Topic: Bitcoin Is Property Not Currency - page 8. (Read 14732 times)

Quote from: Peter R on March 26, 2014, 02:43:53 AM

With BTC there isn't a broker so I assume you simply need to document your decision but I'm not a tax lawyer so I'm not really sure.

The blockchain is the most perfect broker record you could hope for.

With coin control you could sell exactly the coins you wanted to at exact the basis you wanted to at any time.

How? as far as i know you can choose wallet to spend but btc are stored in transactions.

I can have bunch of tx in that wallet, but i cant pick the a specific one, correct?

I think you would need a custom wallet client to do this. Unless you can show one thats already done.

smooth

legendary

Activity: 2968

Merit: 1198

Quote from: DeathAndTaxes on March 26, 2014, 02:38:48 AM

Quote from: DeathAndTaxes on March 26, 2014, 02:38:48 AM

With BTC there isn't a broker so I assume you simply need to document your decision but I'm not a tax lawyer so I'm not really sure.

The blockchain is the most perfect broker record you could hope for.

With coin control you could sell exactly the coins you wanted to at exact the basis you wanted to at any time.

D&T: what do you think about the legal implications of my zero-gain/loss-for-tax-purposes wallet idea. It uses coin control to select a suitable linear combination of coins such that each and every day-to-day purchase you make has a gain/loss for tax purposes of identically zero.

https://bitcointalksearch.org/topic/zgl-wallet-achieve-zero-gainloss-for-tax-purposes-with-coin-control-531135

Mutual funds do this sort of thing already. Should be fine, assuming the IRS continues to use the same gain and loss rules as securities trading.

Peter R

legendary

Activity: 1162

Merit: 1007

With BTC there isn't a broker so I assume you simply need to document your decision but I'm not a tax lawyer so I'm not really sure.

The blockchain is the most perfect broker record you could hope for.

With coin control you could sell exactly the coins you wanted to at exact the basis you wanted to at any time.

D&T: what do you think about the legal implications of my zero-gain/loss-for-tax-purposes wallet idea. It uses coin control to select a suitable linear combination of coins such that each and every day-to-day purchase you make has a gain/loss for tax purposes of identically zero.

https://bitcointalksearch.org/topic/zgl-wallet-achieve-zero-gainloss-for-tax-purposes-with-coin-control-531135

DeathAndTaxes

donator

Activity: 1218

Merit: 1079

Gerald Davis

With BTC there isn't a broker so I assume you simply need to document your decision but I'm not a tax lawyer so I'm not really sure.

The blockchain is the most perfect broker record you could hope for.

With coin control you could sell exactly the coins you wanted to at exact the basis you wanted to at any time.

DeathAndTaxes

donator

Activity: 1218

Merit: 1079

Gerald Davis

Quote from: marcus_of_augustus on March 26, 2014, 01:16:07 AM

That doesn't really tackle my point regarding that you don't know what your gains are, because you don't know which coins you are exactly selling. If they are all fractional-mined at different values, you are getting profits or losses depending on WHEN they were mined. There is no way to track that information.

It would be pretty easy to write a script, using the blockchain API to iterate all the mining receive transactions during the tax year on the receiving address(es) and to get a historical exchange values from the same API. The databases exist for free of charge, and you most likely have a computer that could run such a script.

please re-read my posts regarding the question remaining, how do you know which cashed out BTC, are from which exact mined BTC.
It helps zero to know, you received x btc at x price.

You need to know, that xyz bitcoin was recieved at xx price, and those same xyz bitcoin fraction was sold at yy price.

That is a non-issue. Most (as in 99.99999999999999999999999%) of stock trades are exactly the same way.

You buy 100 shares of Apple, then 20, then 50, then 30. Later you sell 60 which 60 are sold. Broker report simply shows bought and sold, they don't give you assigned share numbers.

If you can't track individual shares (which you actually could with Bitcoin using coin control) it is FIFO. The IRS is fine with that as long as it is consistent. So in the Apple example above the 60 shares would come from the 20 share buy and 40 of the 50 share buy.

amspir

member

Activity: 112

Merit: 10

And another thing ... can all the people (IRS agents) who are fond of saying things like "if you don't count your coins carefully the men with guns are going throw you in jail where you'll get ass-raped!!", FUD, etc, etc just leave all the scary govt. rhetoric at the door?

We're all just trying to figure out a way to live peaceably and all these threats and innuendo is polluting the discussion, thnx.

If you are referring to my comments, I'm just saying -- the methods that the IRS may use to have your taxes paid. I'm not threatening anyone, I'm just saying what I believe is true from my own experience.

If you work as a contractor, and the the person that pays you files a 1099 documenting your gross income and you don't document it on your own tax return, they will come after you. I have had this personally happen to me and was held liable by the IRS and had to pay the tax with penalties. It never got to the point where IRS-CID agents came to my door with guns, but they do exist.

If you want to pretend that the IRS doesn't pay attention to all the 1099's that get filed, go for it.

marcus_of_augustus

legendary

Activity: 3920

Merit: 2349

Eadem mutata resurgo

And another thing ... can all the people (IRS agents) who are fond of saying things like "if you don't count your coins carefully the men with guns are going throw you in jail where you'll get ass-raped!!", FUD, etc, etc just leave all the scary govt. rhetoric at the door?

We're all just trying to figure out a way to live peaceably and all these threats and innuendo is polluting the discussion, thnx.

marcus_of_augustus

legendary

Activity: 3920

Merit: 2349

Eadem mutata resurgo

Quote from: LostDutchman on March 25, 2014, 11:42:43 PM

Quote from: Stratobitz on March 25, 2014, 11:41:24 PM

Quote from: smooth on March 25, 2014, 11:35:07 PM

Quote from: Stratobitz on March 25, 2014, 11:32:03 PM

If they are going to treat it as property, how would mined coins by a company set up as a corporation be treated? My impression is that per the IRS's position, bitcoins mined would be the same as a the creation of a product you create/produce for sale but does not sell. It becomes on the shelf inventory, and there is no taxable event until it sells. This applies to all companies that make products through a process, hard materials or digital. If you own a software application, or a script (plugin) you developed, and sell it for $50 per copy, and make 1000 copies on CDROM, you don't owe the IRS taxes on the copies until they sell. It's all 1s and 0s, so what difference is there between using computers to create scripts or plugins or software, or bitcoins? All property right? You just have to view it from a manufacturing standpoint. And the fact that they have ruled it is property, the manufacturing stance would in my opinion apply. Manufacturing being the creation of something tangible "property" from the use of labor, machines, raw materials, and energy resources. So you mine the coins, put them on paper wallets as inventory to sell. But hold them... For sale at a later date, which would be taxable. You'd have to set up an s-corp to do this, or is my thinking way off??

They are essentially saying that mining is more like receiving in trade than creating it yourself.

It's a rule they made, in some sense doesn't have to be logical (as long as they can defend it in court), but if you want a logical basis for it, that's it right there.

You could argue that any product you produce or manufacture, digital or hard goods, has value... Whether you are making copies of a script or software package, selling music CDs, DVDs of movies you produce, or you make widgets that have real value in the marketplace... Unless you sell them, there is no taxable event. Mining is a process in which something is made. The bitcoin does not exist before you mine it. The block ledger is not prewritten. If it was, their ruling would apply as it would be a transfer of something that is already in existence.

But Bitcoins don't exist before they are mined. Not in any way shape or form. Otherwise people would make them before the block got that far ahead. They are manufactured through a process. After which, they are a product. Shelve them.

Fine and good.

I trust that you will be the one to argue this before a court?

right

My $.02.

Wink

So you have appointed yourself as a proxy for the IRS to implicitly threaten court action, on behalf of the IRS, for anybody who wants to argue a contrary stance in a public forum?

Peter R

legendary

Activity: 1162

Merit: 1007

Quote from: ?? on ??

Quote from: Stratobitz on March 26, 2014, 12:29:45 AM

No you can't. It's LIFO.

Of course you can pick if you are using a wallet with coin control.

That just blew my mind.

amspir

member

Activity: 112

Merit: 10

Quote from: black3000gt on March 26, 2014, 12:34:31 AM

For large transactions, they might be able to find them, but honestly, how can the IRS find out how much you mine?

If your exchange reports the sale of your bitcoin to the IRS, then they may/will make you pay tax on all of the bitcoin as regular income, if you can't document the source of the bitcoin, i.e. you are cyber drug dealer.

If you are a miner, then it would be advantageous to document the mining income as regular income (minus expenses) when you received the mining income, then pay tax lower capital gains rates on the profit from holding them when you cash out.

iambk

newbie

Activity: 36

Merit: 0

Quote from: Stratobitz on March 26, 2014, 12:29:45 AM

Quote from: iambk on March 26, 2014, 12:27:30 AM

Quote from: Stratobitz on March 26, 2014, 12:24:45 AM

Quote from: smooth on March 26, 2014, 12:39:20 AM

That doesn't really tackle my point regarding that you don't know what your gains are, because you don't know which coins you are exactly selling. If they are all fractional-mined at different values, you are getting profits or losses depending on WHEN they were mined. There is no way to track that information.

It would be pretty easy to write a script, using the blockchain API to iterate all the mining receive transactions during the tax year on the receiving address(es) and to get a historical exchange values from the same API. The databases exist for free of charge, and you most likely have a computer that could run such a script.

please re-read my posts regarding the question remaining, how do you know which cashed out BTC, are from which exact mined BTC.
It helps zero to know, you received x btc at x price.

You need to know, that xyz bitcoin was recieved at xx price, and those same xyz bitcoin fraction was sold at yy price.

I believe you can use FIFO, LIFO, or pick yourself the associations. Same as with stocks.

FIFO requires a ruling from the IRS for your company... It would put you on the radar.

what?

All I'm saying is that you can pick yourself which BTC purchases match up to which BTC sales, just like with stock.

No you can't. It's LIFO.

My understanding is that stocks are taxed FIFO unless you designate to your broker which shares you're selling at the time of the sale. If you designate at the time of the sale then you can pick whichever shares you want.

With BTC there isn't a broker so I assume you simply need to document your decision but I'm not a tax lawyer so I'm not really sure.

Stratobitz

legendary

Activity: 1022

Merit: 1010

Quote from: Stratobitz on March 26, 2014, 12:29:45 AM

Quote

All I'm saying is that you can pick yourself which BTC purchases match up to which BTC sales, just like with stock.

No you can't. It's LIFO.

With stocks it is LIFO unless you identify specific shares when you sell. I haven't seen anything to say that bitcoin will be different that stocks, but who knows what is coming next.

My bad, you are correct.

smooth

legendary

Activity: 2968

Merit: 1198

Quote from: Stratobitz on March 26, 2014, 12:29:45 AM

Quote

All I'm saying is that you can pick yourself which BTC purchases match up to which BTC sales, just like with stock.

No you can't. It's LIFO.

With stocks it is LIFO unless you identify specific shares when you sell. I haven't seen anything to say that bitcoin will be different that stocks, but who knows what is coming next.

EDIT: Correction stocks are FIFO (not LIFO) by default.

black3000gt

newbie

Activity: 47

Merit: 0

For large transactions, they might be able to find them, but honestly, how can the IRS find out how much you mine?

Stratobitz

legendary

Activity: 1022

Merit: 1010

Quote from: iambk on March 26, 2014, 12:27:30 AM

Quote from: Stratobitz on March 26, 2014, 12:24:45 AM

Quote from: Stratobitz on March 26, 2014, 12:24:45 AM

That doesn't really tackle my point regarding that you don't know what your gains are, because you don't know which coins you are exactly selling. If they are all fractional-mined at different values, you are getting profits or losses depending on WHEN they were mined. There is no way to track that information.

It would be pretty easy to write a script, using the blockchain API to iterate all the mining receive transactions during the tax year on the receiving address(es) and to get a historical exchange values from the same API. The databases exist for free of charge, and you most likely have a computer that could run such a script.

please re-read my posts regarding the question remaining, how do you know which cashed out BTC, are from which exact mined BTC.
It helps zero to know, you received x btc at x price.

You need to know, that xyz bitcoin was recieved at xx price, and those same xyz bitcoin fraction was sold at yy price.

I believe you can use FIFO, LIFO, or pick yourself the associations. Same as with stocks.

FIFO requires a ruling from the IRS for your company... It would put you on the radar.

what?

All I'm saying is that you can pick yourself which BTC purchases match up to which BTC sales, just like with stock.

No you can't. It's LIFO.

iambk

newbie

Activity: 36

Merit: 0

Quote from: Stratobitz on March 26, 2014, 12:22:52 AM

That doesn't really tackle my point regarding that you don't know what your gains are, because you don't know which coins you are exactly selling. If they are all fractional-mined at different values, you are getting profits or losses depending on WHEN they were mined. There is no way to track that information.

It would be pretty easy to write a script, using the blockchain API to iterate all the mining receive transactions during the tax year on the receiving address(es) and to get a historical exchange values from the same API. The databases exist for free of charge, and you most likely have a computer that could run such a script.

please re-read my posts regarding the question remaining, how do you know which cashed out BTC, are from which exact mined BTC.
It helps zero to know, you received x btc at x price.

You need to know, that xyz bitcoin was recieved at xx price, and those same xyz bitcoin fraction was sold at yy price.

I believe you can use FIFO, LIFO, or pick yourself the associations. Same as with stocks.

FIFO requires a ruling from the IRS for your company... It would put you on the radar.

what?

All I'm saying is that you can pick yourself which BTC purchases match up to which BTC sales, just like with stock.

amspir

member

Activity: 112

Merit: 10

IRS agents don't carry guns.

http://www.forbes.com/sites/robertwood/2014/01/18/gun-toting-at-the-irs/

iambk

newbie

Activity: 36

Merit: 0

Quote from: Beliathon on March 26, 2014, 12:11:17 AM

Quote from: iambk on March 26, 2014, 12:02:54 AM

A capital gain is a capital gain. I don't think the IRS much cares if it is a pain in the ass for you to calculate.

I imagine they care about as much as I care that their tax laws will soon be virtually impossible to effectively enforce.

You're right there is going to be a lot of BTC gains that don't get reported to the IRS. All that I'm saying is that if you get caught then the "it was too complicated so I didn't report it" excuse isn't going to help you.

Stratobitz

legendary

Activity: 1022

Merit: 1010

That doesn't really tackle my point regarding that you don't know what your gains are, because you don't know which coins you are exactly selling. If they are all fractional-mined at different values, you are getting profits or losses depending on WHEN they were mined. There is no way to track that information.

It would be pretty easy to write a script, using the blockchain API to iterate all the mining receive transactions during the tax year on the receiving address(es) and to get a historical exchange values from the same API. The databases exist for free of charge, and you most likely have a computer that could run such a script.

please re-read my posts regarding the question remaining, how do you know which cashed out BTC, are from which exact mined BTC.
It helps zero to know, you received x btc at x price.

You need to know, that xyz bitcoin was recieved at xx price, and those same xyz bitcoin fraction was sold at yy price.

I believe you can use FIFO, LIFO, or pick yourself the associations. Same as with stocks.

FIFO requires a ruling from the IRS for your company... It would put you on the radar.

iambk

newbie

Activity: 36

Merit: 0