Topic: Bitcoin being classified as property is far, far, far better than having it be c (Read 2401 times)

Very true so the only thing that you can do is to utilize legal tax avoidance methods.

My $.02.

The problem I see when playing this game is that the feds are always making up crazy loop holes that don't make any sense down the line and screwing people that is just how they operate all the time.

This is the case whether bitcoin is taxed as property or currency.  Think about it for a minute.  When you buy something that costs $200+ you need to know the basis of the coins used to pay for it.  In order to do this you need to track the basis for all of your coins, which means that you need to track every single purchase, even those of negligible value.

So the required record keeping is identical.  Just in case you didn't get it the second time (I already mentioned this in my original post) I'm going to mention it a few more times:

The required record keeping is identical whether bitcoin is classified as property or currency.

The required record keeping is identical whether bitcoin is classified as property or currency.

The required record keeping is identical whether bitcoin is classified as property or currency.

Yes, There is a lot I don't understand about this subject and am trying to learn more about it.

You people just don't get it, do you?

My $.02.

Yes we all understand the IRS rules for btc mining, which could mean an end to small time mining in the usa. My opinion on BTC as property only benefits those who want to buy and or hold, and penalizes everyone else to some degree, which is not what BTC was supposed to be used for, so my vote is still the IRS classification and rules are bad, but not all bad. Yes some people will benefit and some will not, I just hope this is not the final tax code.

Regarding gold mining, I was able to ask retired accountant and a coin collector who both told me the simple answer is that a gold miner pays tax on his/her gold when it is sold or used in a transaction for gain and only for the amount in the transaction. The accountant did say there was a lot more to it regarding claiming expense, losses etc. I will try ask another working accountant about this too.

Well, that taxing on reception is exactly what the IRS is doing.

Read the damned ruling.

I have posted it many times on this very forum, so go look for it this time.

My $.02.

I think you are correct.  It wouldn't make sense to be taxed immediately on things you haven't sold yet.  Whatever, anyway..

That document assumes that you are selling the gold fairly soon, and it doesn't say what happens if a miner keeps the gold for a substantial amount of time.

My interpretation is that mined gold = income, gains on gold sold within a year = income.    So added together it makes sense that the miner is going to pay income tax.  For a miner who sells all of his gold within a year it it is practical to simply calculate the tax when he sells the gold to a processor, or when he uses the gold to pay his workers.  Either way he's going to pay tax at the income tax rate.  So it doesn't matter how that tax breaks down to income vs short-term gains vs foreign currency.  They all use the same rate in short-term situations.

How would the IRS handle a situation where, every month, the miner sells part of his gold and keeps part of it?  My interpretation (I'm speculating here) is that when he sells for the month he has to pay income tax on all of the gold that he mined that month, both the gold that he is selling and the gold that he is keeping.  The gold that he keeps would then become property with a basis equal to the current price.

Mining is only a distraction if you are not mining. I know this is off topic and do apologize for the side track, but it is part of why I feel the classification as it is defined is not correct.

Thank you posting the link I have read this. As everyone has their own point of view I would very much like to see what everyone else finds in this document.

The below are extracts from the document and indicate that tax is payed by a gold miner when the gold is sold, used as collateral or barter.
-------------------
Chapter 2
Mining Income

Gold refiners are generally the primary market for miners. Raw gold is usually delivered to the
refiner where it is purchased from the miner, processed, and refined. At the point of sale, funds
received are considered income to the miner.

If gold was used as collateral, verify the
value placed upon it by the bank or other lender. If the gold is used as collateral for a loan, it
becomes income to the taxpayer and should be reported.

Income information may be obtained in examination of the Affidavits of Annual Labor. The
affidavit will list the names and addresses of those individuals who performed labor on the claim.
It is often the case that an owner will pay for labor in gold. Verification of the amount of
payment for labor performed may also indicate income to the miner.
----------------------

This covers placer mining (similar to small-scale bitcoin mining): www.irs.gov/pub/irs-mssp/placer.pdf‎

Larger scale mining falls under the corporate tax rate and so you have to look at business as a whole, allowing deductions for equipment and other expenses, exactly the same way that the IRS allows professional bitcoin miners to handle it.

Of course talking about mining is a complete distraction, as the number of miners is small and shrinking.

Read it and weep:

http://www.irs.gov/pub/irs-drop/n-14-21.pdf

I have only posted this ruling about nine places on this forum.

Jesus.

My $.02.

Please post a link for where you found this, I have been looking but have not been able to find it. The only info I have been able to find for individuals is you pay tax when it is sold. There is a lot more to it for gold mining company's.

thanks

Pay income tax if they sell within 365 days??

Doing research and coming up with the correct information would pretty much kill off all the speculation that is going on in this thread.

You are correct; the IRS rules are clear for the most part regarding the method by which crypto is taxed.

All you have to do is read the ruling.  There is a certain complexity to the method of calculation of value buth after all, this is the IRS we're talking about.

Fin-CEN rules are perfectly clear as well, which rules are going to shake up the mining industry right down to its toes.

My $.02.

Nope, I looked it up.  Miners pay income tax on what they dig up, not capital gains.  Am I the only person with access to google?  Why aren't you guys looking this stuff up?  It is all publicly available from the IRS.

Let me check the consequences. Well... it might encourage people to hold Bitcoins longer, and there by reducing short-selling. This might add to the stability of exchange rates by reducing the volatility. 

That is my understanding too. Your gold would have a 0$ cost base and you pay gains only when you sell or trade it. BTC should be treated the same way. For me this is the biggest issue with the IRS rules which as they stand would seem to be an attempt to steer people away from mining BTC and penalize them if they do.

No. I fixed it.  Thanks.

Did you mean to have both headers as property?