Topic: IRS made a mistake (Read 2822 times)

I've got nothing to do with you, other than having a philosophical argument on a public forum.   I'm just saying that if you plan to break the laws of the USA, then telegraphing your intent in public to do so is not the smartest thing to do.   If I hypothetically were to want to evade taxes, then I would not choose to publicly declare myself a sovereign citizen, print my own license plate for the car I drive in public, and then eventually be taken to court then jail.  You can be angry and upset all you want, but you would be really dumb to think that it wouldn't happen.   I would more likely be want to have a good understanding of the laws and methods that the government uses to investigate the breaking of its laws, and how to avoid them, because declaring ignorance of them won't help you in court.

BTW, your use of the word "criminal" above is as it applies to a violation of your personal philosophy, not in relation to the government's laws.

Look, I may or may not be sympathetic to your cause, and I may or may not be a government agent or an informant.   You should regard anybody as a possible informant when you actively break the government's laws.   In fact, you should be most suspicious of those that appear to completely agree with you.   Just because I don't pick up an assault rifle and march along side you to overthrow the government, doesn't mean I'm not partially sympathetic to your views.

You seem suspiciously well-versed in the conniving (covertly criminal ways) of the government agents, and their informants ... coward government agent?

The most effective way to change things is to remain free and with enough resources to apply toward efforts which have some chance of making things change.  Having one's property confiscated and getting thrown in jail may impress a handful of fringe observers (and relatively inconsequential ones at that) but ultimately it is going to be a relatively ineffective way to address the very real issues of dis-empowerment of ordinary citizens through a variety of rather ugly means.  I'd go so far as to say that we are probably close enough to an event of significance that it makes sense to 'keep one's powder dry', but only time will tell on that one.

Proud to remain a coward.   Smart criminals don't get caught.  Dumb criminals get caught.  Really dumb criminals don't require a confidential informant to inform the government of their activities.

 

The guy said he doesn't want to go to jail and I don't blame him.  There are other ways to show your protest that doesn't involve getting locked up. 

Besides he's right, the judge ruling has nothing to do with the IRS, they are two separate issues, which you fail to comprehend.

Coward. You disagree with a corrupt system but state you'll do nothing to change or stand up to it.

Best I can tell (law not being my vocation) the IRS formalized things such that not only are winnings taxed as capital gains, but losses are also a factor.

This is key because it allows people with real money to put some of it on the table and enjoy at least some tax advantage if Bitcoin experiences some sort of a failure or collapse.  I would expect more speculation from those with deep pockets for that reason.

This isn't the only reason why the formal guidance from the IRS as it came down delights me, but it is one of them.

Umm, ya.   They even have their own court in which to sue you for your unpaid taxes.   I never advocated or endorsed the system, I just want to stay out of jail and be able to live a public life without having to go underground as a criminal.

The federal judge ruling is a framework that applies to a different area of the law, for money laundering, not taxes.

[edit]
You seem to be arguing base issues to which the rulings apply:
1) The government demands a tax on your income
2) The government demands that you don't transfer money without their supervision

The invention of bitcoin never invalidated these laws.   It's just the government clarifying how bitcoin applies to these laws.

No. How about you describe in detail to us idiots how screwed up and schizophrenic the Federal government really is? It's quite clear the Federal Judge is saying it is legally to be treated as money. Are you saying the IRS is basically a criminal organisation that can use its very own legal definitions to extort wealth from the USA citizenry? How does that work?

no, that wasn't my point.

it's the stepped up tax rate of ordinary income at time of pay or mining that i'm not happy about.  b/c the IRS defines it as "property" i'm arguing that if i'm paid for services in bitcoin i should be able to make the choice of deferring taxes out one year and making them capital gains just like one might do with stock options.

anyways, it's not a huge deal.  i'll pay the tax for now and hope they reverse the decision later.

You do know that the IRS ruling and the federal judge's ruling are two different things, applied to narrow scopes in the law.  The case you cited applies to AML/Money Transfer laws, while the IRS ruling allows bitcoin holders with long term capital gains to be taxed at a lower capital gains rate.

The broker is your agent.  From the moment you buy the BTC,  the broker "owes" you Bitcoins.
So the cost basis is fixed at that point in time;  it is not necessary to take delivery, before the basis is set.

You usually don't take immediate possession of stock you purchase either.
Most people keep all their stocks in street name the whole time, so they can sell easily.

Best I can tell (law not being my vocation) the IRS formalized things such that not only are winnings taxed as capital gains, but losses are also a factor.

This is key because it allows people with real money to put some of it on the table and enjoy at least some tax advantage if Bitcoin experiences some sort of a failure or collapse.  I would expect more speculation from those with deep pockets for that reason.

This isn't the only reason why the formal guidance from the IRS as it came down delights me, but it is one of them.

It appears so ....

Federal Judge Rules Bitcoin is a currency ... suck on that fat one IRS!!

http://techcrunch.com/2013/08/07/bitcoin-clampdown-continues-as-federal-judge-says-its-a-currency/



This  a Federal court ruling. It couldn't get any clearer, the IRS has made a huge mistake!

You make it sound like it's double taxation, when it is not.

I do some work for somebody, and they give me a collectible baseball card in compensation.    I am obligated to pay tax on the income, based on the value of the card when it was given to me.
If I choose to hold onto the card, and realize a capital gain when it sold later at a higher price, then I am obligated to pay taxes on that gain.

Good point. They should allow payment in Bitcoin.

But that doesn't address my more fundamental question.

Just thinking out loud: it may be convenient if a willing 14-year old turned up who's been mining on P2P pool for years, technically has a decent-sized tax liability (due to the erroneous guidance regarding miners), and is unable to sell bitcoins for dollars because he cannot legally register for an account on an exchange.  

If the 14-year old reported his tax liability and was unable to pay it, what would happen?

the problem is the result of what they've done.

the IRS may be technically correct by jamming round Bitcoin into the square hole of their regulatory structure.  but the result will be pushing the real Bitcoin economy overseas while encouraging speculation here domestically.  do we really want to encourage that trend which we've been on for the last 3 decades anyways?

but maybe that's what they want.  i for one think it will backfire on them.

thanks for dropping in once a year to say hi.

yep, Bitcoin isn't going anywhere so neither am i. 

Hey Cypher, good to see you're still around.  I agree with you that taxes shouldn't be incurred until gains are realized.  It's pretty common for businesses to keep account of unrealized gains/losses so it really should be no different with Bitcoin.