I don't think your "hobby" example is accurate.
A more accurate analogy would be you buying gold or a house.
You do not "use bitcon" as a hobby, it is more of an investment as you do not "invest" any of your time in maintaining or earning bitcoins.
Topic: Bitcoin is property....but taxable? (Read 1704 times)
The recordkeeping that may be required to trade against fiat is pretty arduous. I prefer to trade crypto-to-crypto, with my position being that there is no "gain" made until I transact to fiat.
If I buy a crate of tomatoes today and the price drops and I sell them for a loss tomorrow, can I write off the loss if I only buy and sell tomatoes as a hobby, not my primary business?
If I sell them at a profit, do I have to report the income?
I am not in the business of buying and selling bitcoin, do I have to report gains and losses to the IRS every time I spend them for goods and services?
Now here's the kicker...if the IRS says I must report the realized gain every time I spend them, then can I write off the loss that Hasfast will never send me my miner?
Need a knowledgable US CPA.
If I sell them at a profit, do I have to report the income?
I am not in the business of buying and selling bitcoin, do I have to report gains and losses to the IRS every time I spend them for goods and services?
Now here's the kicker...if the IRS says I must report the realized gain every time I spend them, then can I write off the loss that Hasfast will never send me my miner?
Need a knowledgable US CPA.
A CPA is actually an accountant, although they generally are knowledgable about tax law they are probably not the *best* type of people to contact for tax questions. The best person would be a tax attorney (they would often be one and the same).
I am neither a CPA nor an attorney of any kind, however my understanding is that you should treat gains/losses on BTC as you would treat gains/losses on stocks. Any gains can be offset by losses, and losses that exceed your gains can offset your other income by up to 3,000 per year with the remaining being carried over to the next year.
Your best bet is to not convert it to fiat at all if you can avoid it. I know some need to recover cost from purchasing miners etc., but if you hold you can avoid taxes and enjoy the bull run.
Not converting to fiat does not make you immune from taxes. That would be considered tax evasion, and if they catch you there will be penalties and possible jail time depending on how severe.
The above is exactly correct. With all the advances in the reporting over at Coinbase, I would not be surprised if we start receiving 1099s from them by the end of 2014
How would Coinbase figure out the 1099? If you sell bitcoin through them, how will they figure out which bitcoin you sold. What if you transferred bitcoin to your account from another account and then sold it? They could issue a 1099 showing your sold one bitcoin at $700 but who's to say how much you paid for that? I'm afraid I see oppressive regulation coming our way. The good news is, nice the IRS really starts to crackdown on bitcoin, the publicity will be good and enlighten the public about inflation, the fed and government controls.
I hope.
That is one of the main arguments against the technical impossibility of taxing bitcoin as an asset. Almost every bitcoin (and here i mean 0.00001 also!) was bought on different $ rates. So, how could they prove capital gains, if they can not stick a price tag on every separate bitcoin and satoshis you own? They just can not, unless they are going to read EVERY SINGLE transaction on the blockchain till genesis. And if you just did a mixing/altcoin buying and reselling, you completely erased your tracks.
Say people diversify, keep some on paper wallets, or even better, at blockchain.info, and just memorize the passphrase, now that is effectively a brain wallet! Not really a seizable property.
So yes, in theory as long as you keep precautions, and don't sold for fiat, they won't stand a chance to tax on you. (which is effectively a robbery. it is not for new schooling/hospitals. they did not even heard about this technology a year ago and somehow now it is part of the "budget"? come on).
On the other side, we all know government is the biggest mafia, they going to try regulate. But capital fly was never easier, and there are plenty of nice sunny places on Earth to take a 10 year old vacation from the US, and it's IRS commando :-)
Think globally!
Well.. what about Switzerland!? Is it totalle free from tax fee or not?
In the Netherlands its valued as a trade object like gold and silver. I did not tell them about the money I received yet but then again its not that shockingly much either.
I hope they cant ever be taxed, but when you dont have a other income.
And you want to buy a house with bitcoins , you probably have to tax your bitcoins right?
Or doesnt any country have rules about that yet?
And you want to buy a house with bitcoins , you probably have to tax your bitcoins right?
Or doesnt any country have rules about that yet?
No government owns or controls bit coin so there is no inherent right to tax it. With just a little extra effort you can keep them from ever knowing how much you hold or have made short of coming to your door with a gun and taking your computer. Even then if you have a strong wallet password they still wouldn't get much information.
I hope they cant ever be taxed, but when you dont have a other income.
And you want to buy a house with bitcoins , you probably have to tax your bitcoins right?
Or doesnt any country have rules about that yet?
And you want to buy a house with bitcoins , you probably have to tax your bitcoins right?
Or doesnt any country have rules about that yet?
Your best bet is to not convert it to fiat at all if you can avoid it. I know some need to recover cost from purchasing miners etc., but if you hold you can avoid taxes and enjoy the bull run.
Not converting to fiat does not make you immune from taxes. That would be considered tax evasion, and if they catch you there will be penalties and possible jail time depending on how severe.
The above is exactly correct. With all the advances in the reporting over at Coinbase, I would not be surprised if we start receiving 1099s from them by the end of 2014
How would Coinbase figure out the 1099? If you sell bitcoin through them, how will they figure out which bitcoin you sold. What if you transferred bitcoin to your account from another account and then sold it? They could issue a 1099 showing your sold one bitcoin at $700 but who's to say how much you paid for that? I'm afraid I see oppressive regulation coming our way. The good news is, nice the IRS really starts to crackdown on bitcoin, the publicity will be good and enlighten the public about inflation, the fed and government controls.
I hope.
Your best bet is to not convert it to fiat at all if you can avoid it. I know some need to recover cost from purchasing miners etc., but if you hold you can avoid taxes and enjoy the bull run.
Not converting to fiat does not make you immune from taxes. That would be considered tax evasion, and if they catch you there will be penalties and possible jail time depending on how severe.
The above is exactly correct. With all the advances in the reporting over at Coinbase, I would not be surprised if we start receiving 1099s from them by the end of 2014
Your best bet is to not convert it to fiat at all if you can avoid it. I know some need to recover cost from purchasing miners etc., but if you hold you can avoid taxes and enjoy the bull run.
Not converting to fiat does not make you immune from taxes. That would be considered tax evasion, and if they catch you there will be penalties and possible jail time depending on how severe.
You pay capital gains tax on actual gains. I don't have any gains as i have never sold any and received a cash payment.
That's exactly right. Only the appreciation on Bitcoin holdings is taxed as capital gains. Mining or getting paid in Bitcoin is income. Just read the IRS guidance, the opinions I'm seeing in this thread are so ignorant it's bordering on comedy.
Some of it is willful ignorance as well. I personally have no intention of reporting my bit coin income. I don't need permission to protect what belongs to me.
Your best bet is to not convert it to fiat at all if you can avoid it. I know some need to recover cost from purchasing miners etc., but if you hold you can avoid taxes and enjoy the bull run.
Not converting to fiat does not make you immune from taxes. That would be considered tax evasion, and if they catch you there will be penalties and possible jail time depending on how severe.
You pay capital gains tax on actual gains. I don't have any gains as i have never sold any and received a cash payment.
That's exactly right. Only the appreciation on Bitcoin holdings is taxed as capital gains. Mining or getting paid in Bitcoin is income. Just read the IRS guidance, the opinions I'm seeing in this thread are so ignorant it's bordering on comedy.
Your best bet is to not convert it to fiat at all if you can avoid it. I know some need to recover cost from purchasing miners etc., but if you hold you can avoid taxes and enjoy the bull run.
Not converting to fiat does not make you immune from taxes. That would be considered tax evasion, and if they catch you there will be penalties and possible jail time depending on how severe.
You pay capital gains tax on actual gains. I don't have any gains as i have never sold any and received a cash payment.
More to the underlying issue they don't have the right to tax my bit coin and have no way of knowing how much i have short of getting a warrant to seize my computer. Even then they would still have to find my sd cards.
Government will put a service tax on all transactions and demand the payment processor to collect it.
They can do whatever they want. They have clearly established that. It doesn't really matter to me as I don't sell or use my bit coin for anything.
Yes, but property taxes usually are referred to as the taxes that come along with home ownership
No. Some governments tax all kinds of property; cars, furniture, anything.
Ever heard of PROPERTY TAX?
Yes, but property taxes usually are referred to as the taxes that come along with home ownership
And they are not applied by the IRS at the Federal level, but at the local level, usually county in the US. (US centric here given the topic)
Your best bet is to not convert it to fiat at all if you can avoid it. I know some need to recover cost from purchasing miners etc., but if you hold you can avoid taxes and enjoy the bull run.
Not converting to fiat does not make you immune from taxes. That would be considered tax evasion, and if they catch you there will be penalties and possible jail time depending on how severe.
You pay capital gains tax on actual gains. I don't have any gains as i have never sold any and received a cash payment.
More to the underlying issue they don't have the right to tax my bit coin and have no way of knowing how much i have short of getting a warrant to seize my computer. Even then they would still have to find my sd cards.
Government will put a service tax on all transactions and demand the payment processor to collect it.
Your best bet is to not convert it to fiat at all if you can avoid it. I know some need to recover cost from purchasing miners etc., but if you hold you can avoid taxes and enjoy the bull run.
Not converting to fiat does not make you immune from taxes. That would be considered tax evasion, and if they catch you there will be penalties and possible jail time depending on how severe.
You pay capital gains tax on actual gains. I don't have any gains as i have never sold any and received a cash payment.
More to the underlying issue they don't have the right to tax my bit coin and have no way of knowing how much i have short of getting a warrant to seize my computer. Even then they would still have to find my sd cards.
Ever heard of PROPERTY TAX?
Yes, but property taxes usually are referred to as the taxes that come along with home ownership
Ever heard of PROPERTY TAX?
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