Topic: Are Bitcoins legal? (Read 2392 times)
As a general rule, you cannot tax a right, you can only tax a privilege. if you are transacting as a private individual, you shouldn't have any problems.
There are services where you can trade bitcoin for physical silver/gold. Depending on what state you live in, you could then legally sell your gold or silver for cash and not be taxed on the sale. As for whether you pay capital gains on selling the silver, that's hard to say since the value you got in at and value you get out at are somewhat arbitrary or debatable. I am not a lawyer, don't take this as advice or fact without doing your own independent research.
Actually, my understanding is that if you trade BTCs that you mined for Au/Ag, you have to pay taxes per the IRS. It's again bartering. If you trade BTCs that you purchased for Au/Ag, then you have to pay taxes on the gain in value if you made a gain on it.
There are services where you can trade bitcoin for physical silver/gold. Depending on what state you live in, you could then legally sell your gold or silver for cash and not be taxed on the sale. As for whether you pay capital gains on selling the silver, that's hard to say since the value you got in at and value you get out at are somewhat arbitrary or debatable. I am not a lawyer, don't take this as advice or fact without doing your own independent research.
The IRS, you mean the private collection agency for the private federal reserve right? 
I thought the federal reserve doesn't need to collect. I thought they just print whatever money they want.
ofc theyre fucking legal...
The IRS, you mean the private collection agency for the private federal reserve right?
If I paint someone's house, and he gives me 1 ounce of gold. Should I report that with the IRS? And/or am I eligible to pay some kind of tax for that?
(not asking if I would get away with it if I don't, or if they have any chance whatsoever of even detecting this)
(not asking if I would get away with it if I don't, or if they have any chance whatsoever of even detecting this)
This you would pay income tax on. It is considered as bartering by the IRS. http://www.irs.gov/taxtopics/tc420.html/
Good question. I suppose if I was to invest and make a profit on my investments then that profit would be subject to tax once I make a withdrawl in a fiat currency. Banks report sizeable and frequent transactions directly to the tax authorities here in Sweden.
yeah get a tax guy involved to stay super legit, hell offer to pay him in BTC!
lol
hah, if they want a share let's give'em one. I'm waiting forward the day electricity bills and food will be paid in bitcoins, would be interesting to watch
yeah get a tax guy involved to stay super legit, hell offer to pay him in BTC!
Question should be, is it illegal to produce a ton of bitcoins then offload them for USD into your bank account. < that's what I been pondering on.
Why it should be illegal?Of course you have to pay taxes for that, but it's legal.
It should not be illegal is how I look at it, had to phrase the question like so to receive a good reponse as you have done, ty.
Ok, that's what I figured. Probably have to get a tax man to do everything, unless the person moving the BTC knows how to file such taxes. Shouldn't be to hard to have it all done.
Its Anonymity of bit coin that causes a problem with tax's
probably not for long
Of course all this advice depends on the particular jurisdiction you happen to live under, but taking into consideration for the moment only U.S. Federal taxes:
The law requires that you report and pay taxes on any income. Income doesn't have to be USD. If you win a car on a game show, you are legally obligated to pay income tax on the fair market value of the car. When you win money gambling, you are legally obligated to pay income tax on the gambling winnings (although you can deduct any gambling losses in the same year if you kept good records). In most cases you can probably treat BTC like a commodity, though if you are selling anything in exchange for BTC, you may be legally obligated to report and pay sales tax. And if you are buying something in exchange for BTC from somewhere outside your state, you may be legally obligated to report it and pay a use tax.
Of course many people choose not to report all their income (gambling, small jobs for cash, tips, etc), and therefore avoid paying income tax in those situations. While this is not legal, it is such a widespread practice that many people believe that no income tax is actually required on such income.
The law requires that you report and pay taxes on any income. Income doesn't have to be USD. If you win a car on a game show, you are legally obligated to pay income tax on the fair market value of the car. When you win money gambling, you are legally obligated to pay income tax on the gambling winnings (although you can deduct any gambling losses in the same year if you kept good records). In most cases you can probably treat BTC like a commodity, though if you are selling anything in exchange for BTC, you may be legally obligated to report and pay sales tax. And if you are buying something in exchange for BTC from somewhere outside your state, you may be legally obligated to report it and pay a use tax.
Of course many people choose not to report all their income (gambling, small jobs for cash, tips, etc), and therefore avoid paying income tax in those situations. While this is not legal, it is such a widespread practice that many people believe that no income tax is actually required on such income.
1) Capital gains tax: If you buy bitcoins and later sell them or spend them, you have to pay tax on the difference between the value of the bitcoins when you bought them and value of the bitcoins when you sold/spent them.
I agree w/ Foxpup. Except I would even group mined bitcoins as capital gains/losses once sold/spent. The gain or loss would depend on how much you put into new equipment/electricity/depreciation of old equipment. Then there are different tax rates depending on how long you held onto the bitcoins.
Definitely uncharted waters, and seeing how the definitions for capital assets aren't clear on bitcoins, it could be reclassified at any time. But hopefully you will be able to be paid & spend w/o converting before the IRS catches on, then you won't have to pay any taxes
Question should be, is it illegal to produce a ton of bitcoins then offload them for USD into your bank account. < that's what I been pondering on.
Why it should be illegal?Of course you have to pay taxes for that, but it's legal.
The other possibility is that government will force companies to register a particular bitcoin address or addresses as being the payment address for given individuals. Governments would actually love this, as your income would be written in the block chain. It could even be automated so that they get their tax even quicker... the government issues a tax payment address per employee to businesses. The business then has to pay employees in a single transaction that pays both the tax and the employee in one.
What fun we have in store, right?
Would there be a way to filter out processing transactions to/from government assigned addresses as a form of protest? What fun we have in store, right?
My guess is that if Bitcoin ever does become a truly successful global currency, governments will be forced to move to a land value tax, since that is the only tax that cannot be avoided or evaded.
The other possibility is that government will force companies to register a particular bitcoin address or addresses as being the payment address for given individuals. Governments would actually love this, as your income would be written in the block chain. It could even be automated so that they get their tax even quicker... the government issues a tax payment address per employee to businesses. The business then has to pay employees in a single transaction that pays both the tax and the employee in one.
What fun we have in store, right?
The other possibility is that government will force companies to register a particular bitcoin address or addresses as being the payment address for given individuals. Governments would actually love this, as your income would be written in the block chain. It could even be automated so that they get their tax even quicker... the government issues a tax payment address per employee to businesses. The business then has to pay employees in a single transaction that pays both the tax and the employee in one.
What fun we have in store, right?
If we ever reach that level, the world around you would be quite different than it is today. Imagine for a few moments what repercussions would have when a government, which are the same people not the frightening organizacion we have today, adopts and uses bitcoins at that scale. You would immediately have a WOT (web of trust) integrated within society, if everyone pays from his "green address".
Off course you will have all the advantages bitcoin brings us, like anonymity or plausible deniability, in case you don't want all your finances public, but this is way too big to grasp in a single image, my head hurts...
Good point. I mean, hey, every single bitcoin I own comes from Satoshi Dice winnings. Nobody can prove otherwise 
Meh, BTC is gambling anyway : we run random computations on computers and sometimes when we're lucky 50 BTC come out of thin air So yeah, gambling earnings all the way 
My guess is that if Bitcoin ever does become a truly successful global currency, governments will be forced to move to a land value tax, since that is the only tax that cannot be avoided or evaded.
The other possibility is that government will force companies to register a particular bitcoin address or addresses as being the payment address for given individuals. Governments would actually love this, as your income would be written in the block chain. It could even be automated so that they get their tax even quicker... the government issues a tax payment address per employee to businesses. The business then has to pay employees in a single transaction that pays both the tax and the employee in one.
What fun we have in store, right?
The other possibility is that government will force companies to register a particular bitcoin address or addresses as being the payment address for given individuals. Governments would actually love this, as your income would be written in the block chain. It could even be automated so that they get their tax even quicker... the government issues a tax payment address per employee to businesses. The business then has to pay employees in a single transaction that pays both the tax and the employee in one.
What fun we have in store, right?
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