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Court Rules IRS Can Seek Information on Bitcoin Customers

wsj.com

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Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#101

Post by pc86 »

eeeeeeeeeeeee wrote: post #99
ryaniscool wrote: post #36

Earlier quoted context omitted.

In the linked article, the IRS is quoted as saying they are treating BitCoin like property. Essentially, they are looking to tax people who made a profit from selling Bitcoins using Coinbase. They don't seem concerned with the currency aspect at all.

How do you distinguish between someone buying something with Bitcoin and someone "trading" it? I only buy things with Bitcoin, I'm not doing currency trading (or at least, that was not my intention!). It seems like they could have isolated this request down to heavy buy/sell activity where it doesn't look like people are simply buying things. I'm fine with them going after people evading taxes, but this seems like a…

I don't do anything with BTC, is there any visible difference between speculating and purchasing a product when looking at the block chain and/or the user's account?

And I'm not sure how the IRS views this, but if you buy 1 BTC for $750, then its value increases to to $1000 for 1 BTC, and you buy $1000 worth of merchandise, isn't that taxable appreciation on the order of $250, because you're getting $1000 worth of goods for $750?

I agree this is a wide net to cast and I hope this is appealed and overturned, but I just don't know from a technical or tax perspective if they can cast the net any narrower.

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#102

Post by pc86 »

hnburnsy wrote: post #92

What if I buy something with appreciated Bitcoin? Is this a taxable event? If the IRS considers Bitcoin property, am I just bartering with Dell when I buy a laptop with Bitcoin?

> Is [buy[ing] something with appreciated Bitcoin] a taxable event?

According to the IRS, yes.

> If the IRS considers Bitcoin property, am I just bartering with Dell when I buy a laptop with Bitcoin?

Yes, so if you buy 1 BTC for $750, the price increase dramatically and you buy a top-end gaming system from Dell (lol) then you're bartering and the excess value is taxable.

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#103

Post by justin66 »

paulsutter wrote: post #100
justin66 wrote: post #61

Earlier quoted context omitted.

> Mining is awkward, since I believe mined coins are taxed as income on the day they are mined, even if you don't transact. The IRS has indicated that bitcoins are property and taxed as such, so that seems unlikely. Do you have a source for this?

https://www.irs.gov/pub/irs-drop/n-14-21.pdf

(Q-8 is the relevant FAQ on that doc)

Thanks.

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#104

Post by pc86 »

transfire wrote: post #72

Few people know that federal taxation is primarily a way to spy on people. There are numerous alternative places to apply taxation within the economy that are not remotely as intrusive, time consuming or costly. Tax preparation is a $10 billion dollar industry and the IRS has a $12 dollar budget.

On its face ("the more money you make, the more taxes you pay") it's a good system. However, like most things, it doesn't seem to work exactly the way it's described.

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#105

Post by ksherlock »

Fluxenein wrote: post #48
paulsutter wrote: post #18

You can't omit Bitcoin transactions from your tax return just because they seem anonymous. Concealment is the very definition of tax evasion, "Evasion... involves deceit, subterfuge, camouflage, concealment, some attempt to color or obscure events or to make things seem other than they are" Quoting in full since its among the most misunderstood yet important distinctions in tax: http://www.irs.gov/irm/part9/irm_09-00…

So, if an individual buys BitCoin with some capital to not pay taxes for said amount of capital ,is he evading or avoiding?

Neither because buying bitcoins doesn't help you not pay taxes.

If you have legitimate money that's reported to the IRS and taxed, what you do with it is largely irrelevant.

If you have illegitimate money (selling drugs, working under the table, etc) then you're not paying taxes on it to begin with. Buying bitcoin doesn't change that.

(And if you're paid in bitcoin, that's bartering and you either report it or you evade it.)

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#106

Post by throwawayqwer »

JumpCrisscross wrote: post #32
nullc wrote: post #28

So-- IRS seeks _all_ transaction records for all coinbase customers. Not just buying and selling Bitcoin but also people using their wallet services, which would mostly be users moving around their own funds (not a taxable event). They're doing this on the basis that there might be evidence of tax evasion in there somewhere. Which is plausible, I suppose. Thing is: All this same data was also emailed to the customers…

Material transactions are already, for the most part, reported. This action isn't putting special attention on Bitcoin ceteris paribus . It is bringing it into alignment with U.S. dollar custom and law.

So shouldn't they only require Coinbase hand over "material transactions"?
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