Topic: Will miners in USA be able to remain competitive due to huge tax burden? - page 2. (Read 4169 times)

Thats a good point, its a global product.  Why on earth bother paying homage to gov bods in one country when it has zero transportation costs.  USA is not the largest consumer so I guess they cant just setup virtual import tariffs for this luxury good.

Lucky this is just one country.  How many people in the world, its the world that counts not politics from one place.


This relates to tax havens, to the Smoot–Hawley Tariff Act and just generally the inherent failure of government thinking and how it suppresses innovation in every field outside military and politics and this is why Washington DC has replaced silicon valley as the fastest growth area of the USA

My guess is I will mine BTC worth <$500 in 1 yr. For IRS, I do not exist!

Bitcoin is currently too small to fight back legally against the big guys.

Well it that regards you are correct, and they can certainly get away with it, they can do pretty much what they want and still get away with it.

but that the IRS can get away with it, does not make it legal, it is still illegal, with the big difference among us that some are implying that this law/ruling is valid, while some like me stating that is illegal and unethical.

This is like a thug walking to you at night with a gun and taking your money, you acknowledge that your money is gone but clearly see that his actions were not legit.

I do not like to break laws, but if I see a law that is clearly illegal and unethical I will have no respect for that law.

This ruling will destroy the US miners that tries to comply, my advice is do not destroy yourself, and for large mining operations they can move overseas in the land of the truly free.

What the IRS does not understand is that mining will continue overseas, and the difficulty will simply adjust.

I was talking about "This retroactive law is illegal. Any law that is retroactive is illegal." You are clearly unfamiliar with how the IRS works and their abilities. Any changes they make to the tax code are retroactive unless otherwise stated by them.

I repeat and stand by my word only if you id the wallet to yourself, this is something technical which if it is false, you can then  prove scientifically.

This in crypto science falls in the categorize of being able to id yourself while at the same time being anonymous, this can be done with pgp, gpg, and most crypto currencies including bitcoin, it is part of how bitcoin works. And there are a lot of scientific proves in this regards.

Believe me the IRS is not good at crypto (they have the NSA for that), they can  not regulate math they can certainly try but that is as far as they will get.

By the way trying to regulate bitcoin is  trying to regulate math, since it is like regulating the properties of certain numbers to taxes.
 
I am a computer science, I familiarize myself with cryptography, computer science, and mathematics, those rules and laws are  well written and well defined I normally do not like to waste my time other then having fun.


Since in  the early days of bitcoin we defined it to be a currency, and one of the properties for a currency is fungibility, the irs ruling destroys fungibility and then because of their won ruling it stops being a currency they label it a property  something it is not.

That is like you building a car and taking to DMV for registration, and then they take a wheel off and claim it is a motorcycle, of course if you take a wheel off of a car to make it a motorcycle by force it will not function well as a motorcycle, and it will not function well as a car since it has a missing wheel. Thats exactly what the IRS is doing to bitcoin to prevent it from functioning it as a currency, it has already  taken a huge dive in price.
 

Not at all, please familiarize yourself with the IRS' abilities.

Only if you identify your bitcoin address with your physical identification.
This retroactive law is illegal. Any law that is retroactive is illegal.


Also currencies are not supposed to pay taxes for themselves, only actives done to get income, having a job, making a sale, gambling, etc, but that is independent of the currency weather it is bitcoin or the dollar.

The dollar does not pay taxes, if you have $1000 dollars at home you do not pay taxes on the dollar, even if you have the $1000 at the bank the $1000 do not pay taxes only the interest made on the dollar. Why should bitcoin get a different treatment.?

The FED do not pay taxes on the newly printed dollars, why should miners pay taxes on the newly created coins.?

My opinion is that this law is not enforceable for independent miners, large mining companies will be force to go overseas otherwise they will not be able to compete at a global level.

In the town of San Ysidoro USA, the Mexican peso has high acceptance, and exchanges are anonymous and no tax is payed on the currency itself, a commission fee is payed for the service, and the exchange pays taxes based on the profit they make, but no tax on the Peso itself.

That double standard is hypocrisy, their real goal is to kill the currency.

There are a few good politicians that seem to accept it, but they are the minority.

+1

For the first point, here where I live in EU I have to pay about +33% vat and tax for the miners when I import them. There is no (good) manufacturer in EU.

The topic subject is embarrassingly parochial:

1) Doesn't the EU have to pay like 15% - 20% VAT on top of the list price for their mining hardware?

2) The average price in the US for electricity is 0.12/kW-hr.

3) As of Wikipedia 2008, the cost of electricity in Denmark is 0.404 USD/ kW-hr.

4) I believe also the all electrical equipment imported into Europe has to have CE markings.

Welcome to life.

so is this saying you mine 1 BTC, so you get taxed on that whatever the current rate is, and then if you cash out to USD you get taxed again or is it only on the diff from your cost basis??

Only temporarily so provides specific implementation do not know when.

The problem is, the ruling completely undermines bitcoin as a viable currency. So basically, it will fail. I hate being a negative nancy, but since the ruling, the value of BTC has dropped from 585 to 480 USD (and falling). So right now, at that price, no one is covering electricity with their mining profits. If you really believe in bitcoin as an investment, you're better off buying.

Yeah this is really unfortunate

Except you forget that Bitcoin mining is all over the world, not just in the US. The only thing this does is makes mining in America extremely unattractive.

If your expenses exceed your income it is generally considered a hobby. As for the price at the time you mine being your income, I think that would only be true if BTCs were money. If i dig gold out of the ground and put it on a shelf is there a tax liability? Probably not until you transfer it, or as i think of it, moneify(moneyfy? make it money, determine it's true value) it. If i mine bitcoins they aren't, in my opinion, taxable until i either spend them or sell them for fiat. At that time they are taxable at the current 15% capital gains rate. Of course, the expense of acquiring them is deductible then.

I suspect that this will only really affect the big guys, the little home miners shouldn't have an issue. And, in my opinion, the big guys deserve headaches the way they run the difficulty up.

Well I think this is a good news. Please read this article :

http://money.msn.com/top-stocks/post--3-reasons-irs-ruling-is-good-for-bitcoin

Good luck with that.

You do realize that MOST of the people caught evading taxes are reported by a friend/lover/neighbor/family member, right? See, they see you living above your apparent means, they get jealous, they call the IRS and notify you... hell they can even do it online at irs.gov ! This can easily trigger an audit, they come out to your residence, you deny them entry via the 4th, they come back with a warrant and they see an awful lot of expensive things that someone with your income can't afford. You can't show how you purchased them, as the items don't show up on your bank statements... you are hiding income somehow, they value (or seize) the goods and slap you with a tax bill (plus a hefty amount of interest) for tax evasion.

yes,
I have my own access database that i track all my numbers for my mining. I am just going to create a report that generates at the start of each month that tells me what my last month activity was. Take the average price, divide by 30 and thats my "income". take that number and add it to the other 11 months and minus all my deductions. Thats my "income"

I'm not 100% sure on this, but I think if you claim mining is a hobby you don't have to pay self employment tax. (As long as you aren't making an incredible amount of money)