Bitcoin says they don't care what the IRS says.
Take that.
IRS Says Bitcoin Is Property
211–220 of 317 posts
Re: IRS Says Bitcoin Is Property
#212What does this mean if a person bought a Bitcoin for $400 last year and now it is worth $583.03. What is the proper way to record this on a tax form? Will they have to pay tax now or when they sell the coin?
Re: IRS Says Bitcoin Is Property
#213> “The danger is the creation of an electronic black market, similar to the cash economy,” Joshua Blank, a tax law professor at New York University, said in a December interview. “That’s what the IRS wants to avoid.” I think demanding over 40% tax on a trivially worldwide transferable, hard to track, easy to secretly manufacture commodity is exactly the best way to create black market.
Those of us selling software have not frequently complained that we should get preferential tax treatment because our basis is zero and tax fraud would be almost too easy.
Re: IRS Says Bitcoin Is Property
#214Earlier 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.
Almost none of the complexity of the tax code has anything at all to do with it being progressive. The progressiveness comes from the rate structure, which takes under a page to specify.
Almost all of the complexity comes from dealing with what to tax, not how much to tax it.
Re: IRS Says Bitcoin Is Property
#215I believe "enforceability" is the key word here.
Re: IRS Says Bitcoin Is Property
#216What does this mean if a person bought a Bitcoin for $400 last year and now it is worth $583.03. What is the proper way to record this on a tax form? Will they have to pay tax now or when they sell the coin?
It sounds like no taxes would be collected at this point according to this:
"Do I need to file or pay taxes if I own Bitcoins? Not if you bought Bitcoins or any crypto-currencies with your own money. However, if you traded, sold, or used any to purchase something, then you might. If you were given Bitcoins as payment, as a salary, or as a gift/donation, this is income and should be reported as any other income you earn. If you sold any, spent any or even traded one coin for another, then this is a tax event. This probably means you either gained or lost some money on the of the coins you just disposed. Gain or loss, you are supposed to include the sale on your tax forms and include the profit or loss you made. This is taxable as capital gains."
- https://bitcointaxes.info/faq
But would it need to be marked on the tax form as owned property? At what value?
Re: IRS Says Bitcoin Is Property
#217Earlier quoted context omitted.
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.
As of 2011 brokerages are required to keep track of cost basis information.
Re: IRS Says Bitcoin Is Property
#218Earlier quoted context omitted.
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.
Sorry, you're right, I didn't provide enough detail.
If the average user can figure out how to use bitcoin, then they can figure out how to use Armory. Most people have an old laptop or computer that they can afford to keep disconnected from the internet. If it's not connected to the internet, then it's not susceptible to hacks. It also offers a way of doing secure backups, so that if your computer is lost in a house fire, you'll still have your coins.
Even if they don't have an old computer, spending $100 on one off of Ebay or whatever is possibly the best insurance payment they could make, because it's just a matter of time until any bitcoin exchange dies. Not only do you have yourself to worry about, but if you have children then you'll want them to inherit your wealth. Hard to do if your wealth vanishes because your preferred exchange went under.
Re: IRS Says Bitcoin Is Property
#219Earlier quoted context omitted.
Isn't the whole point of saying bitcoin is not currency, but property, that you're not allowed to do this kind of accounting? I'm pretty sure if I buy and sell the same stock throughout the year, I can't simply account for it using the stock's average for the year.
Special rules apply to stocks, principally because the IRS thinks you should have really good records for your cost basis. If you had acquired them through a dividend reinvestment plan (DRIP) average market price over time is exactly what you'd use.
"If you had acquired them through a dividend reinvestment plan (DRIP) average market price over time is exactly what you'd use."
I think that is allowed for mutual funds, but not stocks.
http://www.irs.gov/Help-&-Resources/Tools-&-FAQs/FAQs-for-In...
Re: IRS Says Bitcoin Is Property
#220Earlier quoted context omitted.
Are you the average user? I doubt it, what I said is very much true and you've offered nothing to disprove it.
Sorry, you're right, I didn't provide enough detail. If the average user can figure out how to use bitcoin, then they can figure out how to use Armory. Most people have an old laptop or computer that they can afford to keep disconnected from the internet. If it's not connected to the internet, then it's not susceptible to hacks. It also offers a way of doing secure backups, so that if your computer is lost in a house…
"If it's not connected to the internet, then it's not susceptible to hacks."
Or less susceptible, anyway... didn't Stuxnet hitch a ride on a thumb drive?