Topic: When do I own bitcoins? (Read 693 times)

25% of your private key of course 

No questions about tax can be answered in an informed manner without knowing your jurisdiction. In the US, both federal and state laws would apply, and the primary issue would be income tax. To pay income tax, you need income. Casinos in the US report your winnings directly to the IRS if over a certain amount, but few individuals self-report their smaller winnings. In fact most gamblers would have losses greater than their wins - to claim that you are a gambling loser for the year would require you keeping your own records that an IRS auditor would believe though. You can take a clue what the tax man expects from what happens when you win $100 cash on the blackjack table or a lottery scratch-off, vs win the big lottery jackpot.

The gubmint would probably like you to pay sales tax on everything you buy off Craigslist or barter in exchange too. When businesses sell locally on the internet in the US, state sales tax laws apply. If government doesn't take bitcoins for taxes, how do they take 8% of the purchase price in bitcoins from a business, and what if the price of Bitcoin is 500% higher at the end of the year?

Estate tax? My heirs get a private key, they send what to the government?

The best way is typically to think of all of your bitcoin contact as a "sole proprietorship", taxable income only when you earn government currency gains. Your tax accountant would be the one to talk to, not bitcointalk.

If you think "they" can't trace cash transactions without your help, you're in for a nasty surprise when you get audited.

It's more viable than you think.

They can just subpoena any mining pools you connected to for information on any accounts logged into from your IP address and the Bitcoin addresses associated with those accounts. Too easy.

There are far too many ways to list here.

Blockchain.

I'm not sure what you're talking about. "They" are pretty good at conducting audits without your cooperation.

Getting paid in gold is not tax exempt in any jurisdiction I know of.

You clearly have no idea how SatoshiDice works. Every payout is directly linked to the wager in the blockchain. It is trivially easy to see prove how much you have won and lost on SatoshiDice.

Tell that to any accountant and I guarantee he'll laugh in your face. Your point of view is wrong.

Well Bitcoin works like currencies before paper, I don't think you can ever really 'own' them but you can certainly increase your chances depending on what security measures you take, just recently there was a press artcle about the silkroad guy having encrypted his wallet so the FBI can't even seize his coins so in the end it's all down to you and how paranoid you are.

As long as you dont convert BTC to local currency, you cant pay taxes. Bitcoin is not foreign currency, it is the same as WOW gold.

By voluntarily keeping records then.
Backtracking the blockchain to calculate how much btc I "owned" (at a(ny) given date) doesn't seem viable. Let alone proving the "ownership" of privately mined btc.

How do "they" know I have this key? Even if the wallet can be traced to me, they won't know how much in it is mine to spend without the key.
So the "Rob me" billboard analogy, as mentioned above, sounds plausible when the law dictates I have to surrender my keys for "audit" purposes.


I don't agree. btc is not money. Not unless my government accepts (tax)payments in btc it isn't. Until then it's more like gold and trading gold (as a service) is exempt of taxes. Only when you liquidise your gold you have to pay taxes (in a nutshell)
Until then btc should be considered LETS-currency, maybe.

Also, some of the btc I spent came from Satoshidice, which is a game of chance. Dutch law dictates you have to pay (income-) taxes over the net amount gained (wins minus losses) to retrace this (as a third party) is a next to impossible task. (to prove)

The numbers in my bankaccount aren't money, the stuff the atm spits out is. Or at least in my point of view.

The same way "they" prove and tax cash transactions.

Possession is nine-tenths of the law, so yes. Unless someone else accuses you of stealing the key, if you know it then you legally own the bitcoins.

Yes. To tax the money, of course, because that's what those numbers are, as sure as the numbers in your bank account are money.

I think the answer to your question is "We don't know yet, there is no legislation that covers bitcoins, except in one or two countries".

Since most 'money' in the developed world these days is digital rather than physical, 'ownership' is covered by the joint assumptions of lenders, debtors, buyers and sellers that somehow the digital stuff has value. This assumption seems to be accepted by people using bitcoins, and so I think your ownership would be assumed from the blockchain. If we all stopped assuming that, bitcoin would have no value. I'm sure legislators will find a way to tax us soon.

Thanks for your reply, but it doesn't answer my question.

If I know a key to a wallet, do I own the bitcoins in it?
Are the numbers I am manipulating with this key, really mine? To tax? Tax what?

Hey depends on your security habits. if you use a separate laptop for wallet and vpn it in another country then most likely you won't. Especially if you don't put your wallet address anywhere online and in your forum sig.

Also with taxation for sure, E-Currencies are most likely not legislated yet, so taxation comes in when you cash out and convert to fiat.

When buying online, you get the VAT already so no need to pay tax.

With regards to the question whether they would know how much you have is when you are careless in posting your BTC address online. And I suggest you would refrain from using web based wallets and also don't talk to anyone how much you have. It's like putting a huge billboard over you head that says "rob me".

Regards,
Balanghai

How can "they" prove I (ever) did?
And if proven, how can "they" tell how many I own(ed)?
And after "they" proved I owned x amount, how are "they" going to tax me?

Only if I voluntarily keep records of my transactions, or am I missing something?

 

Oh, sorry:
 Hello.

These may be newbie questions, but I haven't yet found a sound (legislative) answer, mostly only fud, or answers from the taxgatherers. Nothing solid, nor precedents.

Hence this post.