obtaining US residency and crypto without SoF

[pftz]

namesareforothers said:
I believe your basis would be the price when you acquired it. There are some lawyers' sites saying so but I don't see direct links to authority sites.
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daniels27 said:
In this case he would have to sell and buy again shortly before the day he becomes tax resident in the US. Troublesome but would do the job to be in the safe side.
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It might make sense to play it safe and exchange BTC->USDT->BTC

 

[Forester]

pftz said:
Perhaps, I didn't explain the essence of my question clearly enough.

I'm concerned about interacting with government authorities, not banks.
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I have understood this well. You are, unfortunately, missing the following: In the discussed context, banks and exchanges are acting according to the requests of government and de facto on their behalf. Actually, no exchange (well, exceptions may exist and probably exist) really cares where your assets come from, they want to run their business and make money. AML/CTF regulations (inducing i.a. KYC procedures) are purely governmental tools. Simply said, you are interacting with government via bank.

pftz said:
It's hard to believe that it's as simple as just reporting in a tax declaration how much profit you made from selling crypto.
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Yes, and it is not so.

pftz said:
I understand how banks work, what difficulties arise with cashing out, and the many solutions available. My goal is not to move and immediately cash out all the crypto I have. I simply want to spend it gradually over the years while staying within the law.
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The fundamental complications that you can (and probably will) face do not depend on the amount of crypto you want to cash at the particular moment.

pftz said:
Why do you assume that just because there are no docs for crypto, it's stolen or obtained illegally?
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🙂 I do not assume it; but (according to AML/CTF regulations) governments do!

pftz said:
There are different countries,
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Of course.

pftz said:
and in some of them, it's dangerous to disclose too much info about yourself to the gov, for example, because such information often leaks into the hands of criminals
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You are right, unfortunately; I am well aware of it.

pftz said:
(and the gov itself often acts as the criminal).
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You probably can replace the word “often“ with “usually“.

pftz said:
Moreover, until you sell crypto, there's no obligation to report it at all - that depends on the country.
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Very true.

Yet imagine yourself as a US immigration officer or taxman: Wouldn't you be interested how much assets this guy who wants to settle here have and what is his source of funds? Especially when you know that if the assets were not clear, it would be pretty easy to freeze them and confiscate later... 😉

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I am just a simple countryman. Anything I say is only a personal opinion, not a certified advice 🙂

If you think it makes sense, you can like it; if opposite, please, tell me, why I am wrong...

 

[Houdini]

rss said:
Your plan will fail as soon as you hit the second step, they WILL freeze your money and ask for a source-of-crypto.

If you can't provide:

Forget about trying to play this game.
You can easily find a solution to your problem by grabbing a Mentor Group Gold membership, I heard there's a crypto monster lurking in there who can help you.
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It's great to have knowledgeable people here on OCT who can put a stop to some of the most reckless plans before things go completely wrong, helping others avoid losing their fortune or even getting into tax debt.

 

[pftz]

Forester said:
I have understood this well. You are, unfortunately, missing the following: In the discussed context, banks and exchanges are acting according to the requests of government and de facto on their behalf. Actually, no exchange (well, exceptions may exist and probably exist) really cares where your assets come from, they want to run their business and make money. AML/CTF regulations (inducing i.a. KYC procedures) are purely governmental tools. Simply said, you are interacting with government via bank.
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I don't see much of an issue here. There are plenty of options for spending crypto slowly, especially when it's a small portion of the documented wealth.
This question is probably one of the most discussed on this forum. One potential solution is that not all exchanges/EMIs require you to show the entire trace of funds movement; some are satisfied with minimal proof, especially when dealing with small amounts. I believe most of them don't work with US residents, but one could conveniently "forget" to notify them about newly acquired residency. From my perspective, the main risk would be account blocking, but why keep more there than you plan to spend in the near future using their payment card? Correct me if I'm wrong.

Forester said:
Yet imagine yourself as a US immigration officer or taxman: Wouldn't you be interested how much assets this guy who wants to settle here have and what is his source of funds? Especially when you know that if the assets were not clear, it would be pretty easy to froze them and confiscate later
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This question is of particular interest to me. When filing a tax return, there's no need to disclose the amount of crypto assets or the wallet addresses used for selling or spending crypto. Theoretically, the taxman could request this information during an audit, but I'd like to have an idea of how this works in practice. How likely is an audit if the amount of crypto spent is insignificant in relation to overall wealth? Do they investigate the origin of funds if it goes beyond the scope of verifying tax payments?
I've read about how tax authorities in some EU countries might act, but what are some real-life examples regarding the IRS? Is it possible to limit their interest by providing proof of funds availability at the time of acquiring residency (the Step-Up procedure)?

 

[Forester]

pftz said:
This question is of particular interest to me. When filing a tax return, there's no need to disclose the amount of crypto assets or the wallet addresses used for selling or spending crypto. Theoretically, the taxman could request this information during an audit, but I'd like to have an idea of how this works in practice. How likely is an audit if the amount of crypto spent is insignificant in relation to overall wealth? Do they investigate the origin of funds if it goes beyond the scope of verifying tax payments?
I've read about how tax authorities in some EU countries might act, but what are some real-life examples regarding the IRS? Is it possible to limit their interest by providing proof of funds availability at the time of acquiring residency (the Step-Up procedure)?
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To be honest, I can't give you a really solid-founded answer. I have never been interested in getting the US residence permit; and I was always doing my best to keep my interaction with the IRS minimal ”“ so no first-hand experience. I only know well that
”“ the IRS can be very aggressive if they see some trigger;
”“ they keep their processes and methods well zipped so it is difficult to dig some useful information;
”“ wrt the point above, they rarely or almost never go to a court, so not much precedential cases.
Any better informed member is encouraged to comment...

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I am just a simple countryman. Anything I say is only a personal opinion, not a certified advice 🙂

If you think it makes sense, you can like it; if opposite, please, tell me, why I am wrong...