Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

IRS Says Bitcoin Is Property

bloomberg.com

Post reply on HN
Print view View original

141–150 of 317 posts

Re: IRS Says Bitcoin Is Property

#141

Post by sp332 »

humanrebar wrote: post #130
BrandonM wrote: post #119

Earlier quoted context omitted.

Sales taxes are regressive, so much so that combined US state taxes are also regressive, being largely funded by sales tax. Refer to the big square in the middle of https://xkcd.com/980/

Simple taxes is a justice issue. A simple tax code will always be more fair than an arcane one. If we're worried about the cost of living of people with incomes below a certain level, the best solution to that problem is a solution to that problem , such as an earned income tax credit, a guaranteed income, food stamps, health insurance supplements, and the like.

The trouble with a refund is maybe the person can't afford to pay (price of goods + taxes) in the first place. And it seems strange to collect sales tax, then redistribute the money as food stamps, to reduce the burden from the sales tax.

Re: IRS Says Bitcoin Is Property

#142

Post by phogster »

patio11 wrote: post #85
uptown wrote: post #8

"Under the ruling, purchasing a $2 cup of coffee with Bitcoins bought for $1 would trigger $1 in capital gains for the coffee drinker and $2 of income for the coffee shop." So if the coffee shop leaves the "property" as bitcoins instead of converting it over to dollars, and the value of those bitcoins falls before cashing-out, they're stuck paying tax on the $2 worth of income despite potentially no-longer having the…

This is not an anomalous case in taxing business income. A few startups asked me to do work on a barter basis. (Can you do a week of marketing work for us if we build you an iPhone app?) I told them that, if I were to agree to do that, I'd be legally obligated to value my work at it's market price and file an informational return to the IRS showing that amount of money given as payment for services rendered, which th…

Wait, are both parties responsible for paying taxes in this case? In the normal case the party receiving payment for services rendered is the one that pays income taxes. Here both are providing and receiving a service at the same time.

Re: IRS Says Bitcoin Is Property

#143

Post by andrewla »

jstalin wrote: post #65

The actual notice from the IRS: http://i.cdn.turner.com/money/2014/images/03/25/IRS_Notice_2... [EDIT] - added actual notice

Here's the version hosted by the IRS:

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

Linked from here:

http://www.irs.gov/uac/Newsroom/IRS-Virtual-Currency-Guidanc...

(@jstalin -- feel free to edit your post and I'll delete this one)

Re: IRS Says Bitcoin Is Property

#144

Post by twoodfin »

evjim wrote: post #136
IgorPartola wrote: post #111

This is exactly why a sales tax would make things so much easier. Who care about historic price points of when you bought and sold BTC, let alone the historic electricity costs and pool fees when you mined it. You buy a milk shake, you pay taxes. Want food, etc. to be taxed differently? Still easier than figuring out if you are operating a railroad/fishing farm in Alaska while running a BTC mining rig to heat your ho…

Or why not inflationary tax? We already have it, but if it was made the sole tax, we could get rid of whole bureaucratic industries for processing tax. Inflation encourages spending which is good for the economy.

So the U.S. government would fund itself just by printing money? If so, I don't think whoever had this idea has really thought it through.

Re: IRS Says Bitcoin Is Property

#145

Post by patio11 »

Somebody in the Bitcoin ecosystem would get a lot of attention if they published an authoritative number for the average Bitcoin price in 2013, which would likely suffice for most taxpayers' needs for a reasonable and consistent valuation. (Ask a tax professional if you disbelieve that informal recommendation.)

This is one of the many equally valid options for e.g. calculating the yen/USD conversion if you happen to have many yen transactions which are approximately equally distributed throughout the year. (The Treasury Department has a handy web page listing yearly averages for reference, but you're allowed to use any number which is reasonable and consistent. One of the best reasons to keep good books is that you can try several reasonable methods and then consistently adopt the one which is most favorable to your interests. Welcome to taxes, if that being OK is counterintuitive.)

Re: IRS Says Bitcoin Is Property

#146

Post by VLM »

pat2man wrote: post #20

I imagine a managed wallet like Coinbase would really help here. They could easily create a report on exactly how much you owe in capital gains. Managing this yourself could get a bit messy.

How would they know when I mined the coins before I sent them there to be sold about 3 days later?

Another question is, how can I figure it out?

Back when software mining was profitable and difficulty levels were high 2 or low 3 digits, I just let the thing free run for months as a "nice"-d process. So I'm not even sure when I mined them, other than "a long time ago" and then got rid of them late last summer/fall.

Re: IRS Says Bitcoin Is Property

#147

Post by jboggan »

Kopion wrote: post #134

I'm curious, what does this mean for someone interested in operating a Bitcoin ATM? Is a money transmitter license still a requirement?

Really good question. I would guess that the states issuing MSB licenses are going to keep doing whatever they've been doing. This is taxation guidance, not necessarily a definitive ruling that Bitcoin shall be treated as property by every entity for all legal purposes.

Re: IRS Says Bitcoin Is Property

#148

Post by DennisP »

dragontamer wrote: post #36
dllthomas wrote: post #26

Earlier quoted context omitted.

You say it's debilitating, but you describe the precise solution. This is easy to code around if you don't care about preserving BTC anonymity.

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

Then I'm curious to see what happens when Matthew Green releases Zerocash, a cryptocurrency with built-in strong anonymity.

Re: IRS Says Bitcoin Is Property

#149

Post by Consultant32452 »

mbreese wrote: post #92
kevinpet wrote: post #33

It still doesn't clearly address the question of how those who mine bitcoin should be taxed. I guess your cost basis is a prorated portion of what you've spent on bitcoin mining. Very hard to do the accounting.

If you're mining in a pool, you should have a record of when you got each fractional allocation of Bitcoins. You could then look up the Bitcoin/USD rate at that time from historical data at one of the exchanges. This is going to be one very large spreadsheet. One benefit is that you can probably batch rounds together and only count the bitcoins as "realized" when they are sent from the pool to you (at payout). This w…

Theoretically you could probably choose any arbitrary price on the day you "receive" the bitcoins.. which given the nature of bitcoin price fluctuations could be significant.
Post reply on HN