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IRS Says Bitcoin Is Property

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Re: IRS Says Bitcoin Is Property

#251

Post by twoodfin »

scotty79 wrote: post #158
twoodfin wrote: post #144

Earlier quoted context omitted.

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.

How could wages possibly keep up with the inflation that such a scheme would create? If they don't keep up, the government needs to print more money to provide more benefits to keep people from starving, and you have a pretty vicious circle.

Re: IRS Says Bitcoin Is Property

#252

Post by humanrebar »

sp332 wrote: post #141
humanrebar wrote: post #130

Earlier quoted context omitted.

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.

You could dispense an EIC on a paycheck-by-paycheck basis.

Re: IRS Says Bitcoin Is Property

#253

Post by patmcc »

praptak wrote: post #232
patio11 wrote: post #213

Earlier quoted context omitted.

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.

Tax fraud only became easy with the possibility of anonymous acceptance of payments. Now with Bitcoin you and everyone who produces intangible goods can officially complain about not getting preferential tax treatment.

Tax fraud has always been easy, why do you think restaurants/barbers/plumbers/etc. prefer cash so strongly?

The official line is that credit and debit cards have high transaction fees, and that's true (especially for very low and very high prices), but cash isn't free to accept (security, counting, counterfeit risk, etc.), and yet service industries universally prefer cash over any other payment method. Why? Tax fraud.

Re: IRS Says Bitcoin Is Property

#254

Post by humanrebar »

tzs wrote: post #214
humanrebar wrote: post #130

Earlier quoted context omitted.

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.

I agree and you misunderstand. I was saying that, as far as the tax code is concerned, complexity can be treated as orthogonal to progressivity.

I also think that complexity is a justice issue since it favors those with inside knowledge, lobbyists, and the resources to have full-time tax specialists at the expense of everyone else.

This second point is a big deal. It's why we see headlines about how multinationals are legally paying ridiculously low tax rates. It's a headline because it's not fair on its face, despite how legal it is.

Re: IRS Says Bitcoin Is Property

#255

Post by evjim »

twoodfin wrote: post #251
scotty79 wrote: post #158

Earlier quoted context omitted.

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.

How could wages possibly keep up with the inflation that such a scheme would create? If they don't keep up, the government needs to print more money to provide more benefits to keep people from starving, and you have a pretty vicious circle.

We are already partially taxed by inflation. I think about 1% per year. Minimum wage should be matched to inflation and living costs.

Obviously it could cycle out of control if the amount of money printed wasn't regulated. But it could be a decent method to cut no-value-add industries (IRS, accounting).

Job mobility could be higher if you didn't have to file with the government every time you got hired. So the worker would have more leverage over the employer if they did not keep wages sufficient.

Additionally, there are many untaxed workers right now that we would then be taxing if inflationary or single tax was used. Ex, waiters, other tipped jobs, sketchy corner store that only take cash, illegal immigrants who work under the table

Re: IRS Says Bitcoin Is Property

#256

Post by npizzolato »

mindcrime wrote: post #199

“It’s challenging if you have to think about capital gains before you buy a cup of coffee,” he said. This is exactly why we need to quit caring what the IRS, Fed, Treasury, Inland Revenue, etc. think of Bitcoin, and focus on it's use (along with Tor, tumblers, and other technologies) as an untraceable, anonymous crypto-currency that lets us avoid dealings with the IRS and agencies of their ilk. Will this work against…

Let me know how that works out for you when the IRS wants to know how you bought that house, car, and boat with all the money you never reported. When the IRS shows up at your door and your answer is "hahaha sorry, it's all untraceable and anonymous, you can't know how much i own!", I'm sure they'll throw their hands up and walk away in defeat.

Re: IRS Says Bitcoin Is Property

#257

Post by ojiikun »

DennisP wrote: post #148
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).

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

Similarly, there is already DarkCoin, which can do anonymous(ish) payments via DarkSend. Whitepaper:

http://www.darkcoin.io/downloads/DarkcoinWhitepaper.pdf

Unlike ZeroCoin, it has actually been built.

Re: IRS Says Bitcoin Is Property

#258

Post by mattm »

bduerst wrote: post #163
phogster wrote: post #142

Earlier quoted context omitted.

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.

It's more complex than that because both parties have to report the dollar amounts of the goods/services in the barter exchange. Whoever comes out on top has to report income, and whoever comes out on bottom has to report the expense.

Assuming the barter trade was even, the income and expense would cancel out thereby no taxes would be owed.

Re: IRS Says Bitcoin Is Property

#259

Post by tellmetwice »

loumf wrote: post #221
oijaf888 wrote: post #190

Earlier quoted context omitted.

It seems pretty backwards compared to any other sort of creation. If I build a house, my basis is how much I spent building it, not how much my neighbor's house is worth.

I don't think this has anything to do with basis. The difference is that mining the coin is considered a tax event -- so you pay tax on the mined value -- with the cost being deductible. This makes sense because the coin is liquid and can be sold in part without reducing the utility of the remainder. That is not true of a house. It isn't as liquid and it's hard to sell part of the house to cover tax.

so if you mined gold you get taxed at the moment you caught sight of it and not when you take it to market?

And if you knew how mining pools worked it takes it on a totally different course with shelved shares, etc

Re: IRS Says Bitcoin Is Property

#260

Post by sokoloff »

loumf wrote: post #223
itbeho wrote: post #208

Earlier quoted context omitted.

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

It would not be prudent to exercise options that are not liquid. There is no benefit to doing that. You don't, for example, usually get meaningful voting rights with those shares.

You might want to exercise options before a new priced round (series B, C, D, etc) or before an S-1 filing. Yes, this exposes you to some adverse treatment (AMT for ISOs, and the risk of paying income tax on shares that later crash or become worthless), but it also establishes an ownership date (for the LTCG holding period) and a basis (which will presumably be higher in the next priced round or IPO, even though they're illiquid now.

(And as kalkin observes, if you're leaving the company with in-the-money options.)

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