Buying with Bitcoin: A Capital Gains Inquiry. - page 2.

zasad@

legendary

Activity: 2002

Merit: 4735

Quote from: TheUltraElite on August 06, 2024, 08:24:30 AM

Group 2 - you pay the services or buy the goods in bitcoin and there is no fiat money involved, in this case no taxes. The problem will arise when the tax department understands that you are spending far more than what you actually earn. Then the problem will start and you might have to show your source of income.

Great question!

You suggest a good idea. I buy a shitcoin for $1,000 and it grows 100 times. I don't want to pay taxes and buy an expensive car worth $100,000 for this shitcoin.

As a result, I have a great profit in the form of an expensive car for $1,000 without taxes. Are you serious? Everyone would do this if it were possible.

__
The correct answer says that when buying goods, you must take into account the price of the cryptocurrency at the time of purchase and pay taxes.

TheUltraElite

legendary

Activity: 2898

Merit: 1253

So anyway, I applied as a merit source :)

As far as my understanding goes, this can simplified in two groups.

Group 1 - you convert the bitcoin to fiat money. You will have to show capital gains and have to pay the taxes. What you do next with your money is none of their tax department's concern.

Group 2 - you pay the services or buy the goods in bitcoin and there is no fiat money involved, in this case no taxes. The problem will arise when the tax department understands that you are spending far more than what you actually earn. Then the problem will start and you might have to show your source of income.

This is as far as I understand, I am not a CA and I would be willing to hear from experts here in order to enrich my own knowledge.

UnpaidIntern

newbie

Activity: 1

Merit: 0

Hello all,

I have been trying to do some research on this for the past few days however between work and life I have very little time to dedicate towards gaining a concrete understanding. I am hoping one of you amazing people could enlighten me on this matter.

As I understand it, capital gains tax applies when you sell your coins as you have realized those gains and it becomes an income source that must be reported and payed appropriately in accordance with your local tax laws. My question is, if an individual uses their BTC to buy goods or services is that seen as a realized gain prior to the purchase of said product?

I apologize if this topic is tiresome or repetitive to the forum savvy, but feel free to ELI5 or if you have the time I welcome links to resources that I may do my own research and save you the energy.

Thanks in advance!

Topic: Buying with Bitcoin: A Capital Gains Inquiry. - page 2. (Read 477 times)