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

151–160 of 317 posts

Re: IRS Says Bitcoin Is Property

#151

Post by dasil003 »

humanrebar wrote: post #126
slg wrote: post #101

Earlier quoted context omitted.

How so? These aren't new rules, just old rules that are newly applied to Bitcoin. As others have noted, this is how things work for employer issued stock. You only put yourself in danger if you are ignorant of the rules and don't take necessary precautions. If you are investing enough to open yourself up to a capital gains loss of more than $3000, you have no excuse to be ignorant. Tax tip from a non-lawyer/non-accou…

> If you are investing enough to open yourself up to a capital gains loss of more than $3000, you have no excuse to be ignorant. I disagree wholeheartedly. The tax code is needlessly complex. These are not laws of nature, they are arbitrary rules that have accumulated over time. Large capital gains happen naturally and it's silly for there to be gotchas like this.

When it comes to the IRS the prudent thing is to treat them as a force of nature.

Re: IRS Says Bitcoin Is Property

#152

Post by pbreit »

SilasX wrote: post #121
jstalin wrote: post #46

Earlier quoted context omitted.

Actually, it says that you are taxed on their value at the time they are mined.

Strange. Why don't they treat the cost basis as your cost of production? That is, if you spend $X to mine the bitcoins, and sell them for $Y, why not tax you on $(Y-X) rather than Y minus "whatever the market said they were worth then"? $(Y-X) is your true dollar-denominated realized gain.

They do. You can report your costs as an expense.

Re: IRS Says Bitcoin Is Property

#153

Post by vinchuco »

would this ruling encourage more Bitcoin hoarding?

>Bitcoins held for more than a year and then sold would pay the lower tax rates applicable to capital gains — a maximum of 23.8 percent compared with the 43.4 percent top rate on property sold within a year of purchase.

Re: IRS Says Bitcoin Is Property

#154

Post by xur17 »

sitkack wrote: post #48
streptomycin wrote: post #5

Earlier quoted context omitted.

Bitcoin miners would have to report their earnings as taxable income with a value equal to the worth on the day it was mined.

I am confused about bitcoin taxation and mining, I mined coins back in 2011, when they were $7. They matched my costs of hardware and electricity. Are they both income and capital gains (when I sell over a year later)?

Yeah, I'm kind of confused on this too. I mined a few years ago, played around with the coins a bit (lost a few), and have left them in a wallet since.

So, technically I pay the taxes on them in 2011 as income tax (when I 'mined' them), at the price I mined them at, and then I will pay the difference between that price, and the price I sold them at as capital gains?

Can anyone else in a similar situation chime in here?

Re: IRS Says Bitcoin Is Property

#156

Post by iLoch »

twoodfin wrote: post #137
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…

I am warily a supporter of a national sales tax to replace the income tax, but there are a few problems with it: - Making it non-regressive, let alone as close to progressive as our current system, is damned hard. FAIR Tax-style check-cutting probably isn't enough. - The tax would have to be high enough that black market sales would be extremely tempting. It's comparatively easier to monitor and regulate ~150 million…

"Income tax? Sales tax? Why not both?" - Canadian government. sigh

Re: IRS Says Bitcoin Is Property

#157

Post by Zarathust »

I don't see how this law could be enforceable. Hiding bitcoins from the IRS seems to be trivial and lying about the real acquisition value as well. This is very different from stocks where all trades are overseen by the SEC. You can't just go to a neighbor's house and pay for stock in cash without telling anybody else.

Re: IRS Says Bitcoin Is Property

#158

Post by scotty79 »

twoodfin wrote: post #144
evjim wrote: post #136

Earlier quoted context omitted.

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.

It's a good idea. The problem is only how it should be decided and by whom, how much to print. It can't be government for obvious reasons.

Re: IRS Says Bitcoin Is Property

#159

Post by ry0ohki »

Zarathust wrote: post #157

I don't see how this law could be enforceable. Hiding bitcoins from the IRS seems to be trivial and lying about the real acquisition value as well. This is very different from stocks where all trades are overseen by the SEC. You can't just go to a neighbor's house and pay for stock in cash without telling anybody else.

The same way cash transactions are trackable, which is to say they are not. In either event you can choose to evade the taxes but it's probably not a wise bet.

Re: IRS Says Bitcoin Is Property

#160

Post by VLM »

twoodfin wrote: post #137
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…

I am warily a supporter of a national sales tax to replace the income tax, but there are a few problems with it: - Making it non-regressive, let alone as close to progressive as our current system, is damned hard. FAIR Tax-style check-cutting probably isn't enough. - The tax would have to be high enough that black market sales would be extremely tempting. It's comparatively easier to monitor and regulate ~150 million…

"Making it non-regressive, let alone as close to progressive as our current system, is damned hard."

Its not really important or difficult. The state I grew up in has a long list of poor people exemptions by industry. Everything in the grocery store except hot deli food is tax free, for example. Tuition, medical care, bunch of other poor people things all tax free... As a poor person the only taxes you'll likely ever pay are the 100% or so gasoline sin tax and sales tax on a car. 5% depreciation on a new car is a fraction of driving it off the lot, and for used, especially for poor people, there's a wink and nod that if you're not involving a bank just don't submit anything completely ridiculous, and they don't enforce sales tax at all on family sales because they know we'd just avoid it via gift tax if they cracked down and other than divorce situations you'll never get family members testifying against each other.

Its important to keep the tax rate reasonably low compared to the "real world poor folks" inflation rate (not the made up one). Another way to think about it, is I live in a civilized (non-california) area and our cost of living is much lower. So you can express our 5% sales tax as living about 18 months in the future, or as living about 1/20th more like Californians. Its just not a big deal.

Now if you want a euro style 50% then the big problem isn't so much the poor as all the people trying to evade that kind of tax rate. We already have plenty of problems with petroleum fuels and tobacco products, imagine those kind of problems with "everything".

Post reply on HN