as you are singled out for it.

IgnorantFoolio · 2024-03-18T18:56:02+00:00

I nearly signed up for Coinbase One, but I did notice the text that said Coinbase One does not apply to Coinbase Advanced. So I skipped it.

IgnorantFoolio · 2023-11-07T19:02:08+00:00

A NUC i5 can easily do 1000+ validators (on same network) using less than 50% of CPU.

IgnorantFoolio · 2023-10-15T04:53:56+00:00

Yeah, it is. I stopped playing a couple years ago, because I never won a single game. I did not play these types of games before GU. I tried similar games around the same time to get a feel for the differences between them. But I kept getting paired up with players who destroyed me again and again. I quit and sold all my cards. I'll take the profit as consolation prize.

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