In the US, you only pay taxes on income and gains. In other words, you’re not going to pay taxes on those tokens until you redeem them for fiat currency. The tax is an percentage of the fiat currency you receive, not the token value.
Just like stocks (you don’t pay for any changes in value to the stock until you sell it for fiat currency).
Crypto is taxed as income. Everything is taxed as income. You are only taxed on gains if you have a cost basis and are trading the tokens, but otherwise if you are compensated via tokens you owe income tax on that whether or not you convert it to fiat.
Yep, not just stock grants, but anything. For example you find a bug in an airline, and report it and they compensate you as a thank you with 200k airline miles... you now owe income tax on those miles.
Based on the value of the "item" for example airlines will assign a value to these miles ie (100,000 miles worth $1200) - or something like that. Otherwise, I don't know. I'm not an accountant/cpa, but I know that this stuff is taxable whether it's tokens or ketchup packets.
Imagine that, they tax you on a special “number”! Do they accept Crypto? If not, please point to the money they want to tax.
They can’t have it both ways. Either crypto is an equivalent to money or it isn’t. If it is, accept it. If it’s not, tax it when the money “appears” out the other end.
The government does not accept RSUs at tax payment. Instead, you pay tax as if you were paid the amount said RSUs are worth at the time you received them.
Basically the current trade value for the non-dollar item is your income on it.
There are some exceptions like exercising stock options where you’re taxed for the difference between the strike price and the fair market value at the time of exercise (I’m not sure why the law is this way).
The difference between the strike price and market price is the value of the option--its the money you otherwise would have had to pay to buy the stock if you didn't have the option. That's why it is so.
So tax the gain on sale of the stock - there's no good reason to tax it on exercise (especially when the stock is illiquid and the price can still go down).
Because your trading thing A for thing B. Suppose you could trade stock for a Yacht without income taxes applying. That’s the kind of loophole everyone buying a yacht would use, especially if you could use a near cash equivalent like gold instead of barter.
The difference between stock and stock options might not seem like enough to matter, but it’s simply the same generic rule applying.
I'm not sure this follows in the case of options? You have a contract to buy stock at X price. You do this at a discount and get the stock. You could just tax the gain on the stock on its sale with existing tax law and you could do this specifically for options if having some broad law would create weird exceptions like you suggest.
ISOs existed to correct for this failure in options, but the income at which AMT removes that protection hasn't been updated substantially since it was created so this protection no longer really covers exercise. I also don't really understand how it could be abused.
My change would be to have option exercise pay no tax on the spread, with all taxes payed on gains on sale.
As it is, people with massive wealth can exercise when there is no spread (because they have lots of cash already when the shares are granted to them) or they get special early exercise via the 83b election with the IRS and special access from their startup.
The people that get hit hardest by this are regular employees starting out that don't have lots of cash to exercise when the spread is zero.
Changing the law would of course change the system but paying people with options has significant economic and political implications. The current solution is for companies to agree to buy back enough shares to cover the tax burden when people exercise their options.
Just like stocks (you don’t pay for any changes in value to the stock until you sell it for fiat currency).