Topic: US taxes are owed whenever trading crypto (Read 3201 times)
Never as bitcoins are decentralized cryptocurrency not owned by the government.
I just read the following Forbes article and it sounds like a "taxable event" has occurred in the US whenever any cryptocoin is traded for any other cryptocoin (even the same type of cryptocoin):
http://www.forbes.com/sites/cameronkeng/2013/12/16/bitcoin-is-not-anonymous-is-always-taxable/
I also didn't like the section on Foreign Bank Account Reporting:
"Bitcoins are everywhere and possibly nowhere. The problem with bitcoins is that it could be argued by the IRS that it is a value held overseas. The burden of proof is placed upon the taxpayer (AKA you). Unless you’re able to prove that your “bitcoins” are within the United States, then you may be required to file FBARs. The FBAR rules requires any United States person with at least one financial account outside the United States and has over $10,000 dollars in aggregate value overseas at any time to file. The penalties can be the greater of $100,000 dollars or 50% of the value underreported."
Nowhere in this article does it state the country the author is referring to. Do I have to assume he is describing the tax situation in the United States of America? Why do so many American's think the whole world revolves around them, their population makes up less than 5% of all the people on this planet. Conclusions drawn in this article are 'in and of themselves' completely false, I can think of many countries off the top of my head where there are no 'capital gains taxes' or 'gift taxes'. New Zealand for example has no capital gains tax or gift duties/taxes. So all assumptions about Bitcoin trading being a 'taxable event' with regards to countries 'outside' the US (the other 95% of the world) need to be re-thought. Not having a dig at all American's, I'm just saying... http://www.forbes.com/sites/cameronkeng/2013/12/16/bitcoin-is-not-anonymous-is-always-taxable/
I also didn't like the section on Foreign Bank Account Reporting:
"Bitcoins are everywhere and possibly nowhere. The problem with bitcoins is that it could be argued by the IRS that it is a value held overseas. The burden of proof is placed upon the taxpayer (AKA you). Unless you’re able to prove that your “bitcoins” are within the United States, then you may be required to file FBARs. The FBAR rules requires any United States person with at least one financial account outside the United States and has over $10,000 dollars in aggregate value overseas at any time to file. The penalties can be the greater of $100,000 dollars or 50% of the value underreported."
time for everyone in US to push for "Interaction Point" taxation.
consumer holds BTC - > Bank account , it's income. the cost, can be listed, just keep track.
consumer holds BTC , then goes to Merchant , sends BTC , the interaction point with Finances is on the Merchant, most likely his services will need FIAT ( conversion + taxation on actual income , covering his costs). Just like any value derived commodity, if it took many deductions, debits, etc, costs, to achieve, that would what determine what is considered actual income.
start keeping books, think about how this actually can work.
the value of BTC , is really irrelevant until the time it's translated to Bank Deposits. This should be the only point monitored, as BTC is only worth what it's worth to the persons trading. If you are moving Cash out into your own US income, expect taxes. Everything else is too small to monitor and tax efficiently, so the Business / Businesses / Banks end should cover most of that end.
Fight against anything else, but be prepared, digital or not, appreciation is an expected income to be taxed by our Gov. anyone expecting less, is on a pipe dream.
if you don't like that , should do business abroad like the Many Famed Corporations that make all the jobs
consumer holds BTC - > Bank account , it's income. the cost, can be listed, just keep track.
consumer holds BTC , then goes to Merchant , sends BTC , the interaction point with Finances is on the Merchant, most likely his services will need FIAT ( conversion + taxation on actual income , covering his costs). Just like any value derived commodity, if it took many deductions, debits, etc, costs, to achieve, that would what determine what is considered actual income.
start keeping books, think about how this actually can work.
the value of BTC , is really irrelevant until the time it's translated to Bank Deposits. This should be the only point monitored, as BTC is only worth what it's worth to the persons trading. If you are moving Cash out into your own US income, expect taxes. Everything else is too small to monitor and tax efficiently, so the Business / Businesses / Banks end should cover most of that end.
Fight against anything else, but be prepared, digital or not, appreciation is an expected income to be taxed by our Gov. anyone expecting less, is on a pipe dream.
if you don't like that , should do business abroad like the Many Famed Corporations that make all the jobs
The IRS doesnt give 2 shits about your bitcoins....as long as you are paying them what they want....they leave you be....when you cause waves and try to cheat....thats when the fun begins....
that or when government decides it wants to control whether we can or can't use bitcoins.. the IRS will come after you.
You didn't define "what they want" My understanding says what they want is "more" or as much as possible. Although they simply don't have the resources to audit everyone, why do you think fraud is on the rise? That doesn't mean they won't come after your ass when they can. A nice database with all of your information is easily at their disposal when needed.
All they need is probable cause, think of it as a bond. The government has already decided a lot of things it wants to control. In all cases it's failed, it's biggest success has been instilling fear in people. It's pretty good at arresting and killing innocent people too, it seems to improve on these constantly. But as every brainwashed person says, if you aren't doing anything wrong don't worry.(yet they break laws without even realizing it constantly) As long as it isn't effecting you, you're fine. Just don't be mad when the time comes it is effecting you, because everyone else will be dead or in prison.
The way I see things is Bitcoin is a foreign currency with no definitive country attached to it; ie: CAD = Canada, YEN = Japan, USD = 'Merica and can be used and taxed as you would for any foreign currency. Exchange sites, such as banks, money mart, etc. can exchange bitcoin for cash and be taxed that way like they do for any other currency, except they can do it a couple of ways.
1: They offer a lower exchange compared to online market price.
2: They charge a fee but you still get regular market price.
3: If you don't have a BTC wallet, they can charge either a fee or lower exchange and you get a shiny satoshi coin with a QR sticker on the back that contains your BTC.
I think that would be the easiest way without having to introduce or change a bunch of laws. Just add BTC in as another foreign currency and charge accordingly.
1: They offer a lower exchange compared to online market price.
2: They charge a fee but you still get regular market price.
3: If you don't have a BTC wallet, they can charge either a fee or lower exchange and you get a shiny satoshi coin with a QR sticker on the back that contains your BTC.
I think that would be the easiest way without having to introduce or change a bunch of laws. Just add BTC in as another foreign currency and charge accordingly.
The Forbes author is a idiot.
According to the idiot bob needs $381,000USD worth of BTC to pay $381.314 in taxes.
Either the author used a period where he intended a comma or his math is awful.
This author clearly is a inept fool and should not be taken seriously.
Quote from: Page 2 of Forbes article in OP
An example, Bob starts with 1 bitcoin and makes a million day trades in 2013. Bob is a bitcoin stud and turns 1 bitcoin into 1,000 bitcoins. Bob earned 999 bitcoins or $999,000 dollars (assuming each bitcoin is worth $1,000 dollars). Bob owes $381.314 dollars in federal income taxes, not including state and local taxes. Thus, Bob needs to cash out enough bitcoins (about 381 bitcoins) to pay his taxes.
According to the idiot bob needs $381,000USD worth of BTC to pay $381.314 in taxes.
Either the author used a period where he intended a comma or his math is awful.
This author clearly is a inept fool and should not be taken seriously.
Yeah those are kind of important details when dealing with things, such as, money...
"Bitcoins are everywhere and possibly nowhere.
This was something I've been thinking a lot about. Is the value with the private key or in the block chain? Is the block chain simply the ledger? Or is it more akin to the The Island Of Stone Money (Yap).
The IRS doesnt give 2 shits about your bitcoins....as long as you are paying them what they want....they leave you be....when you cause waves and try to cheat....thats when the fun begins....
+1
This brings the question, How much is true freedom worth to the average person?
Freedom to me, is absolute, no laws whatsoever, the risks are worth the reward, to me.
Freedom to me, is absolute, no laws whatsoever, the risks are worth the reward, to me.
Sometimes i fantasize about living somewhere were there's no police and no state, and I have to protect myself and my family, somehow I still think it's good I can call the police if something really bad happens, and I also think it's good that an ambulance will arrive (hopefully) if I get into a car crash.
But living in a really remote area, with a livestock, growing my own land and being self sufficient (creating energy out of a river), that sounds somewhat romantic too, but I'm sure it wouldn't be that easy..
The IRS doesnt give 2 shits about your bitcoins....as long as you are paying them what they want....they leave you be....when you cause waves and try to cheat....thats when the fun begins....
that or when government decides it wants to control whether we can or can't use bitcoins.. the IRS will come after you.
The FBAR rules requires any United States person with at least one financial account outside the United States and has over $10,000 dollars in aggregate value overseas at any time to file. The penalties can be the greater of $100,000 dollars or 50% of the value underreported."
What constitutes a "financial account" of Bitcoins?A single address?
If I have my bitcoins in 3,748 different addresses, I am happy to fill out 3,748 pages in form "TD F 90-22.1" and mail them to the treasury. I hope bitcoin-qt will have such a feature built in, so I need only to hit the print button, feed the printer with a decent pile of paper and make some nice heavy packages for the mailman
The Forbes author is a idiot.
According to the idiot bob needs $381,000USD worth of BTC to pay $381.314 in taxes.
Either the author used a period where he intended a comma or his math is awful.
This author clearly is a inept fool and should not be taken seriously.
Quote from: Page 2 of Forbes article in OP
An example, Bob starts with 1 bitcoin and makes a million day trades in 2013. Bob is a bitcoin stud and turns 1 bitcoin into 1,000 bitcoins. Bob earned 999 bitcoins or $999,000 dollars (assuming each bitcoin is worth $1,000 dollars). Bob owes $381.314 dollars in federal income taxes, not including state and local taxes. Thus, Bob needs to cash out enough bitcoins (about 381 bitcoins) to pay his taxes.
According to the idiot bob needs $381,000USD worth of BTC to pay $381.314 in taxes.
Either the author used a period where he intended a comma or his math is awful.
This author clearly is a inept fool and should not be taken seriously.
you only pay taxes when converting it back to FIAT!!!! and that only if you have made profit above your tax free allowance. atleast read a book once in a while, or even contact the IRS instead of believing the chinese whispers of media sourced waffle
why are so many people trying to create fud to make bitcoin seem impractical and costly. it must be those bankers and gold hoarders at it again..
why are so many people trying to create fud to make bitcoin seem impractical and costly. it must be those bankers and gold hoarders at it again..
as far as i know the irs has made no determination on bitcoin and how it should be taxed. can someone post something directly from the irs that states unequivocally whether it should be taxed as income, an asset , ie capital gain etc.?
I quite enjoyed that read. It was another example of Bitcoin as "Schrödinger's coin." The article was completely true and completely false at the same time.
P.S. How does one determine fair market value for "hugs"?
P.S. How does one determine fair market value for "hugs"?
I'm sure every american breaks at least 10 laws every day of the week,
American freedom is a joke, we have more laws than liberties.
I'm sure my ancestors who fought for our Independence would be appalled if alive today.
The IRS doesnt give 2 shits about your bitcoins....as long as you are paying them what they want....they leave you be....when you cause waves and try to cheat....thats when the fun begins....
American freedom is a joke, we have more laws than liberties.
I'm sure my ancestors who fought for our Independence would be appalled if alive today.
Its true but if we don't have that many laws there would be people taking advantage of other people and that would suck no body would trust other peopleI'm sure my ancestors who fought for our Independence would be appalled if alive today.
This brings the question, How much is true freedom worth to the average person?
Freedom to me, is absolute, no laws whatsoever, the risks are worth the reward, to me.
On the main subject, bitcoin taxing will not happen.
Most online sales are sheltered from tax for the same reason cryptocurrencies are.
Too hard to establish the appropriate tax rate.
The FBAR rules requires any United States person with at least one financial account outside the United States and has over $10,000 dollars in aggregate value overseas at any time to file. The penalties can be the greater of $100,000 dollars or 50% of the value underreported."
What constitutes a "financial account" of Bitcoins?A single address?
I just read the following Forbes article and it sounds like a "taxable event" has occurred in the US whenever any cryptocoin is traded for any other cryptocoin (even the same type of cryptocoin):
http://www.forbes.com/sites/cameronkeng/2013/12/16/bitcoin-is-not-anonymous-is-always-taxable/
I also didn't like the section on Foreign Bank Account Reporting:
"Bitcoins are everywhere and possibly nowhere. The problem with bitcoins is that it could be argued by the IRS that it is a value held overseas. The burden of proof is placed upon the taxpayer (AKA you). Unless you’re able to prove that your “bitcoins” are within the United States, then you may be required to file FBARs. The FBAR rules requires any United States person with at least one financial account outside the United States and has over $10,000 dollars in aggregate value overseas at any time to file. The penalties can be the greater of $100,000 dollars or 50% of the value underreported."
http://www.forbes.com/sites/cameronkeng/2013/12/16/bitcoin-is-not-anonymous-is-always-taxable/
I also didn't like the section on Foreign Bank Account Reporting:
"Bitcoins are everywhere and possibly nowhere. The problem with bitcoins is that it could be argued by the IRS that it is a value held overseas. The burden of proof is placed upon the taxpayer (AKA you). Unless you’re able to prove that your “bitcoins” are within the United States, then you may be required to file FBARs. The FBAR rules requires any United States person with at least one financial account outside the United States and has over $10,000 dollars in aggregate value overseas at any time to file. The penalties can be the greater of $100,000 dollars or 50% of the value underreported."
Oh dear god, I'm sure every american breaks at least 10 laws every day of the week, and if someone in a power position do not like you, they will crush you no matter what. I'm starting to understand why people want to disappear and start living in very remote places.
Moer like 10 times a day and yes you are absolutely correct.
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