Who cares wtf the I.R.S. does.
Not a single Satoshi I own is traceable to me as a individual.
Anybody could own my BTC, there is no way for the I.R.S. to prove otherwise.
Bitcoin was designed in a way that you should all be able to safely ignore the I.R.S. on this issue.
In reality most of BTC value is attributed to that fact, silkroad is what gave BTC value, gambling sites also helped.
Topic: White House Petition to AMEND IRS NOTICE 2014-2 Taxing virtual currency/Bitcoin - page 4. (Read 4388 times)
March 29, 2014, 08:13:08 PM
legendary
Activity: 1302
Merit: 1008
Core dev leaves me neg feedback #abuse #political
March 29, 2014, 08:00:19 PM
When you think about it, the IRS ruling encourages miners to sell their coins on the open market sooner rather than hoarding and selling later. Seems to possibly help liquidity and stability of bitcoin.
That is a misunderstanding. The capital gains rates are lower than regular income rates to encourage investment, over actually running a business or working for a living.
In any event, I don't think any of this is going to effect bitcoin much.
The big point in all of this is the good news that the irs is helping
To legitimize bitcoin rather than trying to help ban it.
March 29, 2014, 07:59:57 PM
Not true, please read it again. When you mine a Bitcoin you must pay capital gains tax equivalent to the market value at the time it enters your wallet. The capital gains tax is at a higher rate than regular income within the first year. When you mine a Bitcoin you are responsible for the capital gains tax at a rate of 36% and future gains will be taxed at the time of sale.
You are still misinformed. http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States Read the article and check the references.
March 29, 2014, 07:55:28 PM
I have yet to receive any notices from the IRS over any bitcoin that I sold. I don't just hand my money over to thieves.
Usually when you receive notices, it would be too late... Either move out of US or you would be broke.
March 29, 2014, 07:52:44 PM
Do you have reading comprehensive problem? English isnt my first language and i can even understand IRS ruling perfectly.
Do you understand what "capital gain" mean? Think about it for 5 sec.....Let me explain to you what IRS is saying:
MINING will not be taxed as capital gain (since there is no capital in the first place ...duh), it will be included in gross income.
Capital gain ONLY APPLIES to SELL AND BUY btc as bitcoin is a property.
So any mining income will be taxable income. When you sell those mined btc, you might have capital gain/loss. Remember the max capital loss you can claim per year is $3k, the rest will be rolled to next year.
Do you understand what "capital gain" mean? Think about it for 5 sec.....Let me explain to you what IRS is saying:
MINING will not be taxed as capital gain (since there is no capital in the first place ...duh), it will be included in gross income.
Capital gain ONLY APPLIES to SELL AND BUY btc as bitcoin is a property.
So any mining income will be taxable income. When you sell those mined btc, you might have capital gain/loss. Remember the max capital loss you can claim per year is $3k, the rest will be rolled to next year.
Not true, please read it again. When you mine a Bitcoin you must pay capital gains tax equivalent to the market value at the time it enters your wallet. The capital gains tax is at a higher rate than regular income within the first year. When you mine a Bitcoin you are responsible for the capital gains tax at a rate of 36% and future gains will be taxed at the time of sale.
You can only claim regular income on USD; not Bitcoin.
If you hold Bitcoin longer than one year your tax rate decreases.
Ok, you're just an idiot. At first i had my doubt, but you confirmed it
Quote
Q: Does a taxpayer who "mines" virtual currency (for example, uses computer resources to validate Bitcoin transactions
and maintain the public Bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting
from those activities?
A: Yes, when a taxpayer successfully "mines" virtual currency, the fair market value of the virtual currency as of the
date of receipt is includible in gross income. See Publication 525, Taxable and Nontaxable Income, for more information
and maintain the public Bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting
from those activities?
A: Yes, when a taxpayer successfully "mines" virtual currency, the fair market value of the virtual currency as of the
date of receipt is includible in gross income. See Publication 525, Taxable and Nontaxable Income, for more information
When an ESL has to explain English to you, you know you're stupid.
March 29, 2014, 07:51:29 PM
I have yet to receive any notices from the IRS over any bitcoin that I sold. I don't just hand my money over to thieves.
March 29, 2014, 07:50:35 PM
Do you have reading comprehensive problem? English isnt my first language and i can even understand IRS ruling perfectly.
Do you understand what "capital gain" mean? Think about it for 5 sec.....Let me explain to you what IRS is saying:
MINING will not be taxed as capital gain (since there is no capital in the first place ...duh), it will be included in gross income.
Capital gain ONLY APPLIES to SELL AND BUY btc as bitcoin is a property.
So any mining income will be taxable income. When you sell those mined btc, you might have capital gain/loss. Remember the max capital loss you can claim per year is $3k, the rest will be rolled to next year.
Do you understand what "capital gain" mean? Think about it for 5 sec.....Let me explain to you what IRS is saying:
MINING will not be taxed as capital gain (since there is no capital in the first place ...duh), it will be included in gross income.
Capital gain ONLY APPLIES to SELL AND BUY btc as bitcoin is a property.
So any mining income will be taxable income. When you sell those mined btc, you might have capital gain/loss. Remember the max capital loss you can claim per year is $3k, the rest will be rolled to next year.
Not true, please read it again. When you mine a Bitcoin you must pay capital gains tax equivalent to the market value at the time it enters your wallet. The capital gains tax is at a higher rate than regular income within the first year. When you mine a Bitcoin you are responsible for the capital gains tax at a rate of 36% and future gains will be taxed at the time of sale.
You can only claim regular income on USD; not Bitcoin.
If you hold Bitcoin longer than one year your tax rate decreases.
March 29, 2014, 07:50:26 PM
When you think about it, the IRS ruling encourages miners to sell their coins on the open market sooner rather than hoarding and selling later. Seems to possibly help liquidity and stability of bitcoin.
That is a misunderstanding. The capital gains rates are lower than regular income rates to encourage investment, over actually running a business or working for a living.
March 29, 2014, 07:48:47 PM
I'm understanding it clearly. The tax rate on a capital gain within 1 year of acquisition is greater than standard income tax.
You are thinking that the long term capital gains rate is higher than the regular income tax rate. It is not.
The OP didnt understand the ruling at all...
Mining income is never considered capital gain. Its just regular income .... like he wishes.
legendary
Activity: 1302
Merit: 1008
Core dev leaves me neg feedback #abuse #political
March 29, 2014, 07:47:09 PM
When you pool mine BTC for profit you should have your coins transferred to an exchange where they can be traded for USD. You have never owned those coins, the blockchain will confirm that they were never in your possession, and a reasonable argument could be made to eliminate capital gains tax because of the ownership.
Don't send coins to your private address from the mining pool; trade them for USD, then buy BTC with USD and spend the newest hashes first... Capital gains on miners is greater than regular income. This should be sufficient to claim it was regular income.
Don't send coins to your private address from the mining pool; trade them for USD, then buy BTC with USD and spend the newest hashes first... Capital gains on miners is greater than regular income. This should be sufficient to claim it was regular income.
You are still misunderstanding the process. Without your documentation of your mining operation, the government see that you had unexplained funds transferred to your bank account. They will want to tax all of it at the regular income tax rate.
If you want to lessen your tax liability, you would document your expenses in your mining operation to deduct it from gross income, and if you held onto the profits for more than a year, you would document the gains from your holdings at a lower capital gains rate, which is how Warren Buffet and Mitt Romney pay lower tax rates than the average American.
If you hypothetically wanted to evade taxes and break the law, you would find methods that don't trigger a report to the IRS.
I'm understanding it clearly. The tax rate on a capital gain within 1 year of acquisition is greater than standard income tax.
I'm not telling anybody to evade taxes, I'm suggesting a way to consider mining as regular income for tax reporting purposes. This is a way to reduce tax liability, not eliminate it. The ownership aspect of a capital gain forms a loop hole that I am attempting to explain.
You can report your USD deposits as regular income and deduct the cost of mining operations from that. If you purchase Bitcoin then the capital gains will be taken later. It's just minimizing your tax liability.
When you think about it, the IRS ruling encourages miners to sell their coins on the open market sooner rather than hoarding and selling later. Seems to possibly help liquidity and stability of bitcoin.
March 29, 2014, 07:46:15 PM
I'm understanding it clearly. The tax rate on a capital gain within 1 year of acquisition is greater than standard income tax.
You are thinking that the long term capital gains rate is higher than the regular income tax rate. It is not.
March 29, 2014, 07:45:32 PM
i laugh at the panicking people that have not fully understood the ruling or the method of tracking/auditing. nor spoke to a accountant about it, but they simply start a petition to change something they dont understand.
Well my problem is that my accountant actually said a lot of very reassuring things, except they appear to be directly contradicted by the IRS publication even though he's read it. I don't really feel like getting audited.I met with a CPA today and he seemed to advise we only record income on spent BTC. For example, I buy mining gear with BTC, so the act of exchanging BTC for dollars or a good that are "real" is when we will record as income. This means the non-exchanged BTC only has a cost basis at where it was mined. Some of his advice seemed to contradict the IRS Q&A publication, but when I pressed on those he made the point that if I'm holding and not exchanging that it doesn't need to be reported as there's no taxable event. What he was advising sounded a lot like what I was hoping for, or what I thought would make more sense, but I do know the official guidance seems to state things differently. We both agreed it seems silly to report income on a virtual thing that is highly speculative. I mean, if you get $90k in mining payouts but at the year end some big news makes BTC worthless or illegal then you would owe taxes on that income but never saw and dollars, services, or physical goods from purchases because it was never exchanged and ended up worthless. He did say their guidance seems unclear enough that we come up with a method and stick with it until/unless they clarify. Lastly, a bit of confusion how to report some of the expenses, but I need to send him my spreadsheets, more to come...
Your CPA is an idiot and so you are if you use him.
IRS ruling clearly indicates there are 2 possible ways of acquiring btc:
1) Mining: a taxable event that will be in your gross income based on fair market value of the mined coins. There will be another taxable event when you sell those coins, thus fall into capital gain.
2) Buying: there willl be a taxable event when you sell btc.
March 29, 2014, 07:42:41 PM
When you pool mine BTC for profit you should have your coins transferred to an exchange where they can be traded for USD. You have never owned those coins, the blockchain will confirm that they were never in your possession, and a reasonable argument could be made to eliminate capital gains tax because of the ownership.
Don't send coins to your private address from the mining pool; trade them for USD, then buy BTC with USD and spend the newest hashes first... Capital gains on miners is greater than regular income. This should be sufficient to claim it was regular income.
Don't send coins to your private address from the mining pool; trade them for USD, then buy BTC with USD and spend the newest hashes first... Capital gains on miners is greater than regular income. This should be sufficient to claim it was regular income.
You are still misunderstanding the process. Without your documentation of your mining operation, the government see that you had unexplained funds transferred to your bank account. They will want to tax all of it at the regular income tax rate.
If you want to lessen your tax liability, you would document your expenses in your mining operation to deduct it from gross income, and if you held onto the profits for more than a year, you would document the gains from your holdings at a lower capital gains rate, which is how Warren Buffet and Mitt Romney pay lower tax rates than the average American.
If you hypothetically wanted to evade taxes and break the law, you would find methods that don't trigger a report to the IRS.
I'm understanding it clearly. The tax rate on a capital gain within 1 year of acquisition is greater than standard income tax.
I'm not telling anybody to evade taxes, I'm suggesting a way to consider mining as regular income for tax reporting purposes. This is a way to reduce tax liability, not eliminate it. The ownership aspect of a capital gain forms a loop hole that I am attempting to explain.
You can report your USD deposits as regular income and deduct the cost of mining operations from that. If you purchase Bitcoin then the capital gains will be taken later. It's just minimizing your tax liability.
March 29, 2014, 07:38:19 PM
Well I like the tax implications with regard to purchasing BTC.
I suppose the real question is about mining. When a coin is mined it's a capital gain. However, a capital gain is valued on the market value and it isn't taxable until you take possession of your property. If you don't own the private key you don't own BTC remember?
You cannot be taxed on coins that you do not yet own.
When you pool mine BTC for profit you should have your coins transferred to an exchange where they can be traded for USD. You have never owned those coins, the blockchain will confirm that they were never in your possession, and a reasonable argument could be made to eliminate capital gains tax because of the ownership.
Don't send coins to your private address from the mining pool; trade them for USD, then buy BTC with USD and spend the newest hashes first... Capital gains on miners is greater than regular income. This should be sufficient to claim it was regular income.
The law is on your side when it comes to property.
I suppose the real question is about mining. When a coin is mined it's a capital gain. However, a capital gain is valued on the market value and it isn't taxable until you take possession of your property. If you don't own the private key you don't own BTC remember?
You cannot be taxed on coins that you do not yet own.
When you pool mine BTC for profit you should have your coins transferred to an exchange where they can be traded for USD. You have never owned those coins, the blockchain will confirm that they were never in your possession, and a reasonable argument could be made to eliminate capital gains tax because of the ownership.
Don't send coins to your private address from the mining pool; trade them for USD, then buy BTC with USD and spend the newest hashes first... Capital gains on miners is greater than regular income. This should be sufficient to claim it was regular income.
The law is on your side when it comes to property.
Do you have reading comprehensive problem? English isnt my first language and i can even understand IRS ruling perfectly.
Do you understand what "capital gain" mean? Think about it for 5 sec.....Let me explain to you what IRS is saying:
MINING will not be taxed as capital gain (since there is no capital in the first place ...duh), it will be included in gross income.
Capital gain ONLY APPLIES to SELL AND BUY btc as bitcoin is a property.
So any mining income will be taxable income. When you sell those mined btc, you might have capital gain/loss. Remember the max capital loss you can claim per year is $3k, the rest will be rolled to next year.
legendary
Activity: 1302
Merit: 1008
Core dev leaves me neg feedback #abuse #political
March 29, 2014, 07:36:34 PM
there's no need to change anything!
So what if miners have to pay tax on coins?
All it means is they can't postpone taxes by
hoarding.. so what?
IRS has all kinds of BS rules...and there's just
as many ways to legally avoid them. Any
smart company knows all this.
What does this have to do with the future of bitcoin? nothing.
And if bitcoin were to be treated as a currency rather than
property, I think the same thing would happen -- miners
would have to be tax for receiving the currency through
their mining. In both cases its income...
P.S. even if there was a problem, petitioning the whitehouse
wouldnt do shit
So what if miners have to pay tax on coins?
All it means is they can't postpone taxes by
hoarding.. so what?
IRS has all kinds of BS rules...and there's just
as many ways to legally avoid them. Any
smart company knows all this.
What does this have to do with the future of bitcoin? nothing.
And if bitcoin were to be treated as a currency rather than
property, I think the same thing would happen -- miners
would have to be tax for receiving the currency through
their mining. In both cases its income...
P.S. even if there was a problem, petitioning the whitehouse
wouldnt do shit
March 29, 2014, 07:33:50 PM
i laugh at the panicking people that have not fully understood the ruling or the method of tracking/auditing. nor spoke to a accountant about it, but they simply start a petition to change something they dont understand.
Well my problem is that my accountant actually said a lot of very reassuring things, except they appear to be directly contradicted by the IRS publication even though he's read it. I don't really feel like getting audited.I met with a CPA today and he seemed to advise we only record income on spent BTC. For example, I buy mining gear with BTC, so the act of exchanging BTC for dollars or a good that are "real" is when we will record as income. Some of his advice seemed to contradict the IRS Q&A publication, but when I pressed on those he made the point that if I'm holding and not exchanging that it doesn't need to be reported as there's no taxable event. What he was advising sounded a lot like what I was hoping for, or what I thought would make more sense, but I do know the official guidance seems to state things differently. We both agreed it seems silly to report income on a virtual thing that is highly speculative. I mean, if you get $90k in mining payouts but at the year end some big news makes BTC worthless or illegal then you would owe taxes on that income but never saw any dollars, services, or physical goods from purchases because it was never exchanged and ended up worthless. He did say their guidance seems unclear enough that we come up with a method and stick with it until/unless they clarify. Lastly, a bit of confusion how to report some of the expenses, but I need to send him my spreadsheets, more to come...
March 29, 2014, 07:26:45 PM
With miner hardware and electricity costs some people make big losses they can deduct that is for sure.
You are still misunderstanding the process. Without your documentation of your mining operation, the government see that you had unexplained funds transferred to your bank account. They will want to tax all of it at the regular income tax rate.
If you want to lessen your tax liability, you would document your expenses in your mining operation to deduct it from gross income, and if you held onto the profits for more than a year, you would document the gains from your holdings at a lower capital gains rate, which is how Warren Buffet and Mitt Romney pay lower tax rates than the average American.
If you hypothetically wanted to evade taxes and break the law, you would find methods that don't trigger a report to the IRS.
When you pool mine BTC for profit you should have your coins transferred to an exchange where they can be traded for USD. You have never owned those coins, the blockchain will confirm that they were never in your possession, and a reasonable argument could be made to eliminate capital gains tax because of the ownership.
Don't send coins to your private address from the mining pool; trade them for USD, then buy BTC with USD and spend the newest hashes first... Capital gains on miners is greater than regular income. This should be sufficient to claim it was regular income.
Don't send coins to your private address from the mining pool; trade them for USD, then buy BTC with USD and spend the newest hashes first... Capital gains on miners is greater than regular income. This should be sufficient to claim it was regular income.
You are still misunderstanding the process. Without your documentation of your mining operation, the government see that you had unexplained funds transferred to your bank account. They will want to tax all of it at the regular income tax rate.
If you want to lessen your tax liability, you would document your expenses in your mining operation to deduct it from gross income, and if you held onto the profits for more than a year, you would document the gains from your holdings at a lower capital gains rate, which is how Warren Buffet and Mitt Romney pay lower tax rates than the average American.
If you hypothetically wanted to evade taxes and break the law, you would find methods that don't trigger a report to the IRS.
March 29, 2014, 07:22:08 PM
When you pool mine BTC for profit you should have your coins transferred to an exchange where they can be traded for USD. You have never owned those coins, the blockchain will confirm that they were never in your possession, and a reasonable argument could be made to eliminate capital gains tax because of the ownership.
Don't send coins to your private address from the mining pool; trade them for USD, then buy BTC with USD and spend the newest hashes first... Capital gains on miners is greater than regular income. This should be sufficient to claim it was regular income.
Don't send coins to your private address from the mining pool; trade them for USD, then buy BTC with USD and spend the newest hashes first... Capital gains on miners is greater than regular income. This should be sufficient to claim it was regular income.
You are still misunderstanding the process. Without your documentation of your mining operation, the government see that you had unexplained funds transferred to your bank account. They will want to tax all of it at the regular income tax rate.
If you want to lessen your tax liability, you would document your expenses in your mining operation to deduct it from gross income, and if you held onto the profits for more than a year, you would document the gains from your holdings at a lower capital gains rate, which is how Warren Buffet and Mitt Romney pay lower tax rates than the average American.
If you hypothetically wanted to evade taxes and break the law, you would find methods that don't trigger a report to the IRS.
March 29, 2014, 07:09:50 PM
Well I like the tax implications with regard to purchasing BTC.
I suppose the real question is about mining. When a coin is mined it's a capital gain. However, a capital gain is valued on the market value and it isn't taxable until you take possession of your property. If you don't own the private key you don't own BTC remember?
You cannot be taxed on coins that you do not yet own.
When you pool mine BTC for profit you should have your coins transferred to an exchange where they can be traded for USD. You have never owned those coins, the blockchain will confirm that they were never in your possession, and a reasonable argument could be made to eliminate capital gains tax because of the ownership.
Don't send coins to your private address from the mining pool; trade them for USD, then buy BTC with USD and spend the newest hashes first... Capital gains on miners is greater than regular income. This should be sufficient to claim it was regular income.
The law is on your side when it comes to property.
I suppose the real question is about mining. When a coin is mined it's a capital gain. However, a capital gain is valued on the market value and it isn't taxable until you take possession of your property. If you don't own the private key you don't own BTC remember?
You cannot be taxed on coins that you do not yet own.
When you pool mine BTC for profit you should have your coins transferred to an exchange where they can be traded for USD. You have never owned those coins, the blockchain will confirm that they were never in your possession, and a reasonable argument could be made to eliminate capital gains tax because of the ownership.
Don't send coins to your private address from the mining pool; trade them for USD, then buy BTC with USD and spend the newest hashes first... Capital gains on miners is greater than regular income. This should be sufficient to claim it was regular income.
The law is on your side when it comes to property.
March 29, 2014, 07:05:31 PM
i laugh at the panicking people that have not fully understood the ruling or the method of tracking/auditing. nor spoke to a accountant about it, but they simply start a petition to change something they dont understand.
Well my problem is that my accountant actually said a lot of very reassuring things, except they appear to be directly contradicted by the IRS publication even though he's read it. I don't really feel like getting audited. Jump to: