Before you Sell at "x" price, a thing to consider, Please Read

drnick

newbie

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Quote from: mskryxz on November 28, 2013, 12:52:58 PM

True, my bad. Thanks for pointing that out, that is what I need to research and look into. If anyone has any tips regarding that please feel free to share.

Here is a great primer on tax & bitcoin for US residents

http://www.bitcointax.info/

In general, you will not be able to simply hold your bitcoins and then buy expensive items with it without capital gains, as it falls under a barter exchange code of the tax law.

You're "supposed" to declare any exchangable services at their market value, for instance, if your friend is a doctor and you are a painter, you can paint his house in exchange for a medical service, but you will both have to declare the market value of goods received to pay tax as if it were income.

Of course, some things you can quite easily get away with and I don't think are a big deal (e.g. exchanging an hour of tennis lessons for an hour of math tutoring). But buying a house or an expensive car is kind of a big deal.

If you want to not pay gains, your best option is to move to a low tax jurisidiction and cash out once you've established residency there (that process would take about 6 months). Stay for two years, then return. You'll have to decide if it's worth uprooting your life for the savings in tax.

mskryxz

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Quote from: ?? on ??

Quote from: mskryxz on November 28, 2013, 12:35:47 PM

Quote from: ?? on ??

Quote from: mskryxz on November 28, 2013, 12:00:12 PM

I understand you will need to pay taxes on BTC.

What I am saying is you wouldn't need to pay taxes twice.

So you are saying that if you don't convert to fiat, you don't have to pay any capital gains tax.

Could you provide some links which support this claim?

I highly doubt that there is a giant loophole which allows you to trade your bitcoin acquired at $1 each for some goods at the current exchange rate of $1k+ without paying capital gains on those bitcoins.

That's like saying if I bought gold at $250, I can go exchange it for a new car today at $1200 plus without worrying about capital gains on the gold. I just need to find a car dealership which will accept gold. I don't think that's how it works.

Hey sorry don't mean to be confusing.

Wouldn't the example go something like this for the 2 transactions outlined below? Correct me if I am wrong please and apologies for the confusion.

1) Bob sells 10 BTC = $10,000. It is a recognized gain thus being taxed 20% (unless held longer than a year and in first 2 tax brackets).
Bob also uses the $10,000 to purchase a brand new car. The total cost of the car is $11,000 after taxes (again i don't know tax rate on car, just an example)
In total, Bob will spend $2,000 on capital gains tax (assuming he sold less than 1 year) and he paid $1,000 on sales tax= $3,000 of total tax

2) Bob does not convert BTC to Fiat. Bob buys a brand new car for 10 BTC online from craigslist. Bob will still report the purchase.
Using the same percentage of 10%, Bob will then pay 1 BTC of sales tax to the IRS.
Bob in total paid in total 1 BTC (10%) sales tax or total taxes paid = $1,000

In scenario 2 he pays $1,000 instead of $3,000 because he did not sell his BTC. He bought it directly and paid with BTC and will only pay BTC sales tax. Does that make sense?

I understand what you are saying. What makes you think (other than wishful thinking) that you can skip the capital gains step just because you spend those coins directly?

True, my bad. Thanks for pointing that out, that is what I need to research and look into. If anyone has any tips regarding that please feel free to share.

Thanks again.

Wilhelm

legendary

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I would advise paying capital gains tax on a big part of your bitcoins so you can cash out and live large without getting raped by your government tax people. If you only want to spend small amounts you can go around taxes. If you want to buy a house they will ask where the money came from.

jerelimZ

sr. member

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Spend slow, this is the only legal way to avoid taxes

mskryxz

sr. member

Activity: 433

Merit: 250

Quote from: ?? on ??

Quote from: mskryxz on November 28, 2013, 12:00:12 PM

I understand you will need to pay taxes on BTC.

What I am saying is you wouldn't need to pay taxes twice.

So you are saying that if you don't convert to fiat, you don't have to pay any capital gains tax.

Could you provide some links which support this claim?

I highly doubt that there is a giant loophole which allows you to trade your bitcoin acquired at $1 each for some goods at the current exchange rate of $1k+ without paying capital gains on those bitcoins.

That's like saying if I bought gold at $250, I can go exchange it for a new car today at $1200 plus without worrying about capital gains on the gold. I just need to find a car dealership which will accept gold. I don't think that's how it works.

Hey sorry don't mean to be confusing.

Wouldn't the example go something like this for the 2 transactions outlined below? Correct me if I am wrong please and apologies for the confusion.

1) Bob sells 10 BTC = $10,000. It is a recognized gain thus being taxed 20% (unless held longer than a year and in first 2 tax brackets).
Bob also uses the $10,000 to purchase a brand new car. The total cost of the car is $11,000 after taxes (again i don't know tax rate on car, just an example)
In total, Bob will spend $2,000 on capital gains tax (assuming he sold less than 1 year) and he paid $1,000 on sales tax= $3,000 of total tax

2) Bob does not convert BTC to Fiat. Bob buys a brand new car for 10 BTC online from craigslist. Bob will still report the purchase.
Using the same percentage of 10%, Bob will then pay 1 BTC of sales tax to the IRS.
Bob in total paid in total 1 BTC (10%) sales tax or total taxes paid = $1,000

In scenario 2 he pays $1,000 instead of $3,000 because he did not sell his BTC. He bought it directly and paid with BTC and will only pay BTC sales tax. Does that make sense?

Painful Truth

sr. member

Activity: 294

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Quote from: ?? on ??

Quote from: mskryxz on November 28, 2013, 12:00:12 PM

I understand you will need to pay taxes on BTC.

What I am saying is you wouldn't need to pay taxes twice.

So you are saying that if you don't convert to fiat, you don't have to pay any capital gains tax.

Could you provide some links which support this claim?

I highly doubt that there is a giant loophole which allows you to trade your bitcoin acquired at $1 each for some goods at the current exchange rate of $1k+ without paying capital gains on those bitcoins.

That's like saying if I bought gold at $250, I can go exchange it for a new car today at $1200 plus without worrying about capital gains on the gold. I just need to find a car dealership which will accept gold. I don't think that's how it works.

So...... everyone who buys anything with BTC tomorrow on bitcoin black Friday has to file taxes for that?

Or anyone who buys anything with btc in the future for that matter.

This will be a mess.

lightfoot

legendary

Activity: 3164

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I fix broken miners. And make holes in teeth :-)

It's not balls of steel, it's lameness. I didn't sell when things collapsed in 2008 mainly because I was just too fucking lame to do so. As a result, I am good.

Same here. Just be lame, and if it goes down do *not* think of it as "money lost". That is a bad way to think.

C

mskryxz

sr. member

Activity: 433

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Quote from: disclaimer201 on November 28, 2013, 11:57:27 AM

Quote from: mskryxz on November 28, 2013, 11:44:41 AM

Good job to you all that most of you agreed not to sell at $1,000 and roughly 80% of you will continue holding regardless of price.

To the 20% that are deciding to sell at some point, say $2,500 , $5,000, or whatever it may be. You need to realize the importance that once we reach those prices and more opportunities and businesses accept Bitcoin, there is very little point in converting BTC --> $$ --> Buying a house or car. You will actually end up paying more taxes that way.

By the time BTC gets that high in price, I would like to assume that there will also be enough retailers and businesses that accept Bitcoin, that technically you would just purchase a house or a car in BTC without converting to Fiat, thus saving you even more money from tax savings.

Cliffs/TLDR: By the time BTC is at a high price, you can buy whatever you want in BTC. Selling would only mean losing more money since you pay taxes on recognized gains and you would be paying a 2nd tax when you purchase a house or car for example.

You will not be able to buy a house without having to pay taxes for it. Most merchants will be forced to declare sales and pay taxes. Regulation is already here.

I understand you will need to pay taxes on BTC.

What I am saying is you wouldn't need to pay taxes twice.

disclaimer201

legendary

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Quote from: mskryxz on November 28, 2013, 11:44:41 AM

Good job to you all that most of you agreed not to sell at $1,000 and roughly 80% of you will continue holding regardless of price.

To the 20% that are deciding to sell at some point, say $2,500 , $5,000, or whatever it may be. You need to realize the importance that once we reach those prices and more opportunities and businesses accept Bitcoin, there is very little point in converting BTC --> $$ --> Buying a house or car. You will actually end up paying more taxes that way.

By the time BTC gets that high in price, I would like to assume that there will also be enough retailers and businesses that accept Bitcoin, that technically you would just purchase a house or a car in BTC without converting to Fiat, thus saving you even more money from tax savings.

Cliffs/TLDR: By the time BTC is at a high price, you can buy whatever you want in BTC. Selling would only mean losing more money since you pay taxes on recognized gains and you would be paying a 2nd tax when you purchase a house or car for example.

You will not be able to buy a house without having to pay taxes for it. Most merchants will be forced to declare sales and pay taxes. Regulation is already here.

Nemesis

sr. member

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Quote from: BittBurger on November 28, 2013, 11:51:32 AM

They say it takes balls of steel to have held on this long.

I pride myself in my balls of steel thus far.

I believe it would take balls of Titanium to hold on until Bitcoin has propagated enough to be able to buy all your material needs with it.

No longer needing USD may be a long way off. Just depends how quickly merchants hop on board I guess.

Right now its all mom and pop shops for the most part.

And keep in mind, many people will cash out and put their money into an IRA or a mutual fund which will continue to generate income.

Spending tens (hundreds) of thousands of dollars on things like iPods or free coffee for life, really is a loss. There's no gain. Its spending.

Until I can put a down payment on an appreciating asset like a home, with Bitcoin, I'll probably cash out in USD.

Good luck to those with Titanium balls!

My Balls got balls if you know what i mean, and their little grandchild balls are made of titanium.

BittBurger

hero member

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They say it takes balls of steel to have held on this long.

I pride myself in my balls of steel thus far.

I believe it would take balls of Titanium to hold on until Bitcoin has propagated enough to be able to buy all your material needs with it.

No longer needing USD may be a long way off. Just depends how quickly merchants hop on board I guess.

Right now its all mom and pop shops for the most part.

And keep in mind, many people will cash out and put their money into an IRA or a mutual fund which will continue to generate income.

Spending tens (hundreds) of thousands of dollars on things like iPods or free coffee for life, really is a loss. There's no gain. Its spending.

Until I can put a down payment on an appreciating asset like a home, with Bitcoin, I'll probably cash out in USD.

Good luck to those with Titanium balls!

mskryxz

sr. member

Activity: 433

Merit: 250

Good job to you all that most of you agreed not to sell at $1,000 and roughly 80% of you will continue holding regardless of price.

To the 20% that are deciding to sell at some point, say $2,500 , $5,000, or whatever it may be. You need to realize the importance that once we reach those prices and more opportunities and businesses accept Bitcoin, there is very little point in converting BTC --> $$ --> Buying a house or car. You will actually end up paying more taxes that way.

By the time BTC gets that high in price, I would like to assume that there will also be enough retailers and businesses that accept Bitcoin, that technically you would just purchase a house or a car in BTC without converting to Fiat, thus saving you even more money from tax savings.

Cliffs/TLDR: By the time BTC is at a high price, you can buy whatever you want in BTC. Selling would only mean losing more money since you pay taxes on recognized gains and you would be paying a 2nd tax when you purchase a house or car for example.

Topic: Before you Sell at "x" price, a thing to consider, Please Read (Read 1196 times)