Topic: Bitcoin Tax Information - Interesting - page 2. (Read 4652 times)

So say you cultivated 10,000 bushels of corn on June 30, 2011, someone said this is considered a "taxable event" and you would need to pay taxes on the market value of that corn.

~do not use this as tax advice~

Loooool 

And when you finish you can show them the result of your reasearch: A true white paper!

Anyone who has any income or deductions that are BitCoin related should really consider getting A Lawyer's Take On BitCoin And Taxes which is 31 pages with 108 footnotes to statutes, cases, etc. The legal landscape is murkier than you may think and there are several reasonable approaches that can be taken and they can all lead to a different outcome having a massive effect on tax liability (or the opposite if you have other income to offset).

Hell with calling it a hobby! Call it research and that you're writing an in-depth white paper on Bitcoin: Yes, at the moment my position is positive, but I'm hoping to experience negativity, thus giving my paper cred. If I fail, and my position continues to spiral upwards--beyond my control--I will claim my ill gotten gains the next time I choose to file my taxes.

~Bruno~

Anyone who has any income or deductions that are BitCoin related should really consider getting A Lawyer's Take On BitCoin And Taxes which is 31 pages with 108 footnotes to statutes, cases, etc. The legal landscape is murkier than you may think and there are several reasonable approaches that can be taken and they can all lead to a different outcome having a massive effect on tax liability (or the opposite if you have other income to offset).

If someone has a token amount of Bitcoin "income" (common definition not IRS definition) then it likely doesn't matter.  However if you have a significant amount it would be a good idea to consult with an accountant and tax professional.

The above post should be considered informational and not relied upon as tax advice.

I think this would apply only if you sold BTC for fiat - and in that case, the exchange rate at the time of sale would apply. If you simply hold on to your mined coins, there is no tax involved.

The only thing I found interesting was that you have NO income lol
How much was that TradeHill cheque? $5?

Here's one interpretation:

We need some more data, so let's assume the 100 BTC was earned by mining two bitcoin blocks.  One on June 30, 2011 and the other on November 1, 2011.

Record this as ordinary income of

50 BTC * $17 (price of bitcoins on June 30, 2011)   = $850
50 BTC * $3.10 (price of bitcoins on June 30, 2011) = $155
                                                               Total $1,005

So whatever your tax bracket is (let's assume 25%), then your tax line would include $251 of tax.

Now if you want to offset the $1,005 with hardware & electricity costs, I think that's reasonable (and why I haven't declared any income yet).  I'm not sure if you'll need to setup some sort of LLC to do that or not.

Disclaimer: I'm not a tax accountant, and do not rely on these estimates or interpretations as they are a brainstorm of thought and have not been verified by a qualified source.

There's no system in place to audit Bitcoin transactions. The IRS can't do squat in regards to Bitcoin.

Don't bother filing. Don't ever bother filing if you just put your Bitcoins through any service. There's nothing to hold you accountable.

No, seriously.  H&R block said don't even bother coming in, that I have NO income.

In general, taxpayers may deduct ordinary and necessary expenses for conducting a trade or business. An ordinary expense is an expense that is common and accepted in the taxpayer’s trade or business. A necessary expense is one that is appropriate for the business. Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit.

In order to make this determination, taxpayers should consider the following factors:

Does the time and effort put into the activity indicate an intention to make a profit?
Does the taxpayer depend on income from the activity?
If there are losses, are they due to circumstances beyond the taxpayer’s control or did they occur in the start-up phase of the business?
Has the taxpayer changed methods of operation to improve profitability?
Does the taxpayer or his/her advisors have the knowledge needed to carry on the activity as a successful business?
Has the taxpayer made a profit in similar activities in the past?
Does the activity make a profit in some years?
Can the taxpayer expect to make a profit in the future from the appreciation of assets used in the activity?
The IRS presumes that an activity is carried on for profit if it makes a profit during at least three of the last five tax years, including the current year — at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses.

If an activity is not for profit, losses from that activity may not be used to offset other income. An activity produces a loss when related expenses exceed income. The limit on not-for-profit losses applies to individuals, partnerships, estates, trusts, and S corporations. It does not apply to corporations other than S corporations.

Well, 2 days ago I finally got my answer.  After asking the 5 longest-working members at that particular H&R Block location AND after calling the IRS, the lady said that Bitcoin is a hobby.  She knows that I buy precious metals with Bitcoin, knows that I have money in accounts all over the globe, and knows that I have conducted business deals and have provided services specifically dealing in Bitcoin.  I even showed her an old TradeHill check of some of my profits.

Long story short, I don't need to file any taxes this year    But then again, I was kinda hoping to write off some of my computer equipment as a business expense.

So if you made 100 BTC last year and it's sitting in your wallet.dat, how much do you send to the IRS?  Do they even have a receiving address for BTC?

So if you made 100 BTC last year and it's sitting in your wallet.dat, how much do you send to the IRS?  Do they even have a receiving address for BTC?