Bitcoin State (Missouri) Income Tax

[SU-1977]

While federal income tax on Bitcoin sale is straightforward, I can not find a definitive information on its taxation in Missouri.

I pretended to amend my last year return and according to the tax software, there is $492 Missouri tax on a hypothetical $10,000 long-term gain.

The only primary source on crypto tax in MO which I have located is Regulations of the Missouri Department of Revenue. The regulation regarding corporate taxpayer’s income where that taxpayer is taxable in another state states: 3. Receipts from the sale or exchange of currency, including foreign currencies or cryptocurrencies, are excluded from the definition of “receipts” used in section 143.455.3.(6), RSMo. https://www.sos.mo.gov/cmsimages/adrule ... 2c10-2.pdf

Information from various websites is contradictory, ranging from "nontaxable intangible property" in Missouri to a specific tax rate.

Yes, I could ask CPA but she will probably plug in numbers into a tax software just like I did. Is it possible that a tax software is mistaking? I realize that my understanding of taxation is rudimentary, but shouldn't Missouri statutes, DOR Regulations or other official source specify state cryptocurrency tax, if such exists?

Please, help me.

[Silk McCue]

Googling “missouri crypto tax” yields:

https://pro.bloombergtax.com/insights/s ... nd-regulat

Missouri
Nontaxable

Missouri treats bitcoin as nontaxable intangible property.

Cheers

[nisiprius]

You could always try calling the Missouri Department of Revenue. Allot some period of time you are willing to wait on hold, grab something to drink and something to read, and call. If nobody answers within that set time period, give up. It won't cost anything, and there's a reasonable chance you'll get an answer, and that it will be a good approximation to what the Department of Revenue believes the law is and wants/expects taxpayers to do.

If it's really as simple as "nontaxable intangible property" there's a good chance they'll know it and confirm it. Log the phone call and get as much information as you can about who you're talking to and put it in your tax folder.

It looks as if they actually have a web page for scheduling a call, and a field for giving a reason for the call. That looks promising to me.

https://apps4.mo.gov/ScheduleATaxCall/Individual

My experience with IRS tax help is that the representatives are very good about pointing you to a relevant publication. In fact that's all they do--they don't voice an opinion, but they say "the paragraph that describes your situation is on page XX of publication YYY."

[LadyGeek]

As a reminder, cryptocurrency as an investment is off-topic. See: Greater Fool Investing Strategies

Eventually, one runs out of greater fools. - Burton Malkiel

Discussions of investment strategies based on securities or physical assets that have no underlying value or negative expected long term returns are prohibited. Examples include: cryptocurrencies; lottery tickets; tulip bulbs; Ponzi, pyramid, and multi-level marketing schemes; affinity frauds; and market manipulation schemes.

And this post by the site owner: New Forum Policy Prohibiting Discussions of Cryptocurrency, Market Manipulation Schemes, etc as Investing Strategies

Note - This policy is limited to discussions of investing strategies. Discussions of cryptocurrencies in other contexts is still acceptable, for example for money transfers or microtransactions or the current thread on crypto trades and tax loss harvesting.

10/19/21 Edit: What about BITO, the new futures ETF?

This still falls under our prohibition. Our ban on crypto discussions is ultimately based on cryptocurrencies' lack of intrinsic value. While the ETF structure greatly reduces non-market risks, purchasing it is still a purely speculative gamble, not an investment.

Members may have crypto in their portfolio. The discussion may proceed as long as the strategy for managing crypto aligns with "Investing Advice Inspired by Jack Bogle". For example, selling crypto to purchase stocks or bonds.

The OP is asking about taxes. The discussion may continue.

[SU-1977]

Googling “missouri crypto tax” yields:

https://pro.bloombergtax.com/insights/s ... nd-regulat

Missouri
Nontaxable

Missouri treats bitcoin as nontaxable intangible property.

Cheers

Thank you for the reply. I had read and for the longest time accepted the info on bloombergtax.com. Now, I am not sure. FreeTaxUSA which is IRS-Approved E-File Provider output $492 Missouri tax on a hypothetical $10,000 long-term gain. I am trying to locate the primary source such as Missouri statute or DOR regulation.

[Silk McCue]

Googling “missouri crypto tax” yields:

https://pro.bloombergtax.com/insights/s ... nd-regulat

Missouri
Nontaxable

Missouri treats bitcoin as nontaxable intangible property.

Cheers

Thank you for the reply. I had read and for the longest time accepted the info on bloombergtax.com. Now, I am not sure. FreeTaxUSA which is IRS-Approved E-File Provider output $492 Missouri tax on a hypothetical $10,000 long-term gain. I am trying to locate the primary source such as Missouri statute or DOR regulation.

That seems to closely align with this site below showing a 4.95% tax on crypto.

https://help.archlending.com/en/article ... de-in-2024

Cheers

[Curly]

Hello,

I do one MO return per year so I don't have broad experience, but I think your sale of BTC, listed on 8949, will end up on your MO return as part of the Federal AGI that is the starting point of the MO-1040. The gain will be part of your MO income and thus taxed at 4.95%. I looked in one of our tax reference guides for MO and don't see anything that indicates crypto is handled in any way other than described above.

Here is the MO code. If you are really motivated you could search for references to crypto

https://www.revisor.mo.gov/main/OneChap ... hapter=143

[toddthebod]

Googling “missouri crypto tax” yields:

https://pro.bloombergtax.com/insights/s ... nd-regulat

Missouri
Nontaxable

Missouri treats bitcoin as nontaxable intangible property.

Cheers

Thank you for the reply. I had read and for the longest time accepted the info on bloombergtax.com. Now, I am not sure. FreeTaxUSA which is IRS-Approved E-File Provider output $492 Missouri tax on a hypothetical $10,000 long-term gain. I am trying to locate the primary source such as Missouri statute or DOR regulation.

The Bloomberg page is specifically addressing sales and use taxes. Missouri does not charge sales tax on the purchase of cryptocurrency. That's all it is saying.

[SU-1977]

Hello,

I do one MO return per year so I don't have broad experience, but I think your sale of BTC, listed on 8949, will end up on your MO return as part of the Federal AGI that is the starting point of the MO-1040. The gain will be part of your MO income and thus taxed at 4.95%. I looked in one of our tax reference guides for MO and don't see anything that indicates crypto is handled in any way other than described above.

Here is the MO code. If you are really motivated you could search for references to crypto

https://www.revisor.mo.gov/main/OneChap ... hapter=143

Curly, million thank yous for sharing your professional expertise.

I believe the statute cited below confirms your experience. The federal AGI includes cryptocurrency sale gain. Per statute, Missouri AGI is the federal AGI subject to modifications.
143.121. Missouri adjusted gross income. — 1. The Missouri adjusted gross income of a resident individual shall be the taxpayer's federal adjusted gross income subject to the modifications in this section.

Any opinion on filing a return as a resident South Dakota which has no income tax while living many, but fewer than 183, days in Missouri and Illinois each? The requirements for SD residency are SD address, driving license, voter registration and 24 hrs spent in SD. https://choosesd.com/south-dakota-residency/ With my passion for cold, brutal winters, I have considered retiring in SD to begin with.

My hypothetical scenario:
- Become SD resident and buy a house in SD in 2025.
- In 2026, live 1 or 2 months in SD, the remainder of the year split between my parents house in MO and an apartment rented for part of the year in my name in IL. Days lived in MO and IL will be fewer than 183 in each.
- For 2026, file tax return as SD resident. The only source of income is dividends from and sale of ETFs held at Fidelity. My time lived in SD, IL, MO and possible travel destinations is proved by credit card statements.

While weaselly, the scenario appears to avoid state income tax legally. Please, tell me why my assessment of its legality is wrong.

[psteinx]

Residency requirements are tricky, and given that you apparently currently live in Missouri, and plan to continue to spend just under 183 days/year in Missouri, more than you would spend elsewhere, (I'm guessing the IL thing is just across the river, to ~pseudo-live in Missouri), I'm rather skeptical that your plan would pass muster if Missouri decided to question it.

But IANAL, and if you're serious about this, you should probably consult one.

Note that Missouri's top rate (4.95% I think) is not too bad, and I'd far rather live in Missouri than South Dakota (no offense to any SD'ans here).

[SU-1977]

I would like to express gratitude to nisiprius, Silk McCue, Curly, toddthebod, psteinx for helpful replies. nisiprius, I will keep in mind your advice about calling IRS or MO DOR.