Topic: Bitcoin is doomed. Thanks IRS!!! You Ass hats! (Read 19664 times)

I agree - by the time the irs figures out bitcoin's actual potential, the rest of the world will have also figured it out and adopted it in whole or in part, and the government really doesn't have the resources to enforce it. I'm not going to worry about it and probably won't have to for awhile anyway because right now, I'm only a hundredaire.  


It was kind of cool seeing my $400 turn into $500+ without doing any manual labor short of figuring out where the bitcoinwisdom site was again. 

It doesn't really matter until the coins are converted back into cash.
In the scenario you describe I'm assuming you purchased them 1/1/2014 for $500, then a year later sell them for (lets say) $900. If you are: single and not head of household and earn <$36k, single head of household and earn <$48k, married and earn <$72k then your liability in each case is zero. Now if your over those but under $400k your liability on that $400 profit would be $40. It really doesn't matter how much its worth when its moved around or just sits in a wallet, for tax purposes those are unrealized gains and have no liability. It's once you sell it for USD that matters. So you'd pay the tax on your 2015 tax return, if you are rich enough (and hey maybe you are mr. $5000-paintings-in-secure-rooms ;P)


All that aside, in most cases not reporting bitcoin profits doesn't really matter since the IRS doesn't have alot of resources you really only have to worry about claiming bitcoin earnings if you are making serious money off it, any good accountant will tell you the same thing.

As promised:

https://bitcointalksearch.org/topic/i-didnt-pay-capital-gains-tax-on-bitcoin-sales-to-irs-today-572437

IRS did bitcoin a great favor by mitigating regulatory uncertainty.  Now let this thread die please.

The problem is, the Feds love love love to do social engineering via the tax code. Give the masses and incentive to do this, and a disincentive to do that. We all know they are going to tax it, just as we know they are going to regulate it (it there anything they just let be? no) I think the worst thing that can happen is we let them pass tax policies that work against it, say for example moving it around from wallet to wallet as I said in my example above.   

To me, it would make more sense to classify bitcoin as a commodity.

It was always eventually to be taxed as either a currency exchange or as as asset. Both introduce challenges in terms of record keeping...but actually treating it as a currency would likely be more complicated for most people and in many cases not nearly as advantageous financially when time comes to pay the tax.

This is after all an electronic "smart currency"...it seems to me that there will be electronic solutions to this problem which will make the necessary record keeping required for most Bitcoin users rather invisible.

I think there are a ton of unanswered question with this ruling. For example, what if I buy one BTC at Coinbase this month for $500, move the coins to a wallet next month when they are worth $600, and finally move them back coinbase next year to sell them, when would I pay tax on them? To follow the blockchain as some people suggest, I'd be paying the tax every time I moved them. But that is crazy. If I buy a $5,000 Soyer painting, and I find out it's now worth 10k, I don't pay a tax on that gain because I moved it to a more secure room.

Good one!

I'll hodl you to that one!

My $.02.

I'll eat my tinfoil hat if im wrong, you have my word

https://www.youtube.com/watch?v=yWTQgmCuiCw

Well now that one may get you The Tinfoil Hat nomination!

My $.02.

The IRS is probably going to find the bitcoin core developers and somehow make the transaction fee 10x more than the amount sent, then that transaction fee doesn't go to miners, it will go to the greedy idiots at the IRS.

Eh. I still say anybody worth their salt should just relocate their gigantic farms to one of the many islands that do not care about (designed for) tax evasion.

They already have but don't panic!

I have at least a partial solution!

My $.02.

I'm going to expatriate when they tax my coins.

Maybe they are? Think about it. If you own a large business and are considering accepting bitcoin as payment wouldn't you want to know how regulators are going to treat it, to have assurances that the government isn't going to "ban" it or add fees that make it more expensive than cash/credit/et al? This policy issuance serves that purpose and gives other nations' federal agencies a guideline and gives them notice that if they create an environment less hospitable than the U.S. then they are losing that source of new economic activity and growth. There may be short-term negative effects from hardcore libertarians ceasing certain uses along with those who find paying 10% or 15% on short-term profits---hard to say how many people this is since if you buy $100 of bitcoin, then sell it for $200 a month later, does $10 in tax make that $90 not worth it anymore? not to mention that the IRS' resources are stretched so thin that they can do very little in terms of enforcement.
I know that it's hard not to interpret anything a federal agency (especially the IRS) involves itself in as bad and harmful since that it is so ingrained into the public's minds with so many negative associations, but try to step back and look at this impartially as possible. I'm not saying only my thoughts are wrong but to think of what actual, individual effects this and similar rule issues have.

The IRS should be trying to help the American people, by helping the value and price of Bitcoin to go up and stabilize, or they should just stay out of it !

I'm not a tax expert, but I don't think this bill does what you think it does.   Currency that is not legal tender of the United States is still subject to tax made from capital gains, except at regular income rates.   To be compliant with tax law, you would still need to keep track of your trades.  The IRS ruling is an advantage for the special tax rates on long-term capital gains, as well as offsetting capital losses.  

I dare say that this bill was written out of ignorance.  The only way not to subject a commodity or property to capital gains is to declare it legal tender or explicitly exempt it from tax on its capital gains in the tax code.

Before attacking me, please read this part of the US Tax code: http://www.law.cornell.edu/uscode/text/26/988

There is hope, a new bill is being passed by Steve Stockman that declares the Bitcoin crypto currency a  currency, and I think that is very good news.

Here is the link:
http://newsbtc.com/2014/04/08/congressman-stockman-seeks-introduce-bill-congress-declaring-bitcoin-currency-property/

I have never heard of Steve Stockman before, but at least the bill he is trying to pass is a very good thing for Bitcoin since it levels the playing field with the dollar ( same set of rules/laws), and makes bitcoin easy to be used as a currency.

There is a very good video  that explains this in very simply terms.
http://www.youtube.com/watch?v=44s-SAkDCic

Basically no more capital gains tax, and make bitcoin easy  to use like it always was.

Normally I am against regulation, but this bill at least the way it is stated on the video it is very good.

If this bill passes bitcoin will gain adoption, and its price will recover from the IRS ruling.

Also it will make paying taxes cheaper since you could easily swap the word bitcoin with the word dollar since the rules would be identical, no more complicated taxes, no extra bookkeeping, I hope this bill passes.

If you look at the bill it looks well written and very precise, unlike the IRS ruling.

So it looks like bitcoin is going to be currency again in the USA and not property.

I registered IRSCoin.com.

Creative ideas on what to do with it?