Topic: IRS&#039;s new guidelines for taxing crypto-currencies (Read 1924 times)

Quote from: QuestionAuthority on May 18, 2014, 10:20:13 AM

Has anyone come out with a wallet or piece of software yet that actually does the accounting for you?

That's a really good idea. Someone should send an email to Intuit and see if they can develop a Quickbooks Bitcoin edition.

No, please, not Intuit.
QB is junk.

Intuit also owns Turbo Tax, the most widely used tax software in the US.

UNV - JAPAN

newbie

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Has anyone come out with a wallet or piece of software yet that actually does the accounting for you?

That's a really good idea. Someone should send an email to Intuit and see if they can develop a Quickbooks Bitcoin edition.

No, please, not Intuit.
QB is junk.

msc_de

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Has anyone come out with a wallet or piece of software yet that actually does the accounting for you?

accounting maybe a problem Grin

QuestionAuthority

legendary

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You lead and I'll watch you walk away.

Quote from: haploid23 on May 16, 2014, 02:31:09 PM

Has anyone come out with a wallet or piece of software yet that actually does the accounting for you?

That's a really good idea. Someone should send an email to Intuit and see if they can develop a Quickbooks Bitcoin edition.

Este Nuno

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amarha

Has anyone come out with a wallet or piece of software yet that actually does the accounting for you?

keithers

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This is the land of wolves now & you're not a wolf

And how exactly will the IRS enforce capital gains tax? Good luck with that. They won't be able to do it, not easily at least. Sure, they can track when you exchanged the bitcoins, but it will be impossible to determine the exact value it was traded it. Different exchanges have different rates, and they also cannot prove what the rate was for private trades. You can claim you had your own custom exchange, or traded with someone for $1 cash per bitcoin.

The way they'll most likely enforce it, is if they feel you are not being fully forthcoming with your capital gains, or if you have large deposits into your bank account that are not declared, they will audit you. Then you will have to be able to produce receipts for everything, pay back taxes, penalties, and then late fees on the whole liability.

skooter

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Quote from: QuestionAuthority on May 17, 2014, 10:33:36 AM

Quote from: skooter on May 17, 2014, 03:18:37 AM

Quote from: skooter on May 17, 2014, 03:18:37 AM

Ever heard of Civil Obedience?...

Actually no, I've always paid more attention to the other side. Cheesy

Civil Obedience?
At least I learned something new today.

With the help of computers, will BTC Civil Obedience actually burden the IRS enough to make a difference?

This will depend on how popular BTC becomes. If a significant number of Americans each submit a few hundred or even thousand capital gains transactions each for relatively small amounts it will have an impact. Contrary to popular assumptions tax agencies do not have unlimited funds and their mandate is to raise money for the state not spend it. If the paperwork burden gets bad enough where there is no significant return in taxes collected, they will change the rules to something more sensible where there is a threshold below which transactions are not reportable as is the case with foreign currency.

By the way I live in Canada and the CRA is doing a similar thing. They will learn just give them some time. It is interesting to see some tax agencies in Europe backtrack on VAT and BTC. The UK comes to mind here. In the meantime I am for tracking every satoshi and do not forget to claim those BTC network fees. Wink

It's no different then Schedule D for stock buys/sales.

There's people who submit Schedule D forms THOUSANDS of pages long. Nobody actually looks at the individual lines unless they suspect something's wrong with it.

I've personally submitted a schedule D form 10+ pages long. It was auto generated by my broker. The IRS doesn't look at each line, they only look at the total (which I'm responsible for calculating).

That's right. I guess no one here actually realizes that auditing is a very small percentage of what the IRS does. I think it's like 5-7% of the returns are audited. If you fill out these ridiculously long forms hoping that a human is going to read it then you're killing a tree for no reason.

They added a bunch more employees to transition the Obamacare program and when that's running smooth they can start digging into auditing Bitcoin returns with those extra employees. If they don't find anything irregular within the first few years then no one will ever read those Bitcoin returns again. They will just accept the bottom line you entered and file it away. You will be the only one inconvenienced by the extra work.

Yeah, it's more like

"Yep, the required paperwork is here" *checks it off the list*

If you DON'T file the required paperwork, there's a high chance you get flagged for audit as a result, THEN they'll start looking at individual line items.

QuestionAuthority

legendary

Activity: 2156

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You lead and I'll watch you walk away.

Ever heard of Civil Obedience?...

Actually no, I've always paid more attention to the other side. Cheesy

Civil Obedience?
At least I learned something new today.

With the help of computers, will BTC Civil Obedience actually burden the IRS enough to make a difference?

This will depend on how popular BTC becomes. If a significant number of Americans each submit a few hundred or even thousand capital gains transactions each for relatively small amounts it will have an impact. Contrary to popular assumptions tax agencies do not have unlimited funds and their mandate is to raise money for the state not spend it. If the paperwork burden gets bad enough where there is no significant return in taxes collected, they will change the rules to something more sensible where there is a threshold below which transactions are not reportable as is the case with foreign currency.

By the way I live in Canada and the CRA is doing a similar thing. They will learn just give them some time. It is interesting to see some tax agencies in Europe backtrack on VAT and BTC. The UK comes to mind here. In the meantime I am for tracking every satoshi and do not forget to claim those BTC network fees. Wink

It's no different then Schedule D for stock buys/sales.

There's people who submit Schedule D forms THOUSANDS of pages long. Nobody actually looks at the individual lines unless they suspect something's wrong with it.

I've personally submitted a schedule D form 10+ pages long. It was auto generated by my broker. The IRS doesn't look at each line, they only look at the total (which I'm responsible for calculating).

That's right. I guess no one here actually realizes that auditing is a very small percentage of what the IRS does. I think it's like 5-7% of the returns are audited. If you fill out these ridiculously long forms hoping that a human is going to read it then you're killing a tree for no reason.

They added a bunch more employees to transition the Obamacare program and when that's running smooth they can start digging into auditing Bitcoin returns with those extra employees. If they don't find anything irregular within the first few years then no one will ever read those Bitcoin returns again. They will just accept the bottom line you entered and file it away. You will be the only one inconvenienced by the extra work.

skooter

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Activity: 70

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Quote from: Bit_Happy on May 16, 2014, 07:33:47 PM

Ever heard of Civil Obedience?...

Actually no, I've always paid more attention to the other side. Cheesy

Civil Obedience?
At least I learned something new today.

With the help of computers, will BTC Civil Obedience actually burden the IRS enough to make a difference?

This will depend on how popular BTC becomes. If a significant number of Americans each submit a few hundred or even thousand capital gains transactions each for relatively small amounts it will have an impact. Contrary to popular assumptions tax agencies do not have unlimited funds and their mandate is to raise money for the state not spend it. If the paperwork burden gets bad enough where there is no significant return in taxes collected, they will change the rules to something more sensible where there is a threshold below which transactions are not reportable as is the case with foreign currency.

By the way I live in Canada and the CRA is doing a similar thing. They will learn just give them some time. It is interesting to see some tax agencies in Europe backtrack on VAT and BTC. The UK comes to mind here. In the meantime I am for tracking every satoshi and do not forget to claim those BTC network fees. Wink

It's no different then Schedule D for stock buys/sales.

There's people who submit Schedule D forms THOUSANDS of pages long. Nobody actually looks at the individual lines unless they suspect something's wrong with it.

I've personally submitted a schedule D form 10+ pages long. It was auto generated by my broker. The IRS doesn't look at each line, they only look at the total (which I'm responsible for calculating).

QuestionAuthority

legendary

Activity: 2156

Merit: 1393

You lead and I'll watch you walk away.

...In the meantime I am for tracking every satoshi and do not forget to claim those BTC network fees. Wink

I need to learn to enjoy the "game" of tracking/claiming every possible deduction and legally paying much less taxes; I know at least a couple people who are able to have high income and shockingly low income taxes.
For me it's also seemed such a hassle to save receipts and account for everything (both big and small)

Flat tax is the way to go. No tracking needed because everyone pays a set percentage.

Bit_Happy

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A Great Time to Start Something!

...In the meantime I am for tracking every satoshi and do not forget to claim those BTC network fees. Wink

I need to learn to enjoy the "game" of tracking/claiming every possible deduction and legally paying much less taxes; I know at least a couple people who are able to have high income and shockingly low income taxes.
For me it's also seemed such a hassle to save receipts and account for everything (both big and small)

ArticMine

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Activity: 2282

Merit: 1050

Monero Core Team

Ever heard of Civil Obedience?...

Actually no, I've always paid more attention to the other side. Cheesy

Civil Obedience?
At least I learned something new today.

With the help of computers, will BTC Civil Obedience actually burden the IRS enough to make a difference?

This will depend on how popular BTC becomes. If a significant number of Americans each submit a few hundred or even thousand capital gains transactions each for relatively small amounts it will have an impact. Contrary to popular assumptions tax agencies do not have unlimited funds and their mandate is to raise money for the state not spend it. If the paperwork burden gets bad enough where there is no significant return in taxes collected, they will change the rules to something more sensible where there is a threshold below which transactions are not reportable as is the case with foreign currency.

By the way I live in Canada and the CRA is doing a similar thing. They will learn just give them some time. It is interesting to see some tax agencies in Europe backtrack on VAT and BTC. The UK comes to mind here. In the meantime I am for tracking every satoshi and do not forget to claim those BTC network fees. Wink

QuestionAuthority

legendary

Activity: 2156

Merit: 1393

You lead and I'll watch you walk away.

Ever heard of Civil Obedience? The idea is that one complies with a questionable law to the letter, in order to force a change in the law. In this case the market can develop the appropriate software to generate the appropriate IRS forms and then let IRS deal with the paperwork burden of tracking millions of small capital gains and losses.

As far as I can see this is a perfect case for Civil Obedience.

PS: One should also include Bitcoin network transaction fees in order to accurately determine the tax cost basis to the last satoshi.

They will just use your tax dollars to hire more employees to do the job. They have a lot more to do lately anyway because they are now monitoring the Obamacare registrations. Next years tax review will include a check to see if you have the mandatory insurance and a fine if you don't.

Bit_Happy

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A Great Time to Start Something!