Topic: Has anyone reported bitcoin capital gains or losses on their taxes? - page 5. (Read 12658 times)

I apologize if my post seemed confrontational. If you are a US citizen there is some information which might be relevant. Legal counsel or tax professional advice might not even be sufficient since this is still new and fairly obscure legislation; adding Bitcoin into the mix results in multiple unknowns.

The legal standing certainly hasn't been officially determined yet, although in the US any financial instrument or income-generating asset valued over USD$10,000 and held outside of the US must be declared; not necessarily taxable, but the Gestapo IRS must be informed of its existence by using a TDF 90-22.1 (PDF) form. I see no reason for Bitcoin to escape similar treatment, since it is basically a supranational currency outside of any regional jurisdiction. Oh, did you get the memo about the new TPS reports?

Be warned: if you do report your Bitcoin holdings, you may be risking more than you bargained for. The initial reaction of most governments in the face of potentially threatening uncertainties is to shoot first and ask questions later.

No service that any gov't provides is anything that couldn't be provided as a utility. If emergency services of police, fire and medics (to name a few) were paid for on a utility and/or per-use basis, there would be little to no justification for the bureaucracies that dwarf the actual work force. The same goes for conflict mediation and legal services. There is empirical evidence that shows private contract services which develop just such a utility system cut costs while providing a better level of service.

Control of commerce through the money supply has historically marked the transition from a government that respects its constituents to one that demonizes them. In the latter stages of a government's lifespan, arbitrary retribution can be exceptionally harsh.

The services I linked to in my previous post provide extensive information on how to protect yourself and your assets from needless government waste and aggression. Make use of them if you can.

Oh, sorry I was talking about people who wanted to pay taxes but were unsure of the legal standing of Bitcoin trading. I like the services provided by my government and don't mind paying my share.

So the mere potential of a government threat involving tax liability is going to spawn a cottage industry that does virtually nothing productive other than assist in the navigation of an equally incomprehensible and financially-parasitic entity? Of all the absurdity.

Bitcoin offers a means to make governments, banks and their respective hordes of secondary and tertiary industries such as tax accountants and the IRS and countless paper-pushers completely irrelevant. This is the power that everyone seems so willing to give up to someone else - the power to eliminate taxation, not just minimize it; reinventing government functions as utilities instead of a unified, authoritarian force. In effect granting the greatest degree of free will to the individual than has ever been available before. Maybe it's the implied personal responsibility that's scary for people so used to passing it off onto others.

It saddens me that there is still so little revulsion toward the magicians behind the curtain and so much quarter given at the slightest of threats. We may not have to literally shed much blood to foment a modern revolution, if any at all, but battles of various types must still be fought.

When a business does wrong by us, we choose to take our business elsewhere. When a government wrongs us, do we stop providing support to that government or leave the country? Internationalize to protect yourself from the dying paradigm that is the all-powerful nation-state, lest it drag you down as well.

Take whatever positives you can from the following resources and put them into action:

• Bye Bye Big Brother
• Casey Research
• International Living
• Sovereign Investor
• Sovereign Man

You're only really at risk if you get audited. But if you get audited, get ready to pay some serious taxes. That sounds like a lot of money to hide from the IRS.

fuck i hope it's not an issue, already bought a house with some of it

Right. And any you bought and sold for profit are taxable as capital gains, like any investment, whether you invested in your brother's lemonade stand or not.

Treat it like a sole proprietorship (schedule C).  Your product is bitcoins, which you sell for a profit.  Any costs involved in that are deductible or depreciable against that profit (electricity, equipment, etc.)

If you have to declare bitcoins its only fair you can claim a rebate for any electricity used to create them and/or store them on your computer. This includes wear and tear and other depreciation costs as well as the elecricity used to access your coins.

How do you treat bitcoins you've mined differently than ones you purchased/earned ?

If I've made anything by the end of the year (big if) I'd plan to report it as capital gains - just like I would if I were trading stocks, commodities or forex.

When I converted bitcoins into dollars through BitPiggy and that money hit my real bank account, I declared the money as income.  Tax costs have always been included in my calculations for mining profitability.

I think it would be more likely that they instruct people to declare their Bitcoin activity in the same way they do with other things like PM's.  People who fail to do so will simply be breaking the law.  I hope so at least since a consumption tax is highly regressive and thus unfair and damaging to society (in my opinion.)

I think governments will need to go to a consumption based tax in future because of bitcoin.

Has anyone filed a tax return since significant capital gains ever happened?  Bubble was in June, taxes aren't due until next April in the US, the year hasn't even ended.

I consider Bitcoin to be the equivalent of a tax haven. Therefore, hell-f*@$ing no.

How would an audit work if your transactions were no longer necessary to the integrity of the blockchain and had been culled?

Which transactions could be verified as yours without exposing your wallet to gov't inspection for verification of ownership?

Why in the world would you want to prostrate yourself as a sacrificial lamb to be made an example of?

Too risky to even consider, especially for anyone with substantial amounts of BTC. There are methods of protecting your tax status internationally against domestic gov't reporting requirements. Bitcoin assets and profits could easily be transferred to such a vehicle; many nations provide for a limited tax-free disbursement of funds from foreign sources. In the US, it's about $90k/year, which is like a ~$150k/year taxable salary.

AFAIK, Gox is the only one that reports such activity! If you just cash out mining profits, it would fall under self employed income. I would treat the first sell as income, then any gains/losses from that.
But, I'm sure there's an [Other] option for claiming capital gains.

However, If you put it all back into BitCoins, then it's unrealized gains and you don't have to claim it!

For the record: I'm not a tax law expert! =)

I'm curious about how much of a hassle will it be to try to explain where your money is coming from. My dollars are routed through an exchange which turns them into Bitcoins which are moved into a mostly anonymous (so far) Mt Gox account where they are traded. I have no way to actually prove the source of Bitcoins which are later converted back into dollars.