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IRS Says Bitcoin Is Property

bloomberg.com

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Re: IRS Says Bitcoin Is Property

#61

Post by sitkack »

hitchhiker999 wrote: post #21
shmerl wrote: post #13

Earlier quoted context omitted.

Exactly. They write: > “The danger is the creation of an electronic black market, similar to the cash economy,” But how can they avoid it if Bitcoin does work like cash in many aspects and they have no control over it?

In short, despite what many seem to think ?? -> Anything they do / will do / or try to do is simply a hack. The problem they have isn't going away - they'll eventually need increasingly draconian legislation to monitor bitcoin transactions. It will be (almost entirely) up to trust in the long run.

Everyone has a copy of the blockchain, the NSA has every email ever sent along with full copies of portions of internet traffic (if not all of it).

The NSA knows the physical location, email address and browsing history of nearly all US based bitcoin addresses.

Re: IRS Says Bitcoin Is Property

#62

Post by Xcelerate »

chime wrote: post #56
Xcelerate wrote: post #54

As a grad student who knows little about taxes (but quickly needs to learn more), what does this mean with regard to the 2 BTC I lost on Mt. Gox?

How much did you buy them for? That is your reportable loss.

Well crap. I bought them for about $50 in Feb 2013.

EDIT: Now I don't know what to do. This is kind of confusing. I bought 1.82 BTC in Feb 2013, traded, played around with them, and lost some. Then I sold what I had left to Gox USD about 5 months ago ($500) and repurchased 2 BTC during the "withdraws are disabled" period a few weeks ago. I'm going have to read more about this I think.

Re: IRS Says Bitcoin Is Property

#63

Post by dragontamer »

dllthomas wrote: post #47
dragontamer wrote: post #36

Earlier quoted context omitted.

BTC Anonymity requires the use of mixers, and using mixers is against the law (its money laundering).

"BTC Anonymity requires the use of mixers" There are different levels of anonymity. "using mixers is against the law (its money laundering)" I think that's likely the case, and I think if it's not yet the case it will be soon, but do you know if this has actually been prosecuted (or otherwise made legally clear) anywhere yet?

""" There are different levels of anonymity. """

You are either secure, or not secure. There is no in between. BTC is a permanent public ledger that can be analyzed for the rest of time. Without mixers (or similar techniques), it becomes possible to figure out lots of facts.

http://www.coindesk.com/194993-btc-transaction-147m-mystery-...

Similarly, your transactions can be tracked and analyzed because its all public information.

--------------------

And yes, people have been prosecuted for money laundering through mixers. (ie: Silk Road seizure + prosecution). So don't play the ignorance game, learn about the current state of affairs and understand the risks you're taking.

Re: IRS Says Bitcoin Is Property

#67

Post by tbrownaw »

shmerl wrote: post #22
loumf wrote: post #12

Earlier quoted context omitted.

At large enough amounts, the IRS routinely investigates large accounts no matter how they are held. For example, in cocaine and cash. At some point you spend the money, and the difference in spending and taxes paid gets their attention.

And if the money is spent in same Bitcoins? It seems the only control they might have is when Bitcoins are exchanged to regular currency.

I thought the way these things normally work is that someone notices that your standard of living doesn't seem to match what they know of your income, and that news makes its way to the IRS (possibly via local law enforcement?).

Re: IRS Says Bitcoin Is Property

#68

Post by unclebucknasty »

Am I missing something or would this be nearly impossible to track?

You buy some bitcoin here and there and occasionally transfer some to a wallet from which you pay for items. The price of bitcoin is rising and falling constantly, such that when you buy that cup of coffee, you could either be realizing a capital gain or loss of X amount.

How on earth would you track this without losing your mind? And, how would the IRS enforce this?

Re: IRS Says Bitcoin Is Property

#69

Post by ewoodrich »

sergiotapia wrote: post #23

And how exactly can they know your bitcoin stash amount?

If you obtained stock prior to 2011, and sold it, the IRS has no idea what the cost basis is, so this is voluntarily reported by the filer (and this will determine your capital gains). Of course, if you fudge this number to the point it is noticeable, you're looking at between a 20% and 100% penalty, or possible civil fraud.

Bitcoin is really no different. It doesn't matter if there's no easy way for the government to keep track of every taxpayer's BTC holdings, because if the IRS determines at a later time that you have provided inaccurate information, you're in trouble. Maybe one day exchanges will provide 1099s for sales, but until then, it's the same rules as any other unreported income.

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