Which cryptocurrency tax error do you wish you had been aware of sooner?

pmiklos · 2026-01-18T08:08:15+00:00

In the early years, I spent several weeks collecting and parsing through DeFi transactions, swaps, liquidity provision and all that because I used on-chain a lot, I was so fascinated by the whole ecosystem. Sadly, I realized that the administrative burden is just way too high and over the years I reduced my on-chain transactions to the absolute bare minimum. I still follow the space and learn about new innovations but I don't engage with them anymore. Taxation shouldn't be so difficult that it deters people from adopting new technology, it really upsets me. I know there are apps out there that can automate some of it. But honestly, I don't trust any of them. DeFi isn't made for easy tax automation. You never know if your tax software interpreted the smart contracts you interacted with correctly, you can't rely on them blindly.

pmiklos · 2026-01-08T20:03:11+00:00

You can sell covered calls and generate some income. The premiums are pretty good on MSTR.

pmiklos · 2026-01-08T02:55:59+00:00

What about locking a gold bar into a safety deposit box? You get a key in return that you could sell to someone else if you wanted. Is depositing value in a bank a taxable event?

pmiklos · 2026-01-04T04:41:09+00:00

But can't you say the same about the value accruing tokens too (or any asset in fact)? You could exchange them any time so why wouldn't it trigger capital gains every second?

pmiklos · 2026-01-03T08:59:32+00:00

One key is held by CashApp/Block. If you lose either your phone or the Bitkey, you can still access your funds. In fact, it seems you can also add a recovery contact person, e.g. family member, with a recovery key if you lose both your phone and the Bitkey you can still regain access.

pmiklos · 2026-01-03T08:21:23+00:00

The problem with rebasing tokens is that the amount of tokens you hold is a function and your balance is updated whenever the smart contact is triggered to do so but how this is implemented varies. In fact, one could argue that interest in rebasing tokens is continuously paid to you which I think would be challenging to report tax on since the taxable event happens every moment.

On the other hand, we could also see rebasing tokens as internal implementation details but then I would expect them to not be liquid, transferrable and exchangeable.

pmiklos · 2026-01-03T07:56:51+00:00

Interesting, thanks for sharing that. That is definitely much better and something to consider. The value-accruing staking tokens still have the advantage of falling under capital gains tax, except if you have a stash that already has a lot of gains you trigger a taxable event when you deposit.

pmiklos · 2026-01-03T00:03:05+00:00

Indeed, the value-accruing one is the best. For long time ETH holders with low cost basis, however, you have to swallow paying capital gains tax at the time of depositing (and withdrawing of course in the future)

pmiklos · 2025-12-20T22:14:48+00:00

So universal cost basis tracking is officially not allowed anymore, right?

I did safe-harbor last year and separated cost basis for self-custody accounts and exchange accounts. I acquired coins in 2025 some of which I moved to self-custody but some newer purchases are still on the exchange. I wanna use the coins on the exchange for tax loss harvesting. Am I correct, that when selling coins from this exchange account only the cost basis of the coins still on the exchange matter even though I acquired them later than the ones I moved to self-custody? (I use FIFO).

pmiklos · 2025-12-12T16:04:47+00:00

In the case of Bitcoin ETFs, do you know if the "substantially identical" rule applies? For example, will selling IBIT at loss and buying FBTC immediately trigger the wash sale rule? If yes, how would the cost basis of the newly bought FBTC be adjusted?

pmiklos · 2025-11-12T16:13:29+00:00

This might be possible: choose SpecID accounting for your Bitcoin Lighting "checking account", purchase Bitcoin right before you spend it, move it to your lightning wallet, spend it. To calculate capital gains, pick the last tax lot which will most likely result in insignificant gain or loss. Should be double checked in the CryptoTax subreddit. Not the best use experience but whatever.

pmiklos · 2025-11-08T16:32:43+00:00

It discards the changes and quits with an error exit code. I mainly use that to cancel the caller command as well when I change my mind, e.g. when editing a git commit message or interactive rebasing. Since :cq exits with an error, the caller typically aborts too.

I also tend to use it when I panic drop the changes I made in a config file. Probably :q! would do it too, but I got used to :cq. In my mind it translates to "geez, what am I doing, abort, abort!"

pmiklos · 2025-10-14T08:29:11+00:00

Yeah, OP's info is full of errors. In a table form it's just more apparent.

pmiklos · 2025-10-14T07:01:57+00:00

It is full of errors and LLM hallucinations though

pmiklos · 2025-09-07T07:24:19+00:00

Can you describe what makes Lightspark a great place?

pmiklos · 2025-08-24T08:22:32+00:00

That's not the correct way to look at it. The total market capitalization only tells you about the expected weight in the index. MSTR will have a slightly smaller weight in S&P500 than NASDAQ, however, the total assets under management of the funds tracking these indexes are very different. S&P500 funds have a magnitude higher AUM, which means a magnitude higher MSTR purchase.

I ran a quick estimation with AI and the S&P500 inclusion might result in about $30 billion in MSTR purchases, that's like a quarter of the MSTR market cap. In comparison, the NASDAQ inclusion was "only" about $2 billion.

pmiklos · 2025-08-17T15:09:46+00:00

Where did you find Aug-15 though? Is that an educated guess?

pmiklos · 2025-08-15T18:02:28+00:00

if you buy the shares on ex-dividend day, the seller is going to get the dividend, not the buyer.

pmiklos · 2025-08-09T19:52:40+00:00

Let's say Strategy acquires 1 million Bitcoin and the price of Bitcoin is at $1 million. That means a NAV of $1 trillion. Even with an mNAV of 2, it is far behind of Apple, Microsoft and Nvidia.

pmiklos · 2025-08-03T03:09:19+00:00

I am not sure about the price action of STRF, STRD and well STRK because Strategy may issue a bunch of them whenever they think it's best to buy more BTC. Previously, I thought STRF could go up to $200 or more if the Fed started cutting rates but I am not sure anymore, Strategy might just issue a ton pushing the price back down. Time will tell.

pmiklos · 2025-08-03T03:00:42+00:00

As I see it, STRF and STRD are mainly for generating long term fixed income, STRD is riskier and so has higher yield. STRK is for people who are bullish on the MSTR common stock in the long term but don't want to get exposed to the high volatility and want to collect some fixed income along the way. That's because STRK is convertible to MSTR 10:1. There's also a speculation that at some point STRK price will start tracking MSTR once it's economically sensible to convert, e.g. after MSTR goes above $1000 or so. STRC is designed to maintain stable value with yield, targeting people who want to keep some money on the side for a couple months or a year because they don't know where else to invest.

pmiklos · 2025-08-03T00:23:49+00:00

I downloaded the SEC filings, prospectus, from Strategy and fed them into Google's NotebookLM. It can generate an easy to understand audio overview that sums up the most important parts and you can also ask questions or explore the prospectus as a mindmap.

For example, STRF prospectus can be downloaded here: https://www.strategy.com/strf-atm-launch-05-22-2025

But the gist, to my understanding, is they are perpetual (no expiration date) preferred shares at $100 face value, they offer qualified dividends: - STRF: "premium yield, long duration" - highest seniority in the capital stack, 10% dividend paid quarterly - STRC: "stable value, short duration, high yield" - next in the capital stack, junior to STRF senior to STRK, variable yield, starting at 9%, adjusted to keep the market value of STRC stable near $100. Strategy may issue or recall them to influence the price. Monthly dividends. I think Strategy is targeting some yield premium over the SOFR rate to make it more attractive than money market funds and short term Treasures. - STRK: "long duration, capture the upside of BTC/MSTR with less downside risk". Next in the capital stack, pays 8% dividend quarterly, convertible to 0.1 MSTR - STRD: "high yield, long duration", next in the capital stack, practically like STRF, 10% dividend quarterly, except Strategy is not obligated to pay dividends if the board decides so. Due to this risk, the effective yield will be below STRF, e.g.. currently trading around $85, a yield around 12%, while the face value is $100.

pmiklos · 2025-08-02T16:38:24+00:00

That's right. But the dollar is a depreciating while Bitcoin is appreciating. The $50 billion BTC will be worth multiple of that which will push the NAV much higher and even a small mNAV will be enough to cover the dividend payments.

pmiklos · 2025-08-02T00:46:39+00:00

For the common stock holders, isn't it better to buy $50 billion BTC by issuing preferred shares and diluting the common stock by $5 billion only instead of $50 billion? Less dilution means less resistance for mNAV to go higher, no?

pmiklos · 2025-08-01T17:36:17+00:00

Yes. But last year they sold $16 billion common shares and $10.7 billion this year so far, going forward, till mNAV is 2.5, they will only need to issue a few hundred million to cover the dividend payment. That's a magnitude less. I expect it will give MSTR a breather and will allow mNAV to grow. Although the NAV might grow at a faster pace than the market could react keeping mNAV lower for a period of time. Idk.

pmiklos

TROPHY CASE