Topic: Bitcoin Is Property Not Currency - page 4. (Read 14732 times)

I want to stay true to bitcoins original purpose, to give power back to the people over their money. What this ruling has in effect done, as evidence by your "better shape up or ship out" response to my dilemma (which is reasonable to assume would be representative of most taxpayers), is change the nature of bitcoin from a "keep your nose out of my business" stance to a "if i want to get favorable tax status i should register all my activities with an official exchange and report this to the government" mentality.

Im not anti-government, nor am i trying to dodge paying my dues, but i dont like to trade on an exchange, you know how much money i lost on mt-gox? $0. Do you know how much i will lose on bitstamp when it gets hacked? $0. Now the IRS is in effect saying, you had better use those services or else we will hit you with a full-taxable amount, that is not fair, nor is it reasonable to presume a small time speculator like myself would have the ability to produce solid evidence of a p2p trade. In fact, its not reasonable to presume anyone has the ability to provide evidence of a p2p trade, this is no more possible than if you sold something on craigslist to a stranger for cash and then get audited and asked the details of the transaction, who was the buyer? prove that you sold the item in question and not illegal drugs or stolen property. This is no different, they arent taxing bitcoin, they are effective threatening the entire bitcoin community with fines and jailtime for doing anything that isnt registered with the government. This is what i mean when i say deanonymized, its not hiding, its having nothing to hide from.

There you go, the IRS has successfully deanonymized bitcoin.

I really don't think the IRS is going to care about the addresses where you store your bitcoins.   What they will be looking at is large reported purchases made with bitcoin, or large amounts of cash coming into your bank account (a bank following KYC/AML laws) from an exchange.  If you can't prove the source, then it will all get taxed.   There's no innocent til proven guilty in tax court.

Think of it like cash.  If you have sizable unexplained deposits to your bank account, or you buy a house with a duffel bag full of cash, the tax man will want to know what is going on.

Ive use online wallets, i do not own the private keys to those, the owner of the wallet site does, i am given a password to access those funds, are they no longer mine? Ie also lost many wallets and the private keys held within, does that mean i never owned them in the first place?


I dont because i dont use an exchange to buy/sell, am i required to pay 40% tax because i choose not to use an exchange?

No one pointed out the big purple elephant thats staring down its big trunk at bitcoin taxation, how can any of us including the IRS prove one way or another that the owner of an address that transacted years ago for a sum of bitcoin was in fact you? Perhaps if you were on an exchange in which you identified yourself, they would report this and it would be tied to you, but for all the other exchange methods that do not require or have no way of proving ones identity, what proof could any of us offer?

Now lets say instead of wanting to be taxed at the 25%-40% short-term capital gains rates you wanted to be taxed at the 15% long-term capital gains rates, instead of pointing to the addresses holding the coins you bought 6 months ago you could point way back in the blockchain (provided the purported gains did not offset the tax savings) and claim those were your bitcoins you bought from a guy on a forum. They demand proof, what proof? There is no proof, no way of proving that those coins were owned by you, does that mean they will then tax you at whatever rate they wish because there is no way to prove something? I dont know, do we all face maximum taxation unless we register our identities on an exchange?

Who cares what the label is, whether currency or property. It's use remains exactly the same. It is still a means of exchange regardless what you call it. My Benjamin Franklin's are also property because they're mine damnit, but I use them to buy stuff just like I use bitcoin to buy stuff.

If you mine a coin at $1200 then you have $1200 in income on that day, minus any expenses used to produce that income (electricity, equipment cost depreciation, etc). The "bias" for you coin is now $1200.

Then if the price drops to $600 or goes to $10K nothing happens until you sell.

If on the day you sell the price of BTC is $600, then you would have a $600 loss ($600 - $1200 =  $-600).

If on the day you sell the price of BTC is $10K then you would have a $8800 gain ($10000 - $1200 = $8800).

To figure short or long term capital gains you just use the length of time you held the coin after mining it. If you sell it less than 1 year after mining it you pay short term capital gains, if you sell after holding for more than 1 year you pay long term.

The IRS knows the answers - they want you to pay taxes on anything you profit from, no matter how it's done.

If your net worth goes from $10,000 to $100,000 in a year, the IRS wants you to pay taxes on $90,000 of income. If you try to move things around thinking you can outsmart the IRS - good luck. The penalties for doing this are severe, and not worth it. You're gaining $90,000. It's a good sum of money. Pay the IRS your tax of say $10,000 now and have peace of mind, or don't - and when they audit you, and you'll end up owing say $100,000 with the penalties. It's a risk you only know if you want to take.

I lived overseas for several years, and this is very clearly wrong.

If you are a US citizen (dual or otherwise) you owe taxes on all worldwide income, even if you do not enter the US for years.

There is a "foreign earned income exclusion" which you only qualify for if you are in the US for 30 days or less per calendar year. With the foreign exclusion you can receive a deduction of up to $97K (in 2013) on income earned outside of the US. This only applies to income earned outside the US.

Many US citizens who live outside the US earn less than the foreign exclusion and so believe they don't need to file US taxes or owe taxes, but this is incorrect. You still have to file a return each and every year to receive the foreign exclusion. If you do not the IRS can later stay you owe taxes and have lost the foreign exclusion deduction.

The dual citizens you know who earn less than $97K/year are correct that they don't owe US taxes, but they still have to file and pay taxes on amounts over that.

Hmmmmmmmmmmm............good questions and it is problems like the ones you have suggested which are going to lead to all sorts of mischeif and headaches in the near future.  I don;'t have the answers but I'll bet the IRS doesn't either!

Oh, I generally type in the $'02.  Takes less time and gives me time to give final consideration to the content of the post.

Thanks for asking.

My $.02.

Under that system, do you pay tax on the gains before the profit is realized?

When and where was it received ? The pool is in the US but virtually its outside US Territory, I received no real property until it hits a bank.  

My tax form goes something like

Have you received property in (origin country),   - no
Have you received property overseas,  - no

There is not a question :-

Have you received property in a virtual location ?

Just out of curiosity, do you have a short cut for your

My $0.02.



or do you type it each time ?

I do appreciate your $0.02. most of the time thou.  

First they ignore you, then they laugh at you, then they fight you, then you win.

I think we're getting closer to winning

None of the countries matter if you're a US citizen.

Example:
You're a Hollywood actor - you work for the BBC on a movie in Australia. Whatever money you earn is taxed by the US as if you were paid by an US company working in the US. You also might owe taxes to England and Australia.

Nexus will reside in the last place the coins landed.

My $.02.

Longer has lower tax rate. I corrected that but you grabbed the quote before I saved the edit. :-(

 

For extra fun, lets say

A block was mined from the US pool,
whilst I was visiting England,
and my pool was pointed to Mtgox in Japan,
but my miners where in Australia.

For tax purpose where did I receive my property, who do I pay the tax too ?

Thanks bbeagle for your reply it is appreciated and probably correct. Am just throwing out thoughts.

Am not actually a US citizen but you can bet this will be exported to the rest of the Anglo-american empire real soon.

So just for fun.

Lets say others adopt this.

Am a UK citizen living in Australia.

I transferred money from a UK bank to MtGox Japan and purchased BTC.

I purchased Mining gear with the BTC in the US for delivery in AUS.

I used the gear to mine BTC on a US Pool and purchased more miners with that from China in BTC, Miners in Aus.

They mined coins on a US Pool, that I exchanged in Aus to my Aus bank Account.

My overall position is probably negative (loss) for the year.

Assuming each country adopts a similar policy, I have a bit of a headache.


 

Speaking of "retarted"; that should be "retarDed" and thank you for your kind input.

My $.02.

An address isn't an ID, much to Jamie Dimon's chagrin. In fact it's advisable to reuse new addresses constantly. The IRS surely wouldn't want to be responsible for making its users accounts insecure, not after all the KYC/AML leaks and identity thefts we already enjoy! And if it's going to tax something like bitcoin, it's taxing something where an address isn't a person, whether they like it or not.