how do you prove to them that you've had your bitcoins for over a year to get the 15% rate? i definitely don't want the IRS all over me, but it's going to be kind of confusing.
i bet most people are not reporting what the sell.
Topic: Time to start thinking about taxes - page 4. (Read 6224 times)
Emilia79, you're looking at it from the perspective of a classical economic product, that is currency as minted by a central government. I'm no true believer (tm), but it's unfair to compare a decentralized currently that is slowly asymptotically 'mined' (released quick -> slow) with a government-backed currency as minted in runs. What we're likely going through right now is a volatility and speculation in line with Bitcoin's sudden notoriety (a feedback loop, to be sure), something which will calm down as the Bitcoin economic ecosystem stabilizes.
Regardless, I agree with the sentiments displayed at the senate hearings, namely that all of the existing regulatory frameworks can be painlessly extended to include Bitcoin (with online money transmitters having blazed the trail). Now, where it will get interesting is to see the IRS' negotiation of distributed securities (ie Mastercoin, ColoredCoins, Bitshares). That's going to cause some furor.
Regardless, I agree with the sentiments displayed at the senate hearings, namely that all of the existing regulatory frameworks can be painlessly extended to include Bitcoin (with online money transmitters having blazed the trail). Now, where it will get interesting is to see the IRS' negotiation of distributed securities (ie Mastercoin, ColoredCoins, Bitshares). That's going to cause some furor.
All I have to says is that BTC is hardly a currency.
A currency has no such high fluctuations, otherwise you can compare it to DeutchMArk in 1923, or Zimbabwean Dollar years ago.
It's more an exchange authorisation for payments.
A currency has no such high fluctuations, otherwise you can compare it to DeutchMArk in 1923, or Zimbabwean Dollar years ago.
It's more an exchange authorisation for payments.
US / IRS: has the IRS provided any guidance on virtual currencies yet? If I had to file today my stance would be to file gains as an asset-based capital gain that would be calculated very simply as follows:
Bill bought 1.0 BTC on 6/1/2013 for $10
Bill sold 1.0 BTC on 11/22/2013 for $890 (you can also deduct trade/wire fees, e.g. coinbase)
Bill reports $880 in long terms capital gains (an capital asset held for more than 1 year).
But what the real questions becomes, is how does the IRS classify bitcoin? Searching for "bitcoin" at irs.gov yields 0 results. Is it a commodity or a currency or capital asset? Forbes weighs in here http://www.forbes.com/sites/robertwood/2013/05/02/irs-takes-a-bite-out-of-bitcoin/:
"In the meantime, the tax rules seem pretty clear. If you provide services or sell goods for Bitcoin, you have income. If you exchange Bitcoins for cash, whether you have gain may depend on whether Bitcoin is really currency or commodity. The latter seems more likely, meaning you have gain to the extent of the appreciation in your Bitcoin."
It's strange to start out the comment with "the rules seem pretty clear," because I was thinking just the opposite.
And then there's the question to file anything on a schedule D in the first place. You have to name the asset so is this putting yourself on a federal radar by listing "bitcoin" or "digital currency asset" or the like in column A? If you made a few $K or less it might be a wait-and-see approach but if you made more than that and you're lucky enough to get a field audit they are going to want to know what those $10k+ deposits are.
One approach may be to just file it under "other income" and pay income rates. This may even be preferable for some folks who have no other income. If you file MFJ you get to almost $90k before rising out of the 15% bracket anyhow. But if you're already in a pretty high bracket there's a big difference between LTCG (20%) or short term gain (28%) and the highest income bracket (39.6%) [note that there's an additional 3.8% tax for obamacare I think that affects some people's investment income, which would be added to the long/short 20/28% investment rates:
https://www.fidelity.com/viewpoints/personal-finance/taxpayers-guide)
Anyway, let's kick off the discussion for US-based folks. With BTC up 30,000% in 2 years, you can bet your bippy the IRS is watching. What are people's thoughts (especially accountants!!!
)
Bill bought 1.0 BTC on 6/1/2013 for $10
Bill sold 1.0 BTC on 11/22/2013 for $890 (you can also deduct trade/wire fees, e.g. coinbase)
Bill reports $880 in long terms capital gains (an capital asset held for more than 1 year).
But what the real questions becomes, is how does the IRS classify bitcoin? Searching for "bitcoin" at irs.gov yields 0 results. Is it a commodity or a currency or capital asset? Forbes weighs in here http://www.forbes.com/sites/robertwood/2013/05/02/irs-takes-a-bite-out-of-bitcoin/:
"In the meantime, the tax rules seem pretty clear. If you provide services or sell goods for Bitcoin, you have income. If you exchange Bitcoins for cash, whether you have gain may depend on whether Bitcoin is really currency or commodity. The latter seems more likely, meaning you have gain to the extent of the appreciation in your Bitcoin."
It's strange to start out the comment with "the rules seem pretty clear," because I was thinking just the opposite.
And then there's the question to file anything on a schedule D in the first place. You have to name the asset so is this putting yourself on a federal radar by listing "bitcoin" or "digital currency asset" or the like in column A? If you made a few $K or less it might be a wait-and-see approach but if you made more than that and you're lucky enough to get a field audit they are going to want to know what those $10k+ deposits are.
One approach may be to just file it under "other income" and pay income rates. This may even be preferable for some folks who have no other income. If you file MFJ you get to almost $90k before rising out of the 15% bracket anyhow. But if you're already in a pretty high bracket there's a big difference between LTCG (20%) or short term gain (28%) and the highest income bracket (39.6%) [note that there's an additional 3.8% tax for obamacare I think that affects some people's investment income, which would be added to the long/short 20/28% investment rates:
https://www.fidelity.com/viewpoints/personal-finance/taxpayers-guide)
Anyway, let's kick off the discussion for US-based folks. With BTC up 30,000% in 2 years, you can bet your bippy the IRS is watching. What are people's thoughts (especially accountants!!!
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