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As others have already said your scenario doesn't work. However, there is a related scenario that actually does work: You have stock with a lot of capital gains and you don't expect to live too many more years. It can make economic sense to take a margin loan rather than sell shares. You borrow against the shares, paying interest in the money. When you ...


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Yes, you can borrow tax-free Bitcoin (or really, any currency not your home currency) is a security like a stock or bond. Whenever you take a loan using a security as collateral, that is not a taxable event, and so you do not owe taxes on the money you borrowed. Perfect world, you pay it back and this is not taxable either: the loan/repayment is a non-event ...


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Capital gains are taxable when they are realized unless statutory exceptions apply, under the U.S. Internal Revenue Code. A loan is not considered income. When a creditor sells collateral in order to secure payment of a debt, the sale by the creditor of collateral owned by the debtor is a realization event that triggers capital gains taxation on the part of ...


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This scheme merely defers the CGT. The gain occurs when the bitcoin is sold to pay off the debt, thereby realising its value for the original owner by cancelling the debt of $100k. At this point CGT will be payable on the sale. This is a general principle with loans: if you borrow $100k then you don't pay tax on it. If the loan is subsequently forgiven you ...


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Now the loan provider has no choice but to sell of my bitcoin to get their $100k back, and it looks like I'm after avoiding capital gains tax. No, you're not avoiding it at all. By losing your capital you do not negate the fact that you gained it. You pay tax on the capital you gain regardless of what then happens to it. Technically, the gain here is ...


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