Topic: IRS Ruling = Floodgates Open for Wall Street? - page 2. (Read 4952 times)
Maybe the corner store won't send 1099s, but actors like Coinbase probably will.
Maybe I shouldn't be so surprised to see people applauding this news. It's good clarification to "investors" and speculators, but it's a serious blow to BTC as a currency. How likely is it that businesses are going to want to accept BTC if they have to 1099 every person who pays in BTC? How likely is it that the average Joe will want to use BTC to buy a cup of coffee when he knows that he has to claim it on his taxes?
Maybe 1099s aren't required now, but that's where this is all going.
Maybe 1099s aren't required now, but that's where this is all going.
They don't have to 1099. That's the bottom line. You're trying to make good news into bad news. But it doesn't make sense that way.
That doesn't make sense to me. If that were the case, then why would anyone in the U.S. buy BTC at all to use as a daily currency? No one in the U.S. is going to buy BTC for daily currency use if it continues a trend of 10X gains a year for the next 2-3 years.
Also it encourages U.S. Merchants to dump BTC immediately upon receipt instead of holding, or not touch it at all, so they can avoid having to pay any gains tax yearly, yes?
Also it encourages U.S. Merchants to dump BTC immediately upon receipt instead of holding, or not touch it at all, so they can avoid having to pay any gains tax yearly, yes?
I'm not sure why you think that having a gain is a bad thing. Do you have an income? Is it taxed? Would you like it to be larger or smaller? If it were larger would you pay more taxes on it? I buy BTC for use as daily currency (actually I only spend BTC about once or twice a week, due to the prevalence of legacy vendors) because (1) my daily currency appreciates in value and purchasing power over the long run, and (2) spending it increases its value, and (3) the fiat I would have to own otherwise depreciates in value over the long run. I much prefer to spend BTC because it is good for me. If I want more BTC than I have, and I have fiat available, I simply buy more BTC. If I don't have fiat, I sell something else, shares or metals, whatever, to get more BTC. It's very simple really.
As for merchants, if they are wise and can tolerate the volatility, they will keep their BTC, preferrably for a least a year, which would likely result in amazing gains in value, and a much lower tax rate. If you only spend as much as you had at least 1 year ago, your BTC balance constantly grows, constantly appreciates in value, and is never taxed at the marginal rate. It's an amazing gift from the IRS.
Bitcoin acts like a speculative investment I can see why they labeled it property.
Maybe I shouldn't be so surprised to see people applauding this news. It's good clarification to "investors" and speculators, but it's a serious blow to BTC as a currency. How likely is it that businesses are going to want to accept BTC if they have to 1099 every person who pays in BTC? How likely is it that the average Joe will want to use BTC to buy a cup of coffee when he knows that he has to claim it on his taxes?
Maybe 1099s aren't required now, but that's where this is all going.
Maybe 1099s aren't required now, but that's where this is all going.
It all depends on demand. A merchant won't be able to stay away from bitcoin if all his competitors take it. They will have to deal with the taxes. Its not that big of deal. Its up to us to spend btc and support btc merchants.
How are you supposed to calculate the gains on a transaction that may be spending hundreds of small inputs mined over several years?
I still don't think FIFO is going to work. I can set up a hot wallet and buy/sell bitcoin hourly just to fund my daily micro transactions, keeping the daily balance at or near 0. But I can also send small amounts of BTC to that wallet from another anonymous wallet (or series of random wallets) that contained BTC that was much older. No one could ever accurately track/calculate how old that incoming BTC was, and if there was any gain. And with tumblers it could be made even more obscure.
Not an issue. You don't account for the specific coins. If you bought 1 coin a month for a year, then spent 1 coin a month, they would all be 1 year old FIFO coins for IRS purposes.
That doesn't make sense to me. If that were the case, then why would anyone in the U.S. buy BTC at all to use as a daily currency? No one in the U.S. is going to buy BTC for daily currency use if it continues a trend of 10X gains a year for the next 2-3 years.
Also it encourages U.S. Merchants to dump BTC immediately upon receipt instead of holding, or not touch it at all, so they can avoid having to pay any gains tax yearly, yes?
How are you supposed to calculate the gains on a transaction that may be spending hundreds of small inputs mined over several years?
I still don't think FIFO is going to work. I can set up a hot wallet and buy/sell bitcoin hourly just to fund my daily micro transactions, keeping the daily balance at or near 0. But I can also send small amounts of BTC to that wallet from another anonymous wallet (or series of random wallets) that contained BTC that was much older. No one could ever accurately track/calculate how old that incoming BTC was, and if there was any gain. And with tumblers it could be made even more obscure.
Not an issue. You don't account for the specific coins. If you bought 1 coin a month for a year, then spent 1 coin a month, they would all be 1 year old FIFO coins for IRS purposes.
Seems more like a dam being built than floodgates being opened. Just more hurdles to jump over for people trying to get into BTC.
How are you supposed to calculate the gains on a transaction that may be spending hundreds of small inputs mined over several years?
I still don't think FIFO is going to work. I can set up a hot wallet and buy/sell bitcoin hourly just to fund my daily micro transactions, keeping the daily balance at or near 0. But I can also send small amounts of BTC to that wallet from another anonymous wallet (or series of random wallets) that contained BTC that was much older. No one could ever accurately track/calculate how old that incoming BTC was, and if there was any gain. And with tumblers it could be made even more obscure.
How are you supposed to calculate the gains on a transaction that may be spending hundreds of small inputs mined over several years?
At least there is no word on VAT. In Spain there is the consensus among lawyers that BTC are goods,
I fear they might end up influencing the Taxman here. Thanks!
This ruling shouldn't come as a surprise to anyone in the community. Nearly every tax professional that has weighed in before the IRS ruling said that transactions should be treated like barter transactions where gains relative to value in USD are taxed. And there are folks here who have been claiming income on their tax forms. Love it or hate it, that's the US tax law.
The rule unknown is whether or not Bitcoin exchangers/dealers in the US will start reporting transactions to the IRS. That would make it less of a honor system, where everyone is on their own to report income/losses, to a self-defense system where traders will get pinged if they don't accurately report everything.
I don't think it makes much sense when trying to use it as a currency. If I buy bitcoin at 3pm to use for a cup of coffee and go to buy coffee at 4pm and my bitcoin appreciated in that hour, I'm not going to make a record of every single buy/sell and determine if it is a gain or loss to report to the IRS. Stupid.
You don't have to make a record. The blockchain does it for you.
yes, but, the blockchain does not calculate the equivalent value at the time of transaction. For that matter, when does the transaction actually take place? 1 confirmation? 6? 120?
And the part about the miners is ridiculous. Should a miner be calculating the price of that fraction of bitcoin that he/she gets payed from each and every block mined by the pool? Are they supposed to calculate it at the time of withdrawl?
How are you supposed to calculate the gains on a transaction that may be spending hundreds of small inputs mined over several years?
You don't. There's no taxable event unless you sell. Costs offset sales. There is no need to do maths on the btc. You just expense all the usd outflows and accrue all the usd inflows. The difference is your gain or loss. This is a very favorable situation for hoarders.
I don't think it makes much sense when trying to use it as a currency. If I buy bitcoin at 3pm to use for a cup of coffee and go to buy coffee at 4pm and my bitcoin appreciated in that hour, I'm not going to make a record of every single buy/sell and determine if it is a gain or loss to report to the IRS. Stupid.
You don't have to make a record. The blockchain does it for you.
yes, but, the blockchain does not calculate the equivalent value at the time of transaction. For that matter, when does the transaction actually take place? 1 confirmation? 6? 120?
And the part about the miners is ridiculous. Should a miner be calculating the price of that fraction of bitcoin that he/she gets payed from each and every block mined by the pool? Are they supposed to calculate it at the time of withdrawl?
How are you supposed to calculate the gains on a transaction that may be spending hundreds of small inputs mined over several years?
I don't think it makes much sense when trying to use it as a currency. If I buy bitcoin at 3pm to use for a cup of coffee and go to buy coffee at 4pm and my bitcoin appreciated in that hour, I'm not going to make a record of every single buy/sell and determine if it is a gain or loss to report to the IRS. Stupid.
You don't have to make a record. The blockchain does it for you.
I think if we look at the motion of the ocean, this all points to wall st getting in.
Tax rulings, Fincen guidance and soon The Lawsky Regs all seem to be laying a platform for the big boys to play in the waters.
Second Market is putting in some big dollars, Bruce Fenton has hinted at institutional money entering the space soonish, and the Pantera etc fund is going ahead.
I realise it is in their interests (& @pmarca aswell) to talk their book, but it seems like it is happening.
Tax rulings, Fincen guidance and soon The Lawsky Regs all seem to be laying a platform for the big boys to play in the waters.
Second Market is putting in some big dollars, Bruce Fenton has hinted at institutional money entering the space soonish, and the Pantera etc fund is going ahead.
I realise it is in their interests (& @pmarca aswell) to talk their book, but it seems like it is happening.
well from the big picture perspective I'd have to say this is some good news the crypto bulls and such. Gonna have to co sign the floodgates term on this one. 
Good luck trying to enforce that.
The SEC can not even regulate the scams on the pink sheets. Let alone Bitcoin.
The SEC can not even regulate the scams on the pink sheets. Let alone Bitcoin.
planning on committing tax fraud aren't we?
Did I say that no! I am making a point that IRS has no clue what to do with Bitcoin and it is reaching for straws. I pay the IRS on time every year and will continue to do so. So dont put words in my mouth.
Isn't this exactly the clarification they needed to make a serious move?
On the one hand, The Man recognises Bitcoin as a valid asset.
On the other hand The Man undermines the whole fundamental purpose of Bitcoin by implementing a capital gains tax with every purchase made with Bitcoin. Sounds totally unenforceable in practice but just as with internet piracy, there will always be those that are made an example of and totally fucking nailed to the last letter of the law for buying a cheeseburger with a Bitcoin they made 56.6% profit on and failied to declare to tax authority.
I think that he means that many Wall Streeters have been involved trading in bitcoin for some time now (perhaps the last 3 years), the attraction being that they have been able to make quick easy trades and enormous profits basically tax-free due to the lack of clear guidance issued from the IRS. Now that guidance has been issued on taxable bitcoin gains, and being required to hold bitcoin for at least 12 months to avoid income tax, it may scare some WS players away.
I don't think it makes much sense when trying to use it as a currency. If I buy bitcoin at 3pm to use for a cup of coffee and go to buy coffee at 4pm and my bitcoin appreciated in that hour, I'm not going to make a record of every single buy/sell and determine if it is a gain or loss to report to the IRS. Stupid.
But maybe it'll encourage the investors to HODL large amounts of bitcoin for at least 12 months.
Jump to: