So, I just reviewed koinly reports, and I came to an interesting realization in terms of tax law.So, when you deposit to a liquidity pool, you are given a TOKEN. now, that TOKEN is redeemable for the underlying assets. However, that token has no market value. The redeemed underlying assets do have market value, but the token itself is not traded anywhere. For all purposes, its worthless.Now, why is this important? Well, the IRS likes to use legal fictions like "if you trade btc to wbtc, you are incurring a taxable transaction because its from one token to another" This is their rules.So, it can also be argued that if you deposit tokens to a uniswap smart contract, you are changing your risk profile. For example, what if uniswap had a smart contract bug discovered? The actual risk profile here is changed entirely.If the IRS wants to classify our tokens as property, and force us to play a shell game where if we swap one asset like eth for another asset like maker we are "incurring a taxable event" while we never actually cashed out, then their game rules can be used against them, and people might be able to win in court against the IRS. Swap to liquidity pools, and rack those losses to mars.Relevant us code: https://ift.tt/3dXNzjI, if this idea just saved you $10,000+ in taxes, this needs to be bumped to the top of /r/cryptocurrency.And we need the finest legal minds to discus and debate this. The legal argument is that uniswap has a different risk profile than the underlying assets, and that token to token transactions are taxable events. This is not tax evasion. This is tax avoidance, using a legal strategy. This is not hiding taxable transactions from the IRS.
Submitted October 26, 2020 at 07:38PM
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