Topic: Bitcoin is doomed. Thanks IRS!!! You Ass hats! - page 3. (Read 19754 times)

Guys, bone up on the hobby/business laws. If you don't show a PROFIT for 3/5 years the IRS will categorize your business as a HOBBY. At that point you cannot write off expenses unless you are itemizing and there are restrictions on how much. Basically, once your business gets categorized as a hobby you get boxed in, and in either case you still need to account for the income. Right now it's almost impossible to not be projecting a loss for 2014, and those that started late in 2013 will have startup expenses that exceed mining revenue. So go ahead and tally all that stuff up, but when you show a loss it (a) increases your chances of being audited greatly and (b) puts you one step closer to having a hobby categorization.

In my opinion the IRS should not tax anything in a barter system, meaning if my mining and reinvestment into equipment is handled with all BTC it should have nothing to do with the IRS. With this the only things reportable would be taxable events, or the exchange of BTC for USD. Fantasy land, but I would have been much happier without having to account for capital gain/loss every time I buy a miner. It's really such bullshit because Bitcoin went from being convenient and fun, almost like a money simulation game, to the current state of accounting nightmare of spreadsheet madness. If I mine a Bitcoin and spend a Bitcoin the IRS wants me to pay them twice, but if I have a garden I only pay taxes when I sell the veggies, not when they grow. Bullshit, they really did ruin it, doing all my spreadsheets and meeting with an accountant confirmed this. Also, add up the hours doing all the math, and if you need to hire an accountant keep in mind they need to spend time on it and they get paid in dollars, not BTC.

Already did an LLC registered in Texas about a month ago: www.steeltidellc.com  

ya should get a business license before april 15th us tax day and china bans bitcoin ..

Don't forget about computer maintenance costs (hint: make it expensive)!

Coinbase is registered with FINCEN, and FINCEN can send information to the IRS.

You can write off just about every single facet of your operation.

I am going to tabulate all of my hardware costs, electrical usage each month, my internet bill, my rent.. just about everything associated with mining.  I am certain that i am obligated for 0 tax burden.

Are there any IRS requirements for Coinbase or our local banks to report to the IRS when we move funds in/out of Coinbase (or similar services)? I'm wondering how on earth the IRS is going to know you sold a bitcoin in the first place? Or how will they know that a bitcoin you've sold was bought at XXX price, or was it one of the coins you mined?

Moreover, if we mined it shouldn't we be able to deduct the cost of electricity and the cost of mining hardware? Like many altcoin miners I've spent a good deal more on my mining hardware than I'll ever get in mining revenue, so I don't see the justice in the IRS taxing my mining revenue as if it had a cost basis of 0.

Let's say I instead use my BTC to by a Gyft card and spend it at Walmart - is there any way the IRS can possibly learn about the Gyft card purchase and use currently? Because that's the route I'm thinking of taking for any BTC I do cash out. I still think the IRS is in for an accounting nightmare if they want to try to wade through all my penny-altcoin trades at a half dozen exchanges, etc.

Thanks IRS!!! You Ass hats!
What is the highest tax rate on my Ass hat collection? 
I need to make my taxes easier.

Correct, taxation is validation.  

More importantly, market players finally have a clear indication of what kind of beast they are dealing with.  As such, it is only a matter of time now before you see integration of Bitcoin payment protocol into their business models.   Clearly work must be done to iron out internal company tax compliance issues, but that is a far easier thing to stomach than paying hundreds of millions in fees a year to the current payment processing entities like mastercard, visa, amex etc.    Silicon Valley angel vc's are already investing millions into start-ups that provide solutions for all manners of Bitcoin protocol issues / applications.

With China out, out goes most of the speculation that has lead to nearly all the volatility of the price in the recent months.  The price straightens out...gets pegged at 750-825 where it should be at, people starting gaining confidence in the stability and then boom - people start buying stuff with bitcoins again.

Trust me, tax compliance services are well on their way to the market.

Bitcoin is not doomed,maybe taxing bitcoin is not as bad as it seams at the first sight.Once it get taxed people will be aware that is legal ,they will trust it more,buy it,make its value grow.

yeah usa tax day .. what a coincidence .

Well then they can renounce their citizenship if they can find another country that will take them and quit bitching about it.  Until then it's my tax dollars that bail their asses out when they go running to the American consulate or whatever.

Ya but thats all american citizens even ones not living in america but living abroad too. Even american citizens that are residents of other countries who are not even living in america anymore still have to pay taxes for being an american citizen and being born in america. Its such a burden and penalty to be an american citizen your taxed everywhere even outside of america.

Nah - it's classified.

Seriously, instead of sniping at people that wish to comply with IRS laws and stay out of jail, why don't you make a guide called "the tax evader's guide to using bitcoin and not getting caught" which would actually be useful for some people.   Then keep the philosophical arguments about paying/not paying taxes in the Politics & Society subforum.

You are soo helpful pointing this out. I am sure there is a nice couch in heaven reserved for you.

I think your right for right now. But this is a dangerous path to take. A few years from now the IRS may have resources that make it very easy to associate you with your bitcoins. They may audit you and if they discover in previous years that you have not paid gains then you will owe the principal + interest + fines. It is even possible that you are jailed for tax evasion. Such penalties could be far higher than your profits and you may end up loosing a lot money.

Anyone who wants to try tax evasion should be aware of this and understand the financial risk you are taking by hiding profits from the IRS.

I'm pretty sure the IRS would like a list of all those computers and appliances and would think they deserve a piece of it.

"My coins were stolen and the thief keeps sending me computers and appliances to my home, I don't know how to stop him"

They will.  They might not care about bitcoin, but they are dead serious about being big players in cryptocurrencies and the IRS regulation applies to all cryptos.

Furthermore, if I have this taxable property shouldn't I get it insured? Yea, like that will go over.