Good for me I will pay15% taxes instead of 30%
Exactly and no one is focusing on that!
That is good for you.
A lot of people are not focusing on that because that is not the issue.
Topic: Is the IRS ruling that bad really? (Read 2084 times)
Exactly and no one is focusing on that!
That is good for you.
A lot of people are not focusing on that because that is not the issue.
Good for me I will pay15% taxes instead of 30%
Since BTC is a property and classified as "capital gains" I would imagine that you would just record the USD price at time of receiving at a "fair market price" (Technically IRS states most stable price, which would be Mt. Gox, but you know....) and then record the USD price at time of selling for something, buying something etc. And if the USD price at that time happens to be lower than when you received, it would be a capital loss, and if you made a capital gain on it, you would be taxed for the difference, which effectively makes everyday transactions a burden. DISCLAIMER: Just a guy from the internet, please consult a lawyer or someone that does taxes before doing anything!
WARNING: Not a lawyer, accountant or CPA. I've just done a lot of research on this.
1) If your mining activities are at the level where the IRS classifies it as a business rather than a hobby, then you can deduct it as a self-employment expense.
2) If your mining activities are classified as a hobby, you can deduct the expenses up to the amount of mining income you've made by itemizing on your return.
Thank you for you comments, they are very helpful in trying to understand how to file with the IRS.And it turns out the every day user should only report on transactions over $600
Wondering how the initial burst of news articles missed that quite critical point?
They missed it because that is false. What I'm about to say is highly simplified because there are exceptions. You have it backwards: OTHER people have to report YOU to the IRS when THEY send you more than $600 (of anything) in a given tax year. YOU still have to report everything regardless.Wondering how the initial burst of news articles missed that quite critical point?
I have no issue with paying tax and welcome the acknowledgement that the IRS has now given the asset class. I do have issues with some aspects of the IRS rules.
1)An individual is not allowed to deduct expenses incurred in crating the property. If they want you to pay on creation then a deduction of expenses should be allowed.
Where did you hear that? If you aren't mining as part of a business, then there are two ways you can deduct the expenses:1)An individual is not allowed to deduct expenses incurred in crating the property. If they want you to pay on creation then a deduction of expenses should be allowed.
1) If your mining activities are at the level where the IRS classifies it as a business rather than a hobby, then you can deduct it as a self-employment expense.
2) If your mining activities are classified as a hobby, you can deduct the expenses up to the amount of mining income you've made by itemizing on your return.
The IRS Notice 2014-21 states in section 3. scope:
"No inference should be drawn with respect to virtual currencies not
described in this notice. "
Does this mean you may not use any std TAX rules when declaring virtual currencies and only use those described in the notice? If this is the case how are you able to deduct expenses as an individual not engaged in a business?
If you mine 1btc at $500 you pay tax on receipt of the minded virtual currency, if you hold the 1btc and the price drops to $400. How do you claim this loss as an individual not evolved in a business?
Actually you have to report everything, the $600 threshold is for a form 1099 
WARNING: Not a lawyer, accountant or CPA. I've just done a lot of research on this.
1) If your mining activities are at the level where the IRS classifies it as a business rather than a hobby, then you can deduct it as a self-employment expense.
2) If your mining activities are classified as a hobby, you can deduct the expenses up to the amount of mining income you've made by itemizing on your return.
And it turns out the every day user should only report on transactions over $600
Wondering how the initial burst of news articles missed that quite critical point?
They missed it because that is false. What I'm about to say is highly simplified because there are exceptions. You have it backwards: OTHER people have to report YOU to the IRS when THEY send you more than $600 (of anything) in a given tax year. YOU still have to report everything regardless.Wondering how the initial burst of news articles missed that quite critical point?
I have no issue with paying tax and welcome the acknowledgement that the IRS has now given the asset class. I do have issues with some aspects of the IRS rules.
1)An individual is not allowed to deduct expenses incurred in crating the property. If they want you to pay on creation then a deduction of expenses should be allowed.
Where did you hear that? If you aren't mining as part of a business, then there are two ways you can deduct the expenses:1)An individual is not allowed to deduct expenses incurred in crating the property. If they want you to pay on creation then a deduction of expenses should be allowed.
1) If your mining activities are at the level where the IRS classifies it as a business rather than a hobby, then you can deduct it as a self-employment expense.
2) If your mining activities are classified as a hobby, you can deduct the expenses up to the amount of mining income you've made by itemizing on your return.
It's basically the same tax treatment gold gets. What's the problem?
Gold is not used for everyday transactions. Gold is used on major transactions, if ever so recording a transaction every once in a while is okay. But since BTC gets the same treatment, you have to record every transaction no matter how small (under IRS guidelines) and report capital gains/loss on it. Thats the problem, at least IMO. That and they were really vague, and that for me (personally) it was a bandaid solution. I do hope they revise it quickly!
It's for transactions of under $600 they reported later
Moving is a big decision IMO, I think thats the reason why people aren't fleeing US. PLus I think saving a tiny bit of taxes justifies costs for flight ticket imo :p
It's basically the same tax treatment gold gets. What's the problem?
yeah exactly, why everyone presents is as so bad newsIts actually cheaper then gold. Anyways its still a huge amount that they can just take. I don't see why anyone pays these taxes when they can just go else where to where taxes are cheaper. So what I don't get is what keeps everyone from leaving and fleeing a country and moving to somewhere where the tax burden is less?
It's basically the same tax treatment gold gets. What's the problem?
Gold is not used for everyday transactions. Gold is used on major transactions, if ever so recording a transaction every once in a while is okay. But since BTC gets the same treatment, you have to record every transaction no matter how small (under IRS guidelines) and report capital gains/loss on it. Thats the problem, at least IMO. That and they were really vague, and that for me (personally) it was a bandaid solution. I do hope they revise it quickly!
It's basically the same tax treatment gold gets. What's the problem?
yeah exactly, why everyone presents is as so bad newsI have no issue with paying tax and welcome the acknowledgement that the IRS has now given the asset class. I do have issues with some aspects of the IRS rules.
1)An individual is not allowed to deduct expenses incurred in crating the property. If they want you to pay on creation then a deduction of expenses should be allowed.
2)An individual is not allowed to deduct losses on the the devaluation of the property that has not been used in a transaction or exchanged at the time of creation for $. You should be allowed to deduct loses if you have not yet used the property in a transaction.
or
3)An individual is required to pay “property tax” on creation of the property asset before realizing any benefit or gain from the property. The gain is only realized when the property is used in a transaction. The holder of the property should only pay tax on the gain from the time of creation of the property to the time of the transaction and not on the creation and gain at the time of the transaction.
To add consideration for and address either 1 and 2 or 3 in the rules would in my view be much more reasonable and fare.
It is my opinion that the rules are an attempt to deter individuals from getting involved in mining and transaction based activities.
It's basically the same tax treatment gold gets. What's the problem?
yeah exactly, why everyone presents is as so bad news
It's basically the same tax treatment gold gets. What's the problem?
I mean most people should have expected regulation similar to that right? Not many people expected they will declare it a currency right away?
Also at least now the institutional investors know how much tax they will have to pay on their long term investments in bitcoin, which is 15% and that's supposed to be good, right? I believe that uncertainty was of the reasons they couldn't invest until now?
Yes it will be accounting nightmare for retail users that buy every day stuff with it, but come on, who really accounts their coffee spending and stuff?
My vision is:
big business will comply
smaller and medium business that don't want to deal with the accounting overhead will just formally move to Isle of Man, Germany or Singapore.
Institutional investors will finally jump on board with nice chunk of change.
The retail users won't even bother and will just do stuff as they did until now.
One fun question, when was the last time when you heard about that waitress in the US sued for not declaring her income from tips? If you haven't heard about that case, it's because it never happened.
Discuss
Also at least now the institutional investors know how much tax they will have to pay on their long term investments in bitcoin, which is 15% and that's supposed to be good, right? I believe that uncertainty was of the reasons they couldn't invest until now?
Yes it will be accounting nightmare for retail users that buy every day stuff with it, but come on, who really accounts their coffee spending and stuff?
My vision is:
big business will comply
smaller and medium business that don't want to deal with the accounting overhead will just formally move to Isle of Man, Germany or Singapore.
Institutional investors will finally jump on board with nice chunk of change.
The retail users won't even bother and will just do stuff as they did until now.
One fun question, when was the last time when you heard about that waitress in the US sued for not declaring her income from tips? If you haven't heard about that case, it's because it never happened.
Discuss
I think that the crypto-anarchists, instead of spreading FUD about the IRS and bitcoin, should start their own guides on how to evade taxes with bitcoin, and how to avoid AML monitoring using bitcoin. How many people here know what a Suspicious Activity Report is, and who and when the government requires it to be filed, without knowledge to the target? It would be much more of a service to a portion of the bitcoin community than sniping at and harassing people that plan to pay their taxes like adults. Sticking your head in the sand and pretending such laws aren't enforced doesn't mean the IRS and tax collection and KYC/AML laws are going away overnight.
If such guides were compiled, they would see a lot more use than would be publicly admitted.
And it turns out the every day user should only report on transactions over $600
Wondering how the initial burst of news articles missed that quite critical point?
So no accounting nightmare in everyday transactions, that's a big thing I believe?
Wondering how the initial burst of news articles missed that quite critical point?
So no accounting nightmare in everyday transactions, that's a big thing I believe?
Is anyone really going to pay taxes on bitcoin? Really?
Maybe a few big time investors, but normal people shouldn't be affected by this at all. How hard is it to shuffle your coins around a bit or sell them anonymously for cash?
Anyone paying taxes is choosing to do so. And I have my doubts as to how many bitcoin users will choose to pay taxes.
Maybe a few big time investors, but normal people shouldn't be affected by this at all. How hard is it to shuffle your coins around a bit or sell them anonymously for cash?
Anyone paying taxes is choosing to do so. And I have my doubts as to how many bitcoin users will choose to pay taxes.
Well...just as a word to the wise...the Bitcoin address at the bottom of your posts would probably be a good place for the Feds to start to followup on you through the blockchain if they chose to...and unless you have been religiously using a Tor browser for all of your posts here as "Superdork"...you've probably left a pretty big signature of IP addresses as a second strike.
As the other poster responded to you...personally I don't see the value in risking jail time for tax evasion. Your milage may vary.
Is anyone really going to pay taxes on bitcoin? Really?
Some will, at first. As the technology continues to evolve, however, tax collection on BTC will become more and more farcical, until it fades away like a bad memory.See: Torrent culture sharing vs. Corporate copywrong war.
Related: Dead Dollar Walking: The Truth About Government Debt
Tangentially Related: First as tragedy, then as farce
@Superdork:
The righteous cause would be then reforming the system (voting out the bad apples / repealing/rewriting tax code / removing/remodeling abusive institutions) so that taxation once again is married to representation, yes?
If i pay taxes like a "good citizen" and uphold my particular social contract obligations (re: paying taxes), then the government should hold up their end of the deal too by applying those taxes to the duties/services as outlined in the Constitution.
Unfortunately......there is such amount of taxation without representation that if i didn't risk going to jail for tax evasion i likely wouldn't agree to pay any taxes until things changed.
The righteous cause would be then reforming the system (voting out the bad apples / repealing/rewriting tax code / removing/remodeling abusive institutions) so that taxation once again is married to representation, yes?
If i pay taxes like a "good citizen" and uphold my particular social contract obligations (re: paying taxes), then the government should hold up their end of the deal too by applying those taxes to the duties/services as outlined in the Constitution.
Unfortunately......there is such amount of taxation without representation that if i didn't risk going to jail for tax evasion i likely wouldn't agree to pay any taxes until things changed.
I dislike the IRS decision.
They might find out how great of a system this is when basically everyone who claims anything bitcoin related claims a loss and nobody at all claims profit.
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