Topic: It is now next to impossible to spend bitcoins legally if your american (Read 6601 times)

Quote from: romang on March 27, 2014, 10:46:45 AM

Quote from: BitTrade on March 27, 2014, 09:58:51 AM

Quote from: IrishFutbol on March 26, 2014, 03:50:17 PM

Currently, the majority of BTC owners are investors. If it becomes mainstream, then maybe change it, but for now the classification is correct.

The problem is, Bitcoin will never become mainstream and function as a currency if this regulation stands. The chicken just ate the egg.

The USA wants this to fail so badly.

The USA taxes everything, so by this logic they want everything to fail so badly.

Maybe you are right.

As for me I would be ok with taxes in case if the US Government would use it appropriately , but, unfortunately, they didn't

romang

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Quote from: BitTrade on March 27, 2014, 09:58:51 AM

Quote from: IrishFutbol on March 26, 2014, 03:50:17 PM

Currently, the majority of BTC owners are investors. If it becomes mainstream, then maybe change it, but for now the classification is correct.

The problem is, Bitcoin will never become mainstream and function as a currency if this regulation stands. The chicken just ate the egg.

The USA wants this to fail so badly.

prolixus

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Quote from: BitTrade on March 27, 2014, 10:32:05 AM

Quote from: amspir on March 27, 2014, 10:09:00 AM

Quote from: BitTrade on March 27, 2014, 09:58:51 AM

Quote from: IrishFutbol on March 26, 2014, 03:50:17 PM

Currently, the majority of BTC owners are investors. If it becomes mainstream, then maybe change it, but for now the classification is correct.

The problem is, Bitcoin will never become mainstream and function as a currency if this regulation stands. The chicken just ate the egg.

If you keep your money in an interest-bearing account, the bank will send you a form that it files with the IRS showing the profits you made for the tax year. For most people, this isn't a lot of money and they pay their taxes on it.

Since one of the mottos of bitcoin is "be your own bank", it becomes your job to track your own capital gains for the IRS. Software is available to do this, so you don't need to do it manually. At the end of the tax year, it prints you a form showing your gains. Keep the documentation in your records, report it on your tax return. Boom. done.

Whats the big problem?

Everything bolded. And the fact that accepting Bitcoin now becomes extremely burdensome for businesses, forcing them to implement a completely new accounting mechanism just to accept Bitcoin.

Incorrect, the guidance means that they keep using the exact same accounting mechanism they were already using and that is completely standard for tracking gains/losses of capital assets.

amspir

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Quote from: BitTrade on March 27, 2014, 10:32:05 AM

Everything bolded. And the fact that accepting Bitcoin now becomes more burdensome for businesses, forcing them to implement a completely new accounting mechanism just to accept Bitcoin.

Would you rather that a bank or your stock broker do that for you? The accounting software needed is not going to be a big deal, it involves inputting all the wallet address you own that either hold funds or were used during the tax year. Is it really a burden beyond the normal records that a business has to keep for tax purposes? (i.e. your banking account checkbook register)

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Quote from: BitTrade on March 27, 2014, 09:58:51 AM

Quote from: IrishFutbol on March 26, 2014, 03:50:17 PM

Currently, the majority of BTC owners are investors. If it becomes mainstream, then maybe change it, but for now the classification is correct.

The problem is, Bitcoin will never become mainstream and function as a currency if this regulation stands. The chicken just ate the egg.

^^^This.

The IRS regulation has clearly divided the BTC community: comply vs non-compliance ("the purists")

Another example of "social engineering" to discourage the adoption of BTC.

Remind me again - what was the original intent of Satoshi's whitepaper?

BitTrade

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Quote from: amspir on March 27, 2014, 10:09:00 AM

Quote from: BitTrade on March 27, 2014, 09:58:51 AM

Quote from: IrishFutbol on March 26, 2014, 03:50:17 PM

Currently, the majority of BTC owners are investors. If it becomes mainstream, then maybe change it, but for now the classification is correct.

The problem is, Bitcoin will never become mainstream and function as a currency if this regulation stands. The chicken just ate the egg.

If you keep your money in an interest-bearing account, the bank will send you a form that it files with the IRS showing the profits you made for the tax year. For most people, this isn't a lot of money and they pay their taxes on it.

Since one of the mottos of bitcoin is "be your own bank", it becomes your job to track your own capital gains for the IRS. Software is available to do this, so you don't need to do it manually. At the end of the tax year, it prints you a form showing your gains. Keep the documentation in your records, report it on your tax return. Boom. done.

Whats the big problem?

Everything bolded. And the fact that accepting Bitcoin now becomes extremely burdensome for businesses, forcing them to implement a completely new accounting mechanism just to accept Bitcoin.

boltactionz

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Quote from: Robert Paulson on March 26, 2014, 03:58:24 PM

Quote from: smooth on March 26, 2014, 03:53:32 PM

Quote from: Robert Paulson on March 26, 2014, 03:44:11 PM

https://bitcointalksearch.org/topic/zgl-wallet-achieve-zero-gainloss-for-tax-purposes-with-coin-control-531135

there is no way the IRS will allow people to avoid paying taxes using this trick.

It's not a trick and it doesn't "avoid" taxes as the post explains. You will still pay the same taxes, just not in the form of every $1 transaction being a taxable event.

Quote

if this really catches up i am sure they will clarify that the determining exchange rate for tax purposes is the median of all inputs or something of that sort.

So now you are arguing on the basis of what you think the IRS will do in the future, and you expect anyone to pay the slightest attention to your baseless speculation? Good luck with that.

Identifying lots on capital gains transactions has been done for decades in amounts totaling billions or more likely trillions of dollars (by institutional investors). Closing this non-loophope doesn't appear to be a high priority for the IRS.

Moreover, even if buying a cup of coffee became a taxable event, who cares? This is not 1970. We have this these things called computers, smartphones, etc. They are good at bookkeeping.

This thread is pointless.

no this thread is not pointless.
i don't have to keep track of any capital gains when i use fiat currency why should i do so with bitcoin.
this is a clear attempt by the government to make bitcoin unattractive to use as money.

That's what YOU think. But if you've ever used multiple currencies you'd know that yes, you DO have to keep track.

Consider the American who lives and works in Australia. (S)he is paid in AUD. Buys a house using those AUDs and then sells it years later, again for AUD. Mr. IRSMan expects everything marked to USD for tax calculation purposes. It's actually possible to end up owing taxes on the LOSS of the sale of real estate under this situation...so you'd better be keeping track of exchange rates.

But doesn't this sucky ruling come with a silver lining? I mean, if Bitcoin is property, doesn't that mean that it's no longer a currency therefore exchanges no longer need a money service bureau license? And doesn't that mean that US Treasury owes Mt Gox their Dwolla account back? As well as any other exchanges whose funds they've stolen for not registering?

And isn't this treatment like the way gold is treated?

amspir

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Quote from: BitTrade on March 27, 2014, 09:58:51 AM

Quote from: IrishFutbol on March 26, 2014, 03:50:17 PM

Currently, the majority of BTC owners are investors. If it becomes mainstream, then maybe change it, but for now the classification is correct.

The problem is, Bitcoin will never become mainstream and function as a currency if this regulation stands. The chicken just ate the egg.

If you keep your money in an interest-bearing account, the bank will send you a form that it files with the IRS showing the profits you made for the tax year. For most people, this isn't a lot of money and they pay their taxes on it.

Since one of the mottos of bitcoin is "be your own bank", it becomes your job to track your own capital gains for the IRS. Software is available to do this, so you don't need to do it manually. At the end of the tax year, it prints you a form showing your gains. Keep the documentation in your records, report it on your tax return. Boom. done.

Whats the big problem?

BitTrade

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Quote from: IrishFutbol on March 26, 2014, 03:50:17 PM

Currently, the majority of BTC owners are investors. If it becomes mainstream, then maybe change it, but for now the classification is correct.

The problem is, Bitcoin will never become mainstream and function as a currency if this regulation stands. The chicken just ate the egg.

~Coinseeker~

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Quote from: Beliathon on March 27, 2014, 01:28:03 AM

Quote from: Robert Paulson on March 26, 2014, 05:48:26 PM

the war the banking elite will wage on bitcoin if it gets anywhere close to mainstream adoption will be of biblical proportions, unlike anything we have ever seen when fighting piracy or drugs.this legislation is just the first step (and it is a major one) in the fight against honest and practical money.

*laugh*

It doesn't matter if the war is of biblical, astronomical, inter-galactic, or inter-dimensional proportions. You can't beat technology or global decentralization with nation-state law. Never gonna happen.

Sure you can. I actually can't believe people still think like this. Bitcoin is useless if it's not used, therefore it would be worthless. All they have to do is prevent banks and businesses from legally dealing with Bitcoin. It's done. Sure, the blockchain lives on, blah, blah, blah...but you can forget about mass adoption. It's back to some basement internet token, used by a handful of hackers and gamers. It's utility that Bitcoin needs, so Bitcoin needs to learn to play nice with others.

I'm sure as the digital currency space continues to evolve, the tax codes and regulations will evolve with it. Everything is not a tin-foil hat conspiracy.

amspir

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Quote from: Phinnaeus Gage on March 27, 2014, 07:25:46 AM

Fuck me! It's now impossible for me to spend the dollars I earn due to capital gains tax on the barn wood I sell at a 500% (sometimes more) markup. If only there were a way for me to fudge the numbers.

You wouldn't be paying capital gains on your wood. If you were legally paying your taxes, you'd be paying tax on the regular earned income from selling the wood - the price you paid for it and expenses, like any business that sells stuff. Capital gains would be involved if the bitcoin you got for it rose in value before you traded/sold it.

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Bitcoin: An Idea Worth Spending

Fuck me! It's now impossible for me to spend the dollars I earn due to capital gains tax on the barn wood I sell at a 500% (sometimes more) markup. If only there were a way for me to fudge the numbers.

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Quote from: The_Gloomfrost on March 27, 2014, 03:00:57 AM

I dunno about you guys but I'm going to continue mining my bitcoins and using my bitcoins and selling my bitcoins locally for cash without putting it on my tax return UNTIL I see some way for them to POSSIBLY track it in ANY way or a benefit to me for paying them.

The "you pay your taxes or you risk being found out and fined much more than what you would've had to pay" doesn't make sense to me here because the 'risk of being found out' IMO is 0% unless they waste millions trying to figure out how to track it, then enforce even heavier regulation on the few that actually have or use or want to use bitcoins.

Frankly it's not worth it at this time for any government, and by the time it is, it'll be too late.

Maybe in a few years I'll change my perspective...

If you get audited and they look at your bank accounts and assets will there be anything to show that you've purchased or mined or sold bitcoins? Do you have a regular job or other significant source of income? Do you have KYC forms at any of the exchanges where you traded? If the IRS interviews your friends will any of them know you've invested or mined BTC?

I agree that risk of getting caught can be mitigated but for many people there might be a little denial if they think the risk is zero. Maybe you've done an awesome job and the risk of getting caught is zero.

Regardless I do agree that most people won't be reporting BTC profits.

I however will be reporting BTC loss since I got goxxxed.

The_Gloomfrost

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I dunno about you guys but I'm going to continue mining my bitcoins and using my bitcoins and selling my bitcoins locally for cash without putting it on my tax return UNTIL I see some way for them to POSSIBLY track it in ANY way or a benefit to me for paying them.

The "you pay your taxes or you risk being found out and fined much more than what you would've had to pay" doesn't make sense to me here because the 'risk of being found out' IMO is 0% unless they waste millions trying to figure out how to track it, then enforce even heavier regulation on the few that actually have or use or want to use bitcoins.

Frankly it's not worth it at this time for any government, and by the time it is, it'll be too late.

Maybe in a few years I'll change my perspective...

Beliathon

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https://youtu.be/PZm8TTLR2NU

Quote from: Robert Paulson on March 26, 2014, 05:48:26 PM

the war the banking elite will wage on bitcoin if it gets anywhere close to mainstream adoption will be of biblical proportions, unlike anything we have ever seen when fighting piracy or drugs.this legislation is just the first step (and it is a major one) in the fight against honest and practical money.

*laugh*

It doesn't matter if the war is of biblical, astronomical, inter-galactic, or inter-dimensional proportions. You can't beat technology or global decentralization with nation-state law. Never gonna happen.

jonald_fyookball

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Core dev leaves me neg feedback #abuse #political

Quote from: Robert Paulson on March 26, 2014, 03:44:11 PM

https://bitcointalksearch.org/topic/zgl-wallet-achieve-zero-gainloss-for-tax-purposes-with-coin-control-531135

there is no way the IRS will allow people to avoid paying taxes using this trick.
if this really catches up i am sure they will clarify that the determining exchange rate for tax purposes is the median of all inputs or something of that sort.

There is no trick involved. Quite the opposite, that method is using precision to achieve the most desirable ends.

Let's say I bought two plots of land, one in 2011 and one in early 2014. A family emergency comes up and I need some extra cash. I can choose to sell whichever plot of land I want, and I'm obviously going to choose to sell the one which results in the most favorable tax outcome for me at that point in time. There is nothing wrong with this kind of thing.

"Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes." - Learned Hand. (Helvering v. Gregory, 69 F.2d 809, 810-11 (2d Cir. 1934).)

BigV

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If you are using bitcoin for coffee then you are not getting cash. Tax laws are complex and there are no experts, just people who claim to be.

If you have a capital gain on bitcoin and invest those gains in something else it is a different set of rules than if you cash out and take a trip to Vegas. Tax law is aimed at protecting the wealthy and punishing the stupid. Don't be stupid.

johnyj

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Beyond Imagination

It's more and more likely become a saving medium for pension fund, and that is always the biggest focus for bitcoin in its early days of adoption

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Quote from: Beliathon on March 26, 2014, 04:55:40 PM

Quote from: hellscabane on March 26, 2014, 04:45:29 PM

But something tells me that the federal government won't be so laissez-faire about taxes.

You don't understand what I'm saying to you. Cryptocurrency liberates the people from the currency-monopoly, and thus the authority, of the nation-state.

Credit scores are being rendered irrelevant! If you divest from the dollar into crypto, your debts are rendered irrelevant too, as over time they are eroded into only a tiny fraction of your wealth!

Think about it. Let's say I've got 60,000$ of student debt. The law says I've got to pay back 60,000 DOLLARS... now if Bitcoins value continues to increase relative to the dollar year over year... eventually that very large sum of money will actually be a tiny fraction of the value it once represented in your life. This is financial liberation of the highest caliber!

I didn't really see that kind of connection from your previous argument, but I do see debts divesting through crypto-currencies. Of course though, regarding the $60,000, you have to pay back those debts on a regular basis otherwise, well, repossession right? Of course, if you can get out of those other shackles that inherently turns to financial liberation, but that isn't inherently through bitcoins. The way you've implied your argument is that bitcoins is an means to an end of financial liberation. That's great and all, but in this short term how do you expect people to reconcile with or address the various government ties that already exist?

smooth

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Quote from: DeathAndTaxes on March 26, 2014, 06:20:38 PM

Quote from: smooth on March 26, 2014, 06:12:35 PM

Quote from: cottoneyeJoe on March 26, 2014, 03:27:59 PM

What I don`t understand is, if 1 bitcoin = 1 bitcoin, and in my bitcoin wallet all my coins are lumped together, how do I know how much capital gains I have made on a PORTION of those bitcoins? I don`t know which bitcoin is which or when/where I bought each one, it`s not like they`re physical objects I can easily distinguish between. Do we average all of our fiat-to-bitcoin conversions to determine the starting basis?

The default method is LIFO which means the earliest bitcoins you bought are the ones assumed to be sold (or spent). You can also identify specific bitcoins, and that may well be useful with the ZGL-coin technique, but from the IRS point of view that is optional.

With mutual funds you can use an average cost basis technique, and on the surface that would seem reasonable for bitcoin as well, further simplifying accounting (you need only track a single number). But the IRS has not stated this method is allowed for bitcoins.

Correct except it is FIFO (likely a typo). First In - First Out.

Yes typo. Text following is correct.

corebob

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Quote from: Joshuar on March 26, 2014, 06:35:26 PM

Next to impossible? Hardly...

A pain in the ass and outright theft, sure. But anyone residing in the US obviously accepts their tax burden, right?

I wish it were the case that residence mattered. The truth is that US is possibly the ONLY country that taxes it's citizens even when they live and earn all of their income abroad. Renouncing your citizenship costs ~$400 and even then does not release you from any unmet tax obligations or risk of audit from time during your citizenship.

Worse still, Americans abroad are increasingly being denied foreign bank accounts because of new reporting requirements that the US imposes on banks who accept US citizens as customers.

http://aaro.org/denied-bank-accounts

It doesn't stop there.
All western countries are pumping huge piles of money into the US industry every year. US has become an extremely expensive financial octopus in the global economy. Its a redistribution of wealth that needs to stop.

gentlemand

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Welt Am Draht

Watch as Litecoin price skyrockets...

You don't think the exact same principle applies to every coin?

DeathAndTaxes

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Gerald Davis

Quote from: Alley on March 26, 2014, 06:29:36 PM

So will overstock have to report all transactions to the IRS? Will I need to give my SSN to them?

No.

Joshuar

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eidoo wallet

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Alley

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So will overstock have to report all transactions to the IRS? Will I need to give my SSN to them?

iambk

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That cup of coffee is going to have its price pegged to the dollar rather than BTC. Perhaps you'll get a receipt when purchasing that cup of coffee that shows the USD/BTC exchange rate that was used for the transaction.

Anyway, no such thing as a free lunch, eh?

DeathAndTaxes

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Gerald Davis

Quote from: smooth on March 26, 2014, 06:12:35 PM

Quote from: Robert Paulson on March 26, 2014, 03:34:42 PM

What I don`t understand is, if 1 bitcoin = 1 bitcoin, and in my bitcoin wallet all my coins are lumped together, how do I know how much capital gains I have made on a PORTION of those bitcoins? I don`t know which bitcoin is which or when/where I bought each one, it`s not like they`re physical objects I can easily distinguish between. Do we average all of our fiat-to-bitcoin conversions to determine the starting basis?

The default method is LIFO which means the earliest bitcoins you bought are the ones assumed to be sold (or spent). You can also identify specific bitcoins, and that may well be useful with the ZGL-coin technique, but from the IRS point of view that is optional.

With mutual funds you can use an average cost basis technique, and on the surface that would seem reasonable for bitcoin as well, further simplifying accounting (you need only track a single number). But the IRS has not stated this method is allowed for bitcoins.

Correct except it is FIFO (likely a typo). First In - First Out.

DeathAndTaxes

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Gerald Davis

its not reasonable to expect people to start looking up what the exchange rate was when they received their bitcoins just so they could buy a cup of coffee without breaking the law.

The same thing applies to a US tourist traveling overseas. You take $100 and exchange it for 300 pesos (an example no idea what the exchange rate is) and by the time you spend those 300 pesos they are worth $102.81. You "should" report that $2.81 as taxable income.

Does anyone do that? Does the IRS try to round up every single $0.37 in taxes owed? No. The reality is most people are not compliant with the tax code. It is asinine in its complexity. The average tax return has a half dozen errors or omissions. Now if you buy some Bitcoins and later buy a $40M yatch with those Bitcoins he probably should consult with a CPA on the capital gain impact.

Alley

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What I don`t understand is, if 1 bitcoin = 1 bitcoin, and in my bitcoin wallet all my coins are lumped together, how do I know how much capital gains I have made on a PORTION of those bitcoins? I don`t know which bitcoin is which or when/where I bought each one, it`s not like they`re physical objects I can easily distinguish between. Do we average all of our fiat-to-bitcoin conversions to determine the starting basis?

Hopefully the IRS will change things in the future when Bitcoin`s price is more stable.

Thats a good point. the more I think about this the more I think this is totally unenforceable and nobody is going to claim any gains from btc except a few people. Call me a criminal all you want for tax evasion.

smooth

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Quote from: vpitcher07 on March 26, 2014, 05:52:41 PM

What I don`t understand is, if 1 bitcoin = 1 bitcoin, and in my bitcoin wallet all my coins are lumped together, how do I know how much capital gains I have made on a PORTION of those bitcoins? I don`t know which bitcoin is which or when/where I bought each one, it`s not like they`re physical objects I can easily distinguish between. Do we average all of our fiat-to-bitcoin conversions to determine the starting basis?

The default method is LIFO which means the earliest bitcoins you bought are the ones assumed to be sold (or spent). You can also identify specific bitcoins, and that may well be useful with the ZGL-coin technique, but from the IRS point of view that is optional.

With mutual funds you can use an average cost basis technique, and on the surface that would seem reasonable for bitcoin as well, further simplifying accounting (you need only track a single number). But the IRS has not stated this method is allowed for bitcoins.

EDIT: LIFO above is a typo. Correct default method is FIFO (first in first out).

bomb7

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What I don`t understand is, if 1 bitcoin = 1 bitcoin, and in my bitcoin wallet all my coins are lumped together, how do I know how much capital gains I have made on a PORTION of those bitcoins? I don`t know which bitcoin is which or when/where I bought each one, it`s not like they`re physical objects I can easily distinguish between. Do we average all of our fiat-to-bitcoin conversions to determine the starting basis?

Hopefully the IRS will change things in the future when Bitcoin`s price is more stable.

r0ach

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I'm a firm believer that only weirdos drink coffee.

Klestin

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I don't wanna be that guy but i'm going to be that guy. I don't see bitcoin as a utility to purchase coffee with at a coffee shop. It's far more burdensome than paying in cash and is just flat out not effective.

Have you ever tried it? You scan a QR code and tap OK on the amount. Takes three seconds. Retailer sees funds posted in another five seconds. Walk out with your coffee. Creamer optional.

vpitcher07

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I don't wanna be that guy but i'm going to be that guy. I don't see bitcoin as a utility to purchase coffee with at a coffee shop. It's far more burdensome than paying in cash and is just flat out not effective. I think bitcoins' power comes in it's ability to change the eCommerce landscape and how we pay for goods online. I'm bullish long term on bitcoin, but saying it's going to replace cash for something like a cup of coffee is just not reasonable (with today's current tech).

Robert Paulson

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Quote from: Beliathon on March 26, 2014, 05:25:25 PM

Quote from: Biodom on March 26, 2014, 05:13:50 PM

It is not clear only to the most zealous devotees that IRS ruling basically puts a hard stop on bitcoin usage because it creates a reporting headache that 99% of the populace will have no inclination of pursuing.

That's absolutely right. What you're missing is that the utility of this invention FAR outweighs the irritating but amusing threat of repercussions from the tax-man.

Remember, piracy is illegal. But the utility of torrent technology incentives breaking copyright law well enough that there are now millions of Americans breaking copyright law every day, 24/7.

Even marijuana's utility - which is strictly "entertainment" as a leisure activity for 99.99% of marijuana-users, is enough to get millions to openly flout the law.

We'll break the law to get some weed or download a free movie, but you don't think we'll break the law to get rich and liberate ourselves from bankster-enslavement?

Think again.

money is one of the most important things in the world.
and bitcoin is attempting to take away the ability to print money from some of the most powerful organizations in the world.
the war the banking elite will wage on bitcoin if it gets anywhere close to mainstream adoption will be of biblical proportions, unlike anything we have ever seen when fighting piracy or drugs.
this legislation is just the first step (and it is a major one) in the fight against honest and practical money.

PayWithPins

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This is nothing new. You currently purchased the coffee with USD that you earned and was paid to you after tax was deducted. You would have the same accounting and tax liability if you had purchased Euro in 2000 at .90 USD. When you would go use them today and got 1.40 USD you had a capital gain of .50 USD. Same works if you lose, you will be able to deduct a capital loss. You will be able to pool the purchases and come up with a yearly weighted average to simplify. Similar to buying shares over many months.

Beliathon

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Quote from: Biodom on March 26, 2014, 05:13:50 PM

It is not clear only to the most zealous devotees that IRS ruling basically puts a hard stop on bitcoin usage because it creates a reporting headache that 99% of the populace will have no inclination of pursuing.

That's absolutely right. What you're missing is that the utility of this invention FAR outweighs the irritating but amusing threat of repercussions from the tax-man.

Remember, piracy is illegal. But the utility of torrent technology incentives breaking copyright law well enough that there are now millions of Americans breaking copyright law every day, 24/7.

Even marijuana's utility - which is strictly "entertainment" as a leisure activity for 99.99% of marijuana-users, is enough to get millions to openly flout the law.

We'll break the law to get some weed or download a free movie, but you don't think we'll break the law to get rich and liberate ourselves from bankster-enslavement?

Think again.

Biodom

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It is not clear only to the most zealous devotees that IRS ruling basically puts a hard stop on bitcoin usage because it creates a reporting headache that 99% of the populace will have no inclination of pursuing. They would say-$$ are OK for now, thanks, but no thanks.

Bitcoin might still be reasonably attractive as a transmission protocol and a savings mechanism (similar to gold), but bitcoin usage in everyday transactions will disappear, together with small time mining in US. Large mines will be largely unaffected.

It was good while it lasted, but it is largely over. The funny thing is that greedy IRS basically killed the golden goose for USA few years down the pike.
Now, some other jurisdictions will benefit.

crocko

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'All that glitters is not gold'

Hey, I found something : https://www.youtube.com/watch?v=fvqkQvOWgeo

Beliathon

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https://youtu.be/PZm8TTLR2NU

Quote from: smooth on March 26, 2014, 05:01:29 PM

Most people already don't use bitcoin. A lot will have to change before they do. As in years away.

I'd say we're looking at 3-5 years for massive global adoption, but we'll see.

smooth

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Quote from: Robert Paulson on March 26, 2014, 04:57:50 PM

if a person has to choose between using fiat and bitcoin when buying something he will choose the easiest option.

This was already true in some cases, not in others. This changes things a little, but any use case that was compelling before (hint: that did not include coffee), is likely still compelling.

Quote

most people won't bother using something that requires the hassle of reporting capital gains no matter how easy it is.

Most people already don't use bitcoin. A lot will have to change before they do. As in years away. It is pointless to make grand predictions based on one little tax ruling in 2014.

Robert Paulson

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Quote from: smooth on March 26, 2014, 04:52:50 PM

You are making a mountain out of a mole hill.

I believe this to be true for 85% of the threads on this forum!

this is a big deal, this will hurt mass bitcoin adoption badly.
if a person has to choose between using fiat and bitcoin when buying something he will choose the easiest option.
most people won't bother using something that requires the hassle of reporting capital gains no matter how easy it is.

Beliathon

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https://youtu.be/PZm8TTLR2NU

Quote from: hellscabane on March 26, 2014, 04:45:29 PM

But something tells me that the federal government won't be so laissez-faire about taxes.

You don't understand what I'm saying to you. Cryptocurrency liberates the people from the currency-monopoly, and thus the authority, of the nation-state.

Credit scores are being rendered irrelevant! If you divest from the dollar into crypto, your debts are rendered irrelevant too, as over time they are eroded into only a tiny fraction of your wealth!

Think about it. Let's say I've got 60,000$ of student debt. The law says I've got to pay back 60,000 DOLLARS... now if Bitcoins value continues to increase relative to the dollar year over year... eventually that very large sum of money will actually be a tiny fraction of the value it once represented in your life. This is financial liberation of the highest caliber!

smooth

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Quote from: Robert Paulson on March 26, 2014, 04:47:53 PM

there is no software today

Apparently false.

https://bitcointaxes.info/

I'm sure that doesn't do every single thing that needs to be done, but not bad for day IRS+1.

You are making a mountain out of a mole hill. Stop.

TheButterZone

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RIP Mommy

It has actually been impossible to be an American and be innocent of committing many of millions of victimless crimes, for decades.

Tyrants gonna tyrant.

Robert Paulson

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Quote from: smooth on March 26, 2014, 04:39:57 PM

Quote from: Robert Paulson on March 26, 2014, 04:34:57 PM

a cup of coffee is just a metaphor.
as of now you can't buy anything with bitcoin legally without first checking your capital gains status.
sure you may get away with it if the amounts spent are small, but as far as the law is concerned you are a criminal.

That was always the case unless you thought you could buy for $100, sell it for $1000 and pay no taxes on the difference. Were you actually stupid enough to believe that?

This thread is still pointless, and the headline is absurd. Using a computer to track capital gains when that computer necessarily already has all of your bitcoin transactions recorded since you can't possibly engage in a bitcoin transaction without a computer is not even close to "next to impossible."

there is no software today that imports your bitcoin transactions (from every wallet software in existence might i add),
checks what the exchange rate was when you obtained the bitcoins, checks what the rate was when you used them and calculates your capital gains.
so right now you must do this manually otherwise you risk breaking the law.

this thread is not pointless at all, it highlights how the government starts to unfairly mount bureaucratic burdens on the usage of bitcoin while their fiat currency is exempt from it.

hellscabane

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Quote from: Beliathon on March 26, 2014, 04:40:19 PM

Guess what: You also can't download movies and music "legally", but millions of Americans download hundreds of terrabytes of culture every single day, without any fear whatsoever.

Cryptocurrency liberates money in the same way that torrents liberated culture.

The governments are powerless against decentralization. Useless. And I personally hope no one bails their sorry asses out, because fuck those tyrants, liars, and slavers.

This is very true. But part of me feels like the federal government doesn't particularly care about this realm as much as it may be perceived (after all, foreign piracy is just as pervasive). But something tells me that the federal government won't be so laissez-faire about taxes.

amspir

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Quote from: Robert Paulson on March 26, 2014, 04:34:57 PM

a cup of coffee is just a metaphor.
as of now you can't buy anything with bitcoin legally without first checking your capital gains status.
sure you may get away with it if the amounts spent are small, but as far as the law is concerned you are a criminal.

I doubt the IRS will come after you for buying a cup of coffee with your unreported bitcoin capital gains, but I'm sure someone will develop a wallet that can track that easily for you. Anyone having a device that can generate a bitcoin transaction probably has a device that can keep track of your bitcoin expenditures for tax time. You certainly have the option of not keeping track, and in that case the IRS presents you with a tax bill representing the worst case scenario for you on reported transactions. When you don't pay your tax bill, that's when you become a criminal.

Beliathon

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https://youtu.be/PZm8TTLR2NU

Quote from: IrishFutbol on March 26, 2014, 04:40:25 PM

You're correct. It will be very difficult for the IRS to ever link that to you. However, should you want to buy something with your BTC or convert your BTC into fiat, and the IRS links your purchase / trade back to you, then discovers you've avoided paying taxes on your BTC trades, you're looking at a tax evasion charge.

Everyone keeps citing that we'd be evading taxes, while completely missing the fact that cryptocurrency makes enforcement of the tax laws 9999999 times more complex and difficult.

So the IRS is tracking Bitcoin transactions? Okay cool, there are like 60 other cryptocurrencies we can use in that case, and more are being created every single day.

Have fun expanding the size, scope, and budget of the IRS by a factor of 60.

The harsh reality is this:
Very soon the IRS will be more expensive to run than the amount of money they bring in for the government. They are being rendered obsolete, and will go the way of Blockbuster Video. Ditto the NSA.

IrishFutbol

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Quote from: BittBurger on March 26, 2014, 04:40:12 PM

Why do so few people on this website know the difference between your and you're ?

-B-

The world would be a simpler place if everyone would just use ur.

IrishFutbol

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Quote from: Alley on March 26, 2014, 04:31:02 PM

Why would I report gains on a cup of cofee? I have a anonymous address. The IRS has no way to know what im doing with my btc.

To paraphrase: Why would I report gains on my investments. I have a Swiss bank account. The IRS has no way to know what I'm doing with my money.

You're correct. It will be very difficult for the IRS to ever link that to you. However, should you want to buy something with your BTC or convert your BTC into fiat, and the IRS links your purchase / trade back to you, then discovers you've avoided paying taxes on your BTC trades, you're looking at a tax evasion charge.

Beliathon

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https://youtu.be/PZm8TTLR2NU

Guess what: You also can't download movies and music "legally", but millions of Americans download hundreds of terrabytes of culture every single day, without any fear whatsoever.

Cryptocurrency liberates money in the same way that torrents liberated culture.

The governments are powerless against decentralization. Useless. And I personally hope no one bails their sorry asses out, because fuck those tyrants, liars, and slavers.

BittBurger

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Activity: 924

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Why do so few people on this website know the difference between your and you're ?

-B-

smooth

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Quote from: Robert Paulson on March 26, 2014, 04:34:57 PM

a cup of coffee is just a metaphor.
as of now you can't buy anything with bitcoin legally without first checking your capital gains status.
sure you may get away with it if the amounts spent are small, but as far as the law is concerned you are a criminal.

That was always the case unless you thought you could buy for $100, sell it for $1000 and pay no taxes on the difference. Were you actually stupid enough to believe that?

This thread is still pointless, and the headline is absurd. Using a computer to track capital gains when that computer necessarily already has all of your bitcoin transactions recorded since you can't possibly engage in a bitcoin transaction without a computer is not even close to "next to impossible."

AnonyMint

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Quote from: Beliathon on March 26, 2014, 04:34:41 PM

Quote from: Alley on March 26, 2014, 04:31:02 PM

I have a anonymous address. The IRS has no way to know what im doing with my btc.

Bingo. Smart crypto players keep a small percentage of their crypto wealth in a public (government visible) account, such as Coinbase, and the other 90-95% of their wealth in an anonymous blockchain address.

It is very unlikely they were successful at remaining anonymous from the NSA+GCHQ. However, they wouldn't know it. Later they will find out they were not anonymous when the handcuffs are applied to their wrists.

Tor, mixers, VPNs are honey pots.

hellscabane

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Quote from: Robert Paulson on March 26, 2014, 04:34:57 PM

a cup of coffee is just a metaphor.
as of now you can't buy anything with bitcoin legally without first checking your capital gains status.
sure you may get away with it if the amounts spent are small, but as far as the law is concerned you are a criminal.

Bingo, that's the biggest problem. Sure many Americans may hate laws, but for the most part, most try to comply because the alternative can be quite difficult to deal with.

But then again, it's just "white collar" crime and it's much harder to be slapped with a felony for that. Of course, there's also garnishment...

prolixus

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You don't need to check anything before making a purchase with bitcoin. You just need to use a wallet that lets you export a csv of transactions and import those into your tax software the next year and let it compute the capital gains that you owe. If you exchanged an amount of bitcoin with a gain of $1 for a cup of coffee you don't need to send the IRS any paperwork or its $0.15 until April 15 the next year.

Robert Paulson

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a cup of coffee is just a metaphor.
as of now you can't buy anything with bitcoin legally without first checking your capital gains status.
sure you may get away with it if the amounts spent are small, but as far as the law is concerned you are a criminal.

Beliathon

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https://youtu.be/PZm8TTLR2NU

Quote from: Alley on March 26, 2014, 04:31:02 PM

I have a anonymous address. The IRS has no way to know what im doing with my btc.

Bingo. Smart crypto players keep a small percentage of their crypto wealth in a public (government visible) account, such as Coinbase, and the other 90-95% of their wealth in an anonymous blockchain address.

Alley

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Why would I report gains on a cup of cofee? I have a anonymous address. The IRS has no way to know what im doing with my btc.

LMGTFY

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Quote from: Robert Paulson on March 26, 2014, 04:24:55 PM

Quote from: LMGTFY on March 26, 2014, 04:19:45 PM

Quote from: Robert Paulson on March 26, 2014, 03:58:24 PM

no this thread is not pointless.
i don't have to keep track of any capital gains when i use fiat currency why should i do so with bitcoin.
this is a clear attempt by the government to make bitcoin unattractive to use as money.

Are you sure? I'm not familiar with US tax laws, but in the UK I'm fairly certain I need to keep track of any capital gains I make (or lose) when I trade fiat.

when you buy coffee with USD you don't need to check if the dollar index was higher or lower when you obtained the USD.
but as of this new legislation you do have to do this with bitcoin.

Sorry, my mistake (I've been catching up in the meantime) - I hadn't realised the scenario was a coffee. I guess all I can do is echo the earlier "speak to a tax professional": I doubt HMRC would require reporting a coffee on my tax return, but I genuinely don't know - and the IRS may well be much stricter anyway. Personally, I wouldn't mention that hypothetical coffee to my accountant.

Robert Paulson

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Quote from: LMGTFY on March 26, 2014, 04:19:45 PM

Quote from: Robert Paulson on March 26, 2014, 03:58:24 PM

no this thread is not pointless.
i don't have to keep track of any capital gains when i use fiat currency why should i do so with bitcoin.
this is a clear attempt by the government to make bitcoin unattractive to use as money.

Are you sure? I'm not familiar with US tax laws, but in the UK I'm fairly certain I need to keep track of any capital gains I make (or lose) when I trade fiat.

when you buy coffee with USD you don't need to check if the dollar index was higher or lower when you obtained the USD.
but as of this new legislation you do have to do this with bitcoin.

Peter R

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Quote from: Robert Paulson on March 26, 2014, 04:14:52 PM

...the mere fact that people need to worry about the issue of reporting capital tax gains when buying things in a store is going to push people out of using bitcoin as money.

The point of ZGL is to help eliminate that worry.

…the mere fact that any transaction could be a ZGL transaction and that it is impossible to tell from blockchain data alone means something too.

IrishFutbol

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Quote from: Bonio on March 26, 2014, 04:13:43 PM

So would I be right in suggesting if you lost money with MTGOX it is tax deductable as a loss? Surely it has to work both ways?

Mt. Gox probably qualifies as a casualty loss since it was a theft. So you'd just deduct the entire amount (assuming nothing gets paid out).

LMGTFY

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Quote from: Robert Paulson on March 26, 2014, 03:58:24 PM

no this thread is not pointless.
i don't have to keep track of any capital gains when i use fiat currency why should i do so with bitcoin.
this is a clear attempt by the government to make bitcoin unattractive to use as money.

Are you sure? I'm not familiar with US tax laws, but in the UK I'm fairly certain I need to keep track of any capital gains I make (or lose) when I trade fiat.

MashRinx

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Quote from: Bonio on March 26, 2014, 04:13:43 PM

So would I be right in suggesting if you lost money with MTGOX it is tax deductable as a loss? Surely it has to work both ways?

Yes, I would think so. The difference between your cost basis and the current value (zero for those lost coins - unless the "Magical MtCoin Coin Finding Fairies" (TM) keep finding them, that is...) would be considered a Capital Loss from the way I understand it.

IrishFutbol

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Quote from: tins on March 26, 2014, 03:56:38 PM

Quote from: durrrr on March 26, 2014, 03:50:56 PM

is there anyway for them to keep track of how much u originally bought the bitcoin for? i mean theres no way to prove if u bought for .01$ or 1200$ ? right?

That's what I was thinking. Say the IRS says anything about spending btc, then the person just says they bought in at $1200 and writes off the loss on their taxes.

Were you audited, you would have to prove that you bought it at $1,200. Otherwise, the best case scenario for you will be if they assume you got it for free and don't hit you with a tax penalty.

Beliathon

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https://youtu.be/PZm8TTLR2NU

Notice the only discussion of renouncing US citizenship is listed under the "travel" section of the government.
http://travel.state.gov/content/travel/english/legal-considerations/us-citizenship-laws-policies.html

That's because, up till now if you reside in US-government occupied territory (including entire continental USA), you have no choice!

"You live on this land, you obey our rules, you give us our cut, or we treat you as an enemy of the state."

Sound familiar? Yeah, that's right - it's the logic of the fucking mafia! "we own this property. You live here, we own you".

Cryptocurrency is eroding this neofuedalist bullshit, and exposing the lie - the injustice of wealth extracted at the point of a gun.

In the near future, as the costs of being a citizen pile on, and the benefits dwindle, I expect many current residents of the USA will be renouncing their citizenship.

As we rob nation-states such as the USA of their power, this paradigm will shift toward respecting the natural rights of individuals, and away from the tyranny of central authority.

Robert Paulson

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Quote from: Peter R on March 26, 2014, 04:01:29 PM

Quote from: Robert Paulson on March 26, 2014, 03:44:11 PM

https://bitcointalksearch.org/topic/zgl-wallet-achieve-zero-gainloss-for-tax-purposes-with-coin-control-531135

there is no way the IRS will allow people to avoid paying taxes using this trick.
if this really catches up i am sure they will clarify that the determining exchange rate for tax purposes is the median of all inputs or something of that sort.

This is neither a trick nor a method to avoid paying taxes. You would report the same amount of capital gains taxes either way, but this has the potential to significantly simplify accounting for all parties involved.

this requires that my wallet actually has enough bitcoins obtained when the exchange rate was lower.
the mere fact that people need to worry about the issue of reporting capital tax gains when buying things in a store is going to push people out of using bitcoin as money.

Bonio

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So would I be right in suggesting if you lost money with MTGOX it is tax deductable as a loss? Surely it has to work both ways?

Peter R

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Quote from: Robert Paulson on March 26, 2014, 03:44:11 PM

https://bitcointalksearch.org/topic/zgl-wallet-achieve-zero-gainloss-for-tax-purposes-with-coin-control-531135

there is no way the IRS will allow people to avoid paying taxes using this trick.
if this really catches up i am sure they will clarify that the determining exchange rate for tax purposes is the median of all inputs or something of that sort.

This is neither a trick nor a method to avoid paying taxes. You would report the same amount of capital gains taxes either way, but this has the potential to significantly simplify accounting for all parties involved.

Robert Paulson

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Activity: 448

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Quote from: smooth on March 26, 2014, 03:53:32 PM

Quote from: Robert Paulson on March 26, 2014, 03:44:11 PM

https://bitcointalksearch.org/topic/zgl-wallet-achieve-zero-gainloss-for-tax-purposes-with-coin-control-531135

there is no way the IRS will allow people to avoid paying taxes using this trick.

It's not a trick and it doesn't "avoid" taxes as the post explains. You will still pay the same taxes, just not in the form of every $1 transaction being a taxable event.

Quote

if this really catches up i am sure they will clarify that the determining exchange rate for tax purposes is the median of all inputs or something of that sort.

So now you are arguing on the basis of what you think the IRS will do in the future, and you expect anyone to pay the slightest attention to your baseless speculation? Good luck with that.

Identifying lots on capital gains transactions has been done for decades in amounts totaling billions or more likely trillions of dollars (by institutional investors). Closing this non-loophope doesn't appear to be a high priority for the IRS.

Moreover, even if buying a cup of coffee became a taxable event, who cares? This is not 1970. We have this these things called computers, smartphones, etc. They are good at bookkeeping.

This thread is pointless.

no this thread is not pointless.
i don't have to keep track of any capital gains when i use fiat currency why should i do so with bitcoin.
this is a clear attempt by the government to make bitcoin unattractive to use as money.

tins

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Quote from: durrrr on March 26, 2014, 03:50:56 PM

is there anyway for them to keep track of how much u originally bought the bitcoin for? i mean theres no way to prove if u bought for .01$ or 1200$ ? right?

That's what I was thinking. Say the IRS says anything about spending btc, then the person just says they bought in at $1200 and writes off the loss on their taxes.

smooth

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Quote from: Robert Paulson on March 26, 2014, 03:44:11 PM

https://bitcointalksearch.org/topic/zgl-wallet-achieve-zero-gainloss-for-tax-purposes-with-coin-control-531135

there is no way the IRS will allow people to avoid paying taxes using this trick.

It's not a trick and it doesn't "avoid" taxes as the post explains. You will still pay the same taxes, just not in the form of every $1 transaction being a taxable event.

Quote

if this really catches up i am sure they will clarify that the determining exchange rate for tax purposes is the median of all inputs or something of that sort.

So now you are arguing on the basis of what you think the IRS will do in the future, and you expect anyone to pay the slightest attention to your baseless speculation? Good luck with that.

Identifying lots on capital gains transactions has been done for decades in amounts totaling billions or more likely trillions of dollars (by institutional investors). Closing this non-loophope doesn't appear to be a high priority for the IRS.

Moreover, even if buying a cup of coffee became a taxable event, who cares? This is not 1970. We have this these things called computers, smartphones, etc. They are good at bookkeeping.

This thread is pointless.

durrrr

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is there anyway for them to keep track of how much u originally bought the bitcoin for? i mean theres no way to prove if u bought for .01$ or 1200$ ? right?

IrishFutbol

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Quote from: Robert Paulson on March 26, 2014, 03:45:24 PM

Quote from: IrishFutbol on March 26, 2014, 03:39:07 PM

Quote from: Robert Paulson on March 26, 2014, 03:34:42 PM

Quote from: Robert Paulson on March 26, 2014, 03:13:46 PM

Quoting from http://www.bloomberg.com/news/2014-03-25/bitcoin-is-property-not-currency-in-tax-system-irs-says.html

Quote

Purchasing a $2 cup of coffee with Bitcoins bought for $1 would trigger $1 in capital gains for the coffee drinker and $2 of gross income for the coffee shop.

so now anyone who is taxable by the IRS and wants to buy something with bitcoin must check if he owes capital gains to the IRS.
land of the "free" indeed...

Can you name me any transaction that would not be taxable? All commerce is taxable.

Your calculation is not quite complete. The only way you would owe $1 on your coffee is if you had realized a huge profit. You owe a percentage of your profits. Lets say it's 20% (it could be less or possibly more). So if you bought a bitcoin for $1 and then it rose in value to $5; you owe $1 in tax on the gains. That is still a 300% gain after taxes. I would definitely enjoy drinking that cup of coffee.

the amount of taxes needed to be paid is not the point.
its not reasonable to expect people to start looking up what the exchange rate was when they received their bitcoins just so they could buy a cup of coffee without breaking the law.

So BTC investors should be treated differently than other investors because of laziness?

BTC investors should be treated the same as foreign currency investors.

Currently, the majority of BTC owners are investors. If it becomes mainstream, then maybe change it, but for now the classification is correct.

amspir

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Quote from: Robert Paulson on March 26, 2014, 03:13:46 PM

Quoting from http://www.bloomberg.com/news/2014-03-25/bitcoin-is-property-not-currency-in-tax-system-irs-says.html

Quote

Purchasing a $2 cup of coffee with Bitcoins bought for $1 would trigger $1 in capital gains for the coffee drinker and $2 of gross income for the coffee shop.

so now anyone who is taxable by the IRS and wants to buy something with bitcoin must check if he owes capital gains to the IRS.
land of the "free" indeed...

Pragmatically, there's not much to worry about if you are just buying coffee. If you convert large amounts of bitcoin between fiat, then you would have to document this on your tax returns to match what your bank is reporting to the IRS. i.e. you buy a 1 btc now at $600 then sell it later for $1200. If you spend bitcoins in commerce, the merchant isn't required to report to the IRS unless it's over $600 a year. It may be a hassle to comply with the law, but I suspect you might have a computer to help you with that.

Robert Paulson

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Quote from: IrishFutbol on March 26, 2014, 03:39:07 PM

Quote from: Robert Paulson on March 26, 2014, 03:34:42 PM

Quote from: Robert Paulson on March 26, 2014, 03:13:46 PM

Quoting from http://www.bloomberg.com/news/2014-03-25/bitcoin-is-property-not-currency-in-tax-system-irs-says.html

Quote

Purchasing a $2 cup of coffee with Bitcoins bought for $1 would trigger $1 in capital gains for the coffee drinker and $2 of gross income for the coffee shop.

so now anyone who is taxable by the IRS and wants to buy something with bitcoin must check if he owes capital gains to the IRS.
land of the "free" indeed...

Can you name me any transaction that would not be taxable? All commerce is taxable.

Your calculation is not quite complete. The only way you would owe $1 on your coffee is if you had realized a huge profit. You owe a percentage of your profits. Lets say it's 20% (it could be less or possibly more). So if you bought a bitcoin for $1 and then it rose in value to $5; you owe $1 in tax on the gains. That is still a 300% gain after taxes. I would definitely enjoy drinking that cup of coffee.

the amount of taxes needed to be paid is not the point.
its not reasonable to expect people to start looking up what the exchange rate was when they received their bitcoins just so they could buy a cup of coffee without breaking the law.

So BTC investors should be treated differently than other investors because of laziness?

BTC investors should be treated the same as foreign currency investors.

Robert Paulson

sr. member

Activity: 448

Merit: 250

https://bitcointalksearch.org/topic/zgl-wallet-achieve-zero-gainloss-for-tax-purposes-with-coin-control-531135

there is no way the IRS will allow people to avoid paying taxes using this trick.
if this really catches up i am sure they will clarify that the determining exchange rate for tax purposes is the median of all inputs or something of that sort.

Beliathon

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Activity: 784

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https://youtu.be/PZm8TTLR2NU

Quote from: Robert Paulson on March 26, 2014, 03:34:42 PM

A pain in the ass and outright theft, sure. But anyone residing in the US obviously accepts their tax burden, right?

Wrong.

IrishFutbol

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Quote from: Robert Paulson on March 26, 2014, 03:13:46 PM

Quoting from http://www.bloomberg.com/news/2014-03-25/bitcoin-is-property-not-currency-in-tax-system-irs-says.html

Quote

Purchasing a $2 cup of coffee with Bitcoins bought for $1 would trigger $1 in capital gains for the coffee drinker and $2 of gross income for the coffee shop.

so now anyone who is taxable by the IRS and wants to buy something with bitcoin must check if he owes capital gains to the IRS.
land of the "free" indeed...

Can you name me any transaction that would not be taxable? All commerce is taxable.

Your calculation is not quite complete. The only way you would owe $1 on your coffee is if you had realized a huge profit. You owe a percentage of your profits. Lets say it's 20% (it could be less or possibly more). So if you bought a bitcoin for $1 and then it rose in value to $5; you owe $1 in tax on the gains. That is still a 300% gain after taxes. I would definitely enjoy drinking that cup of coffee.

the amount of taxes needed to be paid is not the point.
its not reasonable to expect people to start looking up what the exchange rate was when they received their bitcoins just so they could buy a cup of coffee without breaking the law.

So BTC investors should be treated differently than other investors because of laziness?

Robert Paulson

sr. member

Activity: 448

Merit: 250

Quote from: Robert Paulson on March 26, 2014, 03:13:46 PM

Quoting from http://www.bloomberg.com/news/2014-03-25/bitcoin-is-property-not-currency-in-tax-system-irs-says.html

Quote

Purchasing a $2 cup of coffee with Bitcoins bought for $1 would trigger $1 in capital gains for the coffee drinker and $2 of gross income for the coffee shop.

so now anyone who is taxable by the IRS and wants to buy something with bitcoin must check if he owes capital gains to the IRS.
land of the "free" indeed...

Can you name me any transaction that would not be taxable? All commerce is taxable.

Your calculation is not quite complete. The only way you would owe $1 on your coffee is if you had realized a huge profit. You owe a percentage of your profits. Lets say it's 20% (it could be less or possibly more). So if you bought a bitcoin for $1 and then it rose in value to $5; you owe $1 in tax on the gains. That is still a 300% gain after taxes. I would definitely enjoy drinking that cup of coffee.

the amount of taxes needed to be paid is not the point.
its not reasonable to expect people to start looking up what the exchange rate was when they received their bitcoins just so they could buy a cup of coffee without breaking the law.

smooth

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https://bitcointalksearch.org/topic/zgl-wallet-achieve-zero-gainloss-for-tax-purposes-with-coin-control-531135

counter

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Merit: 500

Time is on our side, yes it is!

I don't care to discuss what they expect me to do as they make themselves exempt from taxes. And when I say they I"m talking about the obscenely wealthy that pay little to no tax and try to push tighter tax laws on me the "little guy".

cottoneyeJoe

member

Activity: 91

Merit: 10