Topic: Bitcoin Attorney Discussions (Read 2769 times)

Have you ever done Legal Opinion for listing on Bittrex exchange?

A very interesting analysis. So to describe it in another fashion; If I build chairs and then sell them and make a profit, do I need to pay taxes on my profit? My profit would be income so I think yes. What if I build chairs and take one of those chairs and trade it for a server? Let's say the server is the same value as the chair. Have I made a profit? I don't think so, therefore logic tells me I would not need to pay taxes on that transaction. Everyone seems to forget that you report your income but then AT THE END OF THE YEAR, YOU TAKE ALL PROFIT, AND ITEMIZE AND DEDUCT ALL COSTS AND EXPENSES THAT WENT INTO ACHIEVING THAT PROFIT. As to the chair example; the cost of wood, tools, electricity, the rental for the structure that they are built in, utilities, phones, computers, insurance, transportation, any employees or independent contractors used, book keeper, certified public accountant, attorney, shipping costs, continuing education, and so on and so forth. These things are all deducted in one way or another from the total profit as business expenses as well as whatever personal exemptions you claim such as dependents, and then only what is left is what is subject to income taxes.

This same analysis holds true if you are conducting any business related to crypto currencies. Play it safe but play it smart. Then you won't have to look over your shoulder for years.

George D. Greenberg, Esq.
www.attorneybitcoin.com

This is indeed a very intriguing topic out here and I have within me two sides, one side of me says since Bitcoins is neither a currency nor is it accepted as one why should I pay taxes, second side says we should pay tax as normal Fiat usage. However after considering a lot, I decided not to pay any taxes, as I do not purchase Bitcoins I earn them online and I convert for a value of digital currency and I don't see any reason to pay taxes. We are already over taxed in life and last thing need is to pay taxes on Bitcoins. I do pay taxes on all my income, but don't agree that one should pay tax.

Well put about faulty assumptions. Just as a general analysis; practically BTC has elements of personal property or commodities and elements of currency. It is being used by many as a form of trade for goods or services. There are states that have ruled on these matter to varying degrees and others that just don't seem to care. As to the Feds, the guidelines are more clearly defined.  Consult with an attorney and a CPA if you are or intend to be engaged in the business of crypto currencies.

George D. Greenberg, Esq.
www.attorneybitcoin.com

As to whether Bitcoin is a commodity or currency is a matter left to the sound discretion of State laws or ordinances; and, in the absence of the latter, to the best judgment of courts or proper governmental agencies. As of this writing, there has been confusion as to how Bitcoins should be treated especially so that it can substantially affect the payment of taxes. Thus, it is best to wait on a definitive ruling about the aforesaid issue. When that time comes, it is best to abide by the laws or rules of the nation concerned so as to deter faulty assumptions resulting to legal liabilities.

As a purchaser at arms distance paying valuable consideration, in good faith, for a product, unless you have reason to believe that the product or the company selling the product is engaged in some sort of nefarious activity I think you are fine. There would be no duty to search further.

Best:

George D. Greenberg, Esq.
www.attorneybitcoin.com

how can someone know if those small coins were not used for illegal activity like monero in the deepweb for example? monero is also not traceable?

this could lead to a problem of supporting without knowing criminal activity and put you in trouble, if they ever find out

i guess tainted bitcoin also apply for altcoin... the same can apply to many other coins, there are simply to many to keep track of all of them

Thanks Bitcoin Attorney. I am glad to know I can safely invest at the smaller exchange websites There are so many coins out there that have potential. I will check out the coin announcements page. Thanks a lot for the help!

I don't see a legal problem with investing in whatever coins you might find on Yobit or other smaller exchanges. We can't be certain that any given coin is legit in and of itself and not being used for some illegitimate purpose but I doubt we have a duty to investigate that. The smaller exchange itself might have that duty. As to investment strategy I strongly encourage you to investigate the coins announcement pages and other sources. Many coins simply fail, others drop in price at the slightest bit of bad news.

George D. Greenberg, Esq.

www.attorneybitcoin.com

Thanks for the reply So basically, as a coin investor, it should be fine to buy coins from any exchanger? It is just like me going to any website and buying any product right? My biggest risk would be the exchanger closing down and me losing money? I just see some cheap coins sometimes that seem good to invest into. These cheap coins are sometimes not at the bigger exchanger websites but I still want to invest into them. That's why I am asking. Thanks

After practicing law for 25 years I am suspicious of most claims made by certain persons and businesses. I personally trade on Poloniex and they  may very well be registered with FinCEN as an MSB. I don't necessarily take their word for it. In my opinion if an exchange trades crypto's and takes a fee in crypto's then it is questionable whether or not they are transmitting fiat or acting as an MSB. If they are accepting fiat or sending fiat then they have crossed the line into being an MSB and possibly a Money Transmitter in a State that considers them such. Probably more important to FinCEN is that a larger trading sites such as Poloniex have a system in place for tracking certain customers and suspicious activity especially for larger transactions.

As a customer of a trading exchange that appears legitimate and secure and seems reputable I am simply paying a crypto fee for a crypto service, there is nothing illegal about that. I might as well be trading a collectible book to my gardener for mowing my lawn. It seems that the commodity exchange regulators and SEC are not anxious about getting into regulation of these crypto trading platforms although from time to time you hear a rumor or see a story, then nothing seems to come of it. If someone has a link to these issues I would appreciate it. I have not had cause to research them yet.

Now, as to the foreign trading sites, yes there are a lot of foreign sites doing business here. Whether the foreign trading platforms are legit and legally conducting business that is the question that I don't have the answer to. But let's explore this a bit further. There are obviously many illegal activities that are happening on the web that are trying to avoid regulations, laws and taxes. Everything from Doctors and prescriptions to persons claiming to be lawyers to web site builders and SEO providers and gambling. People get burned....all the time....and it is wrong. Then again, someone is trying to get around our laws and taxes.....so well, you know.

The main question from crypto lawyers is: "How risk averse are you?" Of course it's hard to follow laws that are just now being formed. So.....pay taxes on earnings and try to do business with those that at least seem legit and reputable. If starting or running a crypto business consult a lawyer and cpa. Be honest, follow the rules the best you can and keep records of that. Then you should be okay. At least for now. 

Respectfully:

George D. Greenberg, Esq.

www.attorneybitcoin.com

Thanks George. If you go to Poloniex and look at the terms of use, you will see that they are registered with FinCEN as a MSB. So, I thought maybe all exchangers had to do this? But maybe only exchangers based in the USA have to follow these guidelines? I am just confused on this aspect. Buying coins at exchangers is legal right? So basically, as long as you pay your taxes after you earn you should be fine right? It doesn't matter what exchangers you use (from a legal standpoint) as long as you pay your taxes? I love alt coins and bitcoins, but this area just confuses me a little. I really appreciate you taking the time to share your knowledge

I have no opinion on whether Poloniex and Bittrex are safe and follow government regulations. You say you know this. Have you researched it? What have you found to support this?

Having said that I use both Poloniex and Bittrex to trade and they currently seem to be stable and secure. But I wouldn't count on anything yet in this relatively young set of industries, laws and regulations related to crypto.

I don't know the answer to your questions about foreign exchanges. Keep in mind that from time to time some sites get either hacked or have internal corruption and people lose BTC. Sometimes a great deal of BTC. Being a U.S. based site does not make it invulnerable either. I have used Yobit and Cryptopia in the past although I am not currently trading with them but that is not in any way an opinion on them. 

I am not saying don't use the other exchanges you mention, but I advise people to be cautious. Don't keep large amounts of money in any exchange, wallet or other platform for any longer than is needed. Always encrypt wallets and set automatic back up of coins to an external device.  If you are a person who saves BTC as an investment then look into vaults or more secure long term placement with the bigger providers.

As to legality; as long as you are declaring your income when you convert crypto to fiat (either by selling for fiat or using it to purchase non business related goods or services) then you should be fine for now.

George D. Greenberg, Esq.

www.attorneybitcoin.com

I have a question for you Bitcoin Attorney. I know exchanger websites like Poloniex and Bittrex are safe and follow government regulations put in place. But what about the other exchangers that are overseas? Are the overseas exchangers registered with FinCEN? Do they Comply with U.S. Laws? I am talking about exchangers like coinexchange.io, Yobit, cryptopia etc. Do they have usa regulations in place? Is it safe and legal for a United States citizen to use the exchangers that are overseas? Can USA citizens buy coins from these exchangers and everything be legal? Just want to be safe and follow all laws I sometimes see cheap coins I want to invest into on these other exchangers. Just thought I would ask this as I have never seen it brought up.

Great Discussion. I do think that the SOURCE of the BTC used to purchase goods or services should be addressed. For example: If an employee gets a net pacheck from an employer, certain taxes have already been deducted. You can have more or less deducted based upon your dependents claimed; but if the NET income is comfortably just that, after tax income, then taxes have been paid already. Now if that employee takes that after tax money and purchases Bitcoin, and the Bitcoin does not increase in value and then the employee uses that BTC to purchase goods or services, then it is not a taxable event. If the employee converted that same BTC back into fiat under these circumstances, it would STILL not be a taxable event.

BTC price increases that brings profit, mining BTC, or trading BTC that brings a profit; using BTC derived from all of these things, (after the costs involved are deducted,) WOULD be taxable.


Confusing right?

Hard for people and government to track? No kidding. How risk averse are you is the question that each person must ask him or herself. Being essentially honest in earnings and taxes, that is, making a reasonably good faith effort to report, in my opinion, is plenty. I don't think it is practical for feasible to be able to keep track of every single little thing.

For example: I am paid in BTC for goods or services provided. I declare this as income which will be reported on my year end taxes,  then I go and use that same BTC to pay my computer guy for work. However, between the time I received it and the time I paid the computer guy it went up in price 35 cents. It would be overly burdensome in my opinion to have to track that. Keep in mind that volume matters as well. If I did the same transaction 100,000 times a year then it adds up to something more substantial.

This is a real problem that must be solved, yet it seems there is no solution, except to remain reasonably (essentially) honest and report the big stuff. You can then show that you made a good faith effort.

George D. Greenberg, Esq.

www.attorneybitcoin.com

the problem is more complex than that, because not all coins are bought some are generated via mining, and many country don't know how to view this kind of revenue

it's true that all revenue must be declared, if you dump for fiat, there is no escape from that, but i see that some country exempt bitcoin from taxation, because they see it as a currency

also with altcoin and bitcoin is very cumbersome to keep track of everything to declare later, for now i just keep everything on cyrpto to avoid trouble

Bitcoin Wiki claims that "If you mow your neighbour's lawn, it doesn't matter if he pays you $20 in cash or $20 in Bitcoin".

However, I don't think the government is likely to care.  Thousands of people exchange Bitcoin for goods or services - I've paid Steam before with Bitcoin - doesn't mean that the government actually cares or needs you to declare it in tax.  That kind of everyday tax I probably wouldn't even declare in fiat, let alone Bitcoin which governments barely regulate.

I would also say that since Bitcoin is usually regarded as an asset/investment by most governments rather than a currency, you shouldn't really need to tax it.  That's not to guarantee that it's 100% legal, but I don't think it's going to matter at any point.

If you want to minimise your taxes legally, I would definitely declare the transaction if it was a significant amount of Bitcoin.  I wouldn't bother if it was, for example, depositing a little bit of Bitcoin to buy Skyrim, though.

I agree with you regarding the payment of taxes on bitcoin, but the tax rules in each country will have different characteristics depending on government policy in their country, if in the US may be required to pay taxes on the ownership of a number of bitcoin but certainly different from other countries that only pay the cost when making payments in bitcoin transactions

You shouldn't be concerned about what the other country is saying. You pay taxes where you live and you have to obey its laws. If in your country Bitcoin isn't taxed in its original form you don't have to pay anything.
 
From what I've read the majority of countries treat Bitcoin like investments and you have to calculate your gains and pay taxes based on what you've earned.
How do you know how much you've earned? When you decide to buy something with your coins you calculate how much you paid for it when you bought it and how much it's worth right now, when you're cashing out or buying a property and pay your taxes.

but the point is, if bitcoin usage like a currency, is not taxed, why i should declare and pay tax for it? therefore it's not a matter of evasion here

the problem is that there is no law that say that bitcoin is taxable if you don't convert to fiat, then you have complex case like somoone ordering stuff from abroad and pay directly in bitcoin

so even if that country say that i need to declare my income when i use bitcoin as a currency, other country may say otherwise