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

201–210 of 317 posts

Re: IRS Says Bitcoin Is Property

#201

Post by hkphooey »

ewoodrich wrote: post #69
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 t…

> If you obtained stock prior to 2011, and sold it, the IRS has no idea what the cost basis is

Any links to this? Isn't it based on FIFO or LIFO and you just have to be consistent in your approach? Why specifically 2011? Thanks in advance.

Re: IRS Says Bitcoin Is Property

#202

Post by derekp7 »

zacinbusiness wrote: post #193

How does this work for a coffee shop that does not exchange bitcoin for dollars? Say they sell a medium coffee for $4.44 (that's the price I pay for my coffee at my normal "spot.") Or you can pay, say, .002 BTC (I'm guessing here on the amount BTC). But let's say if you send them bitcoin that they just keep it or spend it somewhere else that also accepts bitcoin (and preferably that also doesn't cash them out).

If bitcoin is property, then this should be handled the same way barter is handled. Taxes would be paid on the fair cash value of the property.

This is also what would keep USD in use -- it is the only currency the government accepts to pay taxes.

Re: IRS Says Bitcoin Is Property

#203

Post by sliverstorm »

modeless wrote: post #180
outside1234 wrote: post #165

Earlier quoted context omitted.

If its treated as property then the maximum is 20% of capital gains. Do you not think you should pay taxes on gains?

I think he's talking about mining, which is now subject to income tax (likely 25%) and self-employment tax (15%).

In that case, it seems only right that tax should only be on net profits, right? I.e. after your opex such as equipment costs & electricity?

Re: IRS Says Bitcoin Is Property

#204

Post by anonbanker »

This is fantastic news. I'll be preparing my 1040v's and T5008's accordingly. Thanks for the asset determination, IRS!

Does this decision open the doors to other currencies (linden dollars, Nintendo store points, air miles cards) being similarly registered as assets?

Re: IRS Says Bitcoin Is Property

#206

Post by rodgerd »

Zarathust wrote: post #187
anigbrowl wrote: post #177

Earlier quoted context omitted.

Well, the blockchain records all transactions, and when they took place: http://blockr.io/ So if the IRS is auditing you, then it would be easy for them to cross-reference to that.

But until I tie a wallet address with the physical world (like credit card or such), then they have no way of knowing that I own those coins. Also it will not be possible to determine from the blockchain only which amount of USD was paid for the said bitcoins, only that the transaction was on a particular day and that the bitcoins where worth, on average, a certain amount on that day. Furthermore, btc exchanges are n…

This might play out for you. Or it might take to you to the same place it took Wesley Snipes.

Re: IRS Says Bitcoin Is Property

#207

Post by gnaritas »

sillysaurus3 wrote: post #192
gnaritas wrote: post #169

Earlier quoted context omitted.

Neither is your computer or your safe. Coinbase is very likely much safer for the average consumer than anything they'd do themselves.

That's not true. If I had kept my funds in a secure cold storage wallet, I'd still have them. There are plenty of techniques for keeping your coins safe. Just find one and use it. I've heard Armory is pretty good. Coinbase is far more dangerous in comparison, because they can go under at any time for any reason. Human greed is a thing. Always remember that Coinbase has to rely on some employees to implement their sys…

Are you the average user? I doubt it, what I said is very much true and you've offered nothing to disprove it.

Re: IRS Says Bitcoin Is Property

#208

Post by itbeho »

ChuckMcM wrote: post #135
loumf wrote: post #73

Earlier quoted context omitted.

Do you know (remember) the mechanics of how the AMT affected this? Were you given stock that you didn't have a chance to sell? My understanding that only the initial grant of stock and the subsequent selling are taxable -- and didn't realize the AMT affected this.

Note, the tax code changes every year and I'm not an accountant, just a victim :-) Whenever I have exercised an option, my taxes have included an AMT calculation based on adding in the difference in value between exercise price, and market price, of those options as additional ordinary income. When the AMT tax calculation yields a 'tax owed' number that is larger than the non-AMT version (which it always did when exe…

How would you determine market price for stock options in a startup that's not public yet?

Re: IRS Says Bitcoin Is Property

#209

Post by JumpCrisscross »

If I had more time on my hands:

(1) Launch a Bitcoin capital gains/losses tax approximation application (the "App") in beta. User keys in their Bitcoin addresses. App searches the block chain for the user's entry and exit times. App searches exchanges for the most favourable pricing source. App then returns an approximation of taxes owed/to be credited (e.g. in case of coins lost at Mt. Gox). App has a prominent disclaimer across the top warning against using it as tax advice.

(2) Bring on board a senior CPA with policy-making experience. Clean up the tax logic of the App under their guidance. Call buddies in the IRS and New York State Department of Taxation and Finance. Ask them to look over the tax logic of the App in exchange for dinner, drinks and equity. Move the disclaimer from the top of the app to the bottom.

(3) Call TurboTax and small accounting firms with any public posts about Bitcoin. Meet to discuss a partnership. Parlay into an acquisition.

Re: IRS Says Bitcoin Is Property

#210

Post by gnaritas »

comex wrote: post #200
gnaritas wrote: post #169

Earlier quoted context omitted.

Neither is your computer or your safe. Coinbase is very likely much safer for the average consumer than anything they'd do themselves.

Tell that to users of Mt. Gox or the many smaller sites that have lost bitcoins to hacks. Coinbase is probably better secured than that, but I wouldn't trust any Bitcoin bank at this point. Personal computers are bad too because of malware, but I'd say the average consumer would be considerably safer with a safe.

Try reading what I said, the average user isn't a trader and wasn't on Gox. You've offered nothing to disprove what I said.
Post reply on HN