Pages:
Author

Topic: Bitcoin Is Property Not Currency - page 9. (Read 14732 times)

legendary
Activity: 1022
Merit: 1010
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.

Your exchange keeps that information.   If they are required to report it to the IRS, they will.

If you don't want to pay your taxes, then using poor record keeping isn't an excuse for not paying your taxes.   Men with guns from the IRS can still come after you and demand payment of taxes using a worst case scenario (on your part) .


IRS agents don't carry guns.
member
Activity: 112
Merit: 10
March 26, 2014, 12:20:56 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.

Your exchange keeps that information.   If they are required to report it to the IRS, they will.

If you don't want to pay your taxes, then using poor record keeping isn't an excuse for not paying your taxes.   Men with guns from the IRS can still come after you and demand payment of taxes using a worst case scenario (on your part) .
legendary
Activity: 2968
Merit: 1198
March 26, 2014, 12:13:34 AM
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.

You keep records. Then you apply these rules. Not really that hard, especially with these high tech gadgets we have now called computahs
hero member
Activity: 784
Merit: 1000
https://youtu.be/PZm8TTLR2NU
March 26, 2014, 12:11:17 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.
member
Activity: 98
Merit: 10
March 26, 2014, 12:11:11 AM
Quote
Agreed.  If there is a demand and especially if people are willing to put up a little BTC for it then I'm sure programs will pop up to pull the exchange rates and help do the needed calculations.

You aren't getting it. Let me do an example:

to make it easy, lets keep fractions out of it. I mined 1 BTC yesterday, at a price of $550
I then mine 1 BTC today at a price of $600
I then mine 1 BTC tomorrow at a price of $650
Do this for 1 year.


I then sell 1 BTC. Tell me which BTC I sold. Was it a loss? a gain?
Where are you going to track exactly which coin was sold...especially if they're all partial coins (.25, .50, .25)...

I'll save the suspense...you can't track that.
legendary
Activity: 1022
Merit: 1010
March 26, 2014, 12:09:42 AM
No. But someone certainly will. All the way up to the Supreme Court I would bet.

And you will be right there, carrying a placard outside, right?

My $.02.

Wink

No.  Nice eyepatch btw.

Thanks!

Just funnin' ya on the replies!

We are all awash in new regs and trying to stay afloat!

My $.02.

Wink

Likewise Wink All I'm saying, there's been loopholes before. The IRS is known for them.
member
Activity: 98
Merit: 10
March 26, 2014, 12:07:19 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.
newbie
Activity: 36
Merit: 0
March 26, 2014, 12:04:58 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.

Agreed.  If there is a demand and especially if people are willing to put up a little BTC for it then I'm sure programs will pop up to pull the exchange rates and help do the needed calculations.
newbie
Activity: 36
Merit: 0
March 26, 2014, 12:02:54 AM
So what happens when you sell? You have accumulated coins over the months, but how do you know which particular coins you are selling? Maybe you're selling 5% of the coins you mined at $600, 2% of the coins mined at $630, 6% of the coins you mined at $510

Do you see where I'm going with this?

Those amounts are regular income taxed at regular income rates.  Your mining pool, if complying with US law, is required to report these transactions to the IRS if they exceed $600 during the year.

The profits that you gain on holding onto them are taxed at a lower capital gain rate.   Your exchange, if complying with US law, will have to report the sale of your of your bitcoin if it exceeds $600 during the year.

If the IRS audits you, you will have to come up with documentation that explains the reported transactions.


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.

This isn't like stocks where you get a nice report from your broker for the exact shares you owned, and which block you sold at EOY.

Years ago we didn't have tax programs that downloaded all of that data directly from our brokers.

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.
member
Activity: 112
Merit: 10
March 26, 2014, 12:00:52 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.
full member
Activity: 238
Merit: 100
March 26, 2014, 12:00:27 AM
I can't stop wondering why they didn't do this to the USD while there was still time
sr. member
Activity: 476
Merit: 250
March 25, 2014, 11:54:31 PM
On the other hand, the day the IRS can tell me how much wealth I have in my (vastly larger quantity) brain wallet is the day I pay taxes on my true wealth.

Spoiler: This day will never come.

Unless you mined those coins in your brain wallet yourself, the IRS doesn't really care what you have in it until you convert it back to fiat.  That's when you calculate your capital gains.

Wrong.

Read the ruling.

My $.02.

Wink

http://www.forbes.com/sites/kellyphillipserb/2014/03/25/irs-says-bitcoin-other-convertible-virtual-currency-to-be-taxed-like-stock/
For those buying and selling Bitcoin as an investment, calculating gains and losses are figured the same as buying and selling stock. The basis, the holding period and even the triggering event (the sale of the asset) are all very clear.

I have stocks and I don't pay any tax on them until I sell those stocks.  My understanding is that it works the same way with conversion of btc to fiat.  This is what I assumed before this IRS guidance even.  But maybe I'm misunderstanding.

"Q-

8: Does a taxpayer who “mines” virtual currency (for example, uses computer
resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting from those activities? A-8:
 
Yes, when a taxpayer successfully “mines” virtual currency, the fair market value

of the virtual currency as of the date of receipt is includible in gross income. See Publication 525,
Taxable and Nontaxable Income
, for more information on taxable income."

Not me, THEM!

Have a nice day!

My $.02.

Wink

You're right when mining things are different.  Maybe I didn't specify that clearly.  I was only speaking to people that purchased BTC as an investment.

Cool!

I may have misunderstood you as wel.

We all have a lot of homework to do!

My $.02.

Wink
newbie
Activity: 36
Merit: 0
March 25, 2014, 11:53:30 PM
On the other hand, the day the IRS can tell me how much wealth I have in my (vastly larger quantity) brain wallet is the day I pay taxes on my true wealth.

Spoiler: This day will never come.

Unless you mined those coins in your brain wallet yourself, the IRS doesn't really care what you have in it until you convert it back to fiat.  That's when you calculate your capital gains.

Wrong.

Read the ruling.

My $.02.

Wink

http://www.forbes.com/sites/kellyphillipserb/2014/03/25/irs-says-bitcoin-other-convertible-virtual-currency-to-be-taxed-like-stock/
For those buying and selling Bitcoin as an investment, calculating gains and losses are figured the same as buying and selling stock. The basis, the holding period and even the triggering event (the sale of the asset) are all very clear.

I have stocks and I don't pay any tax on them until I sell those stocks.  My understanding is that it works the same way with conversion of btc to fiat.  This is what I assumed before this IRS guidance even.  But maybe I'm misunderstanding.

"Q-

8: Does a taxpayer who “mines” virtual currency (for example, uses computer
resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting from those activities? A-8:
 
Yes, when a taxpayer successfully “mines” virtual currency, the fair market value

of the virtual currency as of the date of receipt is includible in gross income. See Publication 525,
Taxable and Nontaxable Income
, for more information on taxable income."

Not me, THEM!

Have a nice day!

My $.02.

Wink

You're right when mining things are different.  Maybe I didn't specify that clearly.  I was only speaking to people that purchased BTC as an investment.
sr. member
Activity: 476
Merit: 250
March 25, 2014, 11:52:04 PM
No. But someone certainly will. All the way up to the Supreme Court I would bet.

And you will be right there, carrying a placard outside, right?

My $.02.

Wink

No.  Nice eyepatch btw.

Thanks!

Just funnin' ya on the replies!

We are all awash in new regs and trying to stay afloat!

My $.02.

Wink
member
Activity: 98
Merit: 10
March 25, 2014, 11:51:28 PM
So what happens when you sell? You have accumulated coins over the months, but how do you know which particular coins you are selling? Maybe you're selling 5% of the coins you mined at $600, 2% of the coins mined at $630, 6% of the coins you mined at $510

Do you see where I'm going with this?

Those amounts are regular income taxed at regular income rates.  Your mining pool, if complying with US law, is required to report these transactions to the IRS if they exceed $600 during the year.

The profits that you gain on holding onto them are taxed at a lower capital gain rate.   Your exchange, if complying with US law, will have to report the sale of your of your bitcoin if it exceeds $600 during the year.

If the IRS audits you, you will have to come up with documentation that explains the reported transactions.


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.

This isn't like stocks where you get a nice report from your broker for the exact shares you owned, and which block you sold at EOY.
sr. member
Activity: 476
Merit: 250
March 25, 2014, 11:50:49 PM
On the other hand, the day the IRS can tell me how much wealth I have in my (vastly larger quantity) brain wallet is the day I pay taxes on my true wealth.

Spoiler: This day will never come.

Unless you mined those coins in your brain wallet yourself, the IRS doesn't really care what you have in it until you convert it back to fiat.  That's when you calculate your capital gains.

Wrong.

Read the ruling.

My $.02.

Wink

http://www.forbes.com/sites/kellyphillipserb/2014/03/25/irs-says-bitcoin-other-convertible-virtual-currency-to-be-taxed-like-stock/
For those buying and selling Bitcoin as an investment, calculating gains and losses are figured the same as buying and selling stock. The basis, the holding period and even the triggering event (the sale of the asset) are all very clear.

I have stocks and I don't pay any tax on them until I sell those stocks.  My understanding is that it works the same way with conversion of btc to fiat.  This is what I assumed before this IRS guidance even.  But maybe I'm misunderstanding.

"Q-

8: Does a taxpayer who “mines” virtual currency (for example, uses computer
resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting from those activities? A-8:
 
Yes, when a taxpayer successfully “mines” virtual currency, the fair market value

of the virtual currency as of the date of receipt is includible in gross income. See Publication 525,
Taxable and Nontaxable Income
, for more information on taxable income."

Not me, THEM!

Have a nice day!

My $.02.

Wink
 
newbie
Activity: 36
Merit: 0
March 25, 2014, 11:50:17 PM
Those amounts are regular income taxed at regular income rates.  Your mining pool, if complying with US law, is required to report these transactions to the IRS if they exceed $600 during the year.
I don't know anything about the current mining pools, but it sounds like mining pools may now have incentive to distance themselves from the US so that they don't need to bother with US law.  I really don't know how the whole thing is setup though.  Regardless, it'll be interesting to see.
legendary
Activity: 1022
Merit: 1010
March 25, 2014, 11:48:31 PM
No. But someone certainly will. All the way up to the Supreme Court I would bet.

And you will be right there, carrying a placard outside, right?

My $.02.

Wink

No.  Nice eyepatch btw.
legendary
Activity: 1022
Merit: 1010
March 25, 2014, 11:47:23 PM
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.

Except there is a "transaction" that mines the block. That transaction has counterparties (the rest of the network). If you manufacture a CD and put it on a shelf, it is true you don't pay taxes on it. But if you sell that CD to a warehouse and the warehouse puts it on a shelf, you do pay taxes on it.  Think of the blockchain as a warehouse.

Again, this is not the only rule they could have written (and not the rule I would have written) and there are ways of looking at it that make sense and other ways of looking at it that don't. That likely could be said for any rule.



Using your view that the block chain is a warehouse isn't accurate, because the coins don't exist, anywhere, until the next block is found. A warehouse would have to have inventory. The people make the bitcoins, out of thin air using hardware software, manpower, and energy.  If people stopped altogether, there would be no more btc created. Sounds like manufacturing to me.
newbie
Activity: 36
Merit: 0
March 25, 2014, 11:46:10 PM
On the other hand, the day the IRS can tell me how much wealth I have in my (vastly larger quantity) brain wallet is the day I pay taxes on my true wealth.

Spoiler: This day will never come.

Unless you mined those coins in your brain wallet yourself, the IRS doesn't really care what you have in it until you convert it back to fiat.  That's when you calculate your capital gains.

Wrong.

Read the ruling.

My $.02.

Wink

http://www.forbes.com/sites/kellyphillipserb/2014/03/25/irs-says-bitcoin-other-convertible-virtual-currency-to-be-taxed-like-stock/
For those buying and selling Bitcoin as an investment, calculating gains and losses are figured the same as buying and selling stock. The basis, the holding period and even the triggering event (the sale of the asset) are all very clear.

I have stocks and I don't pay any tax on them until I sell those stocks.  My understanding is that it works the same way with conversion of btc to fiat.  This is what I assumed before this IRS guidance even.  But maybe I'm misunderstanding.
Pages:
Jump to: