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Court Rules IRS Can Seek Information on Bitcoin Customers

wsj.com

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Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#61

Post by justin66 »

paulsutter wrote: post #52
Fluxenein wrote: post #48

Earlier quoted context omitted.

So, if an individual buys BitCoin with some capital to not pay taxes for said amount of capital ,is he evading or avoiding?

IANAL but example taxable transactions might be to sell bitcoins for a gain, or to use appreciated bitcoins in a barter transaction. Losses are also taxable transactions, but in a good way. Mining is awkward, since I believe mined coins are taxed as income on the day they are mined, even if you don't transact. Best to talk to an accountant, of course, and not rely on the advice of a random HN commenter like me.

> Mining is awkward, since I believe mined coins are taxed as income on the day they are mined, even if you don't transact.

The IRS has indicated that bitcoins are property and taxed as such, so that seems unlikely. Do you have a source for this?

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#62

Post by EthanHeilman »

paulsutter wrote: post #18

You can't omit Bitcoin transactions from your tax return just because they seem anonymous. Concealment is the very definition of tax evasion, "Evasion... involves deceit, subterfuge, camouflage, concealment, some attempt to color or obscure events or to make things seem other than they are" Quoting in full since its among the most misunderstood yet important distinctions in tax: http://www.irs.gov/irm/part9/irm_09-00…

It would be hard to argue that Bitcoin transactions are concealment since they are completely public and very hard to transact, purchase or redeem without linking a great deal of personal information to your identity.

There are ways of buying and selling Bitcoins that do not require you give all your personal information (for instance localbitcoins) but you will likely pay a markup (33% was a number that someone quoted to me) far greater than your taxes and you will only be able to move small amounts of money.

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#63

Post by tyingq »

paulsutter wrote: post #18

You can't omit Bitcoin transactions from your tax return just because they seem anonymous. Concealment is the very definition of tax evasion, "Evasion... involves deceit, subterfuge, camouflage, concealment, some attempt to color or obscure events or to make things seem other than they are" Quoting in full since its among the most misunderstood yet important distinctions in tax: http://www.irs.gov/irm/part9/irm_09-00…

>You can't omit Bitcoin transactions from your tax return just because they seem anonymous

I agree if this is trading, where there are net gains (or losses) from fluctuations in value.

I assume, though, that a notable number of bitcoin transactions are just buying and/or selling merchandise. Buyers convert existing money that's already reported to the IRS (like their salary) into bitcoin, and buy something. Sellers get the money, convert it to dollars, and then deposit into their regular bank account, which then flows into their company books as revenue (again, reported to the IRS).

I'd be curious to know how much of the activity on coinbase was this sort of thing, versus buy/hold/trade speculation.

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#64

Post by Chris2048 »

eschaton wrote: post #34
Chris2048 wrote: post #30

Earlier quoted context omitted.

What country do you live in that's solved the healthcare and unemployment problem? > people who use what we all pay for, then try to not pay for their part by evading taxes But tax is not flat rate. The poorest often pay the least tax, but use public facilities the most; how is that "pay[ing] for their part"?

The poorest often pay the proportion of their income they can least afford to lose in taxes: A person who makes a million a year paying 50% is more able to afford it than a person making $10000 a year and paying 10%, because there's a nonzero floor to the cost of living. Learn some about diminishing marginal utility. (Also note that you need to consider all taxes, not just income taxes, when considering tax burden.)

What does "able to afford it" mean?

If we assume a fixed, minimum cost of living, a richer person can always afford more since they have more money.

What can be afforded, and what is fair payment for public services used are different things. OP was talking about "paying fair share" of public services used.

Also, comparing the very bottom with the very top is extreme. There are plenty more in the middle.

> diminishing marginal utility

What relevance it this to fair tax on individuals?

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#65

Post by smokeyj »

ryaniscool wrote: post #36
jrockway wrote: post #31

Oh good, another list I'm on. I'm going to have to start making a list of the lists. Bitcoin seems obviously like money to me. But I wonder when the IRS is going to start cracking down on other electronic money you can earn. Think about computer games where you can buy credits, or earn them by playing. That sounds like income tax evasion to me; you're getting paid in Green Rupees instead of US Dollars, but you should…

In the linked article, the IRS is quoted as saying they are treating BitCoin like property. Essentially, they are looking to tax people who made a profit from selling Bitcoins using Coinbase. They don't seem concerned with the currency aspect at all.

Say I buy two bitcoins, A and B, and combine them into a wallet C. Bitcoin A was purchased for $100 and Bitcoin B was purchased for $1000. If I sell half of wallet C for $500 - can I pick "which" bitcoin was sold? Because depending on which coin was sold the tax implication may change.

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#66

Post by Chris2048 »

oelmekki wrote: post #33
Chris2048 wrote: post #30

Earlier quoted context omitted.

What country do you live in that's solved the healthcare and unemployment problem? > people who use what we all pay for, then try to not pay for their part by evading taxes But tax is not flat rate. The poorest often pay the least tax, but use public facilities the most; how is that "pay[ing] for their part"?

> What country do you live in that's solved the healthcare and unemployment problem? What has unemployment to do here? Are you saying that with no taxes, there is no unemployment? (for reference, I live in France) > how is that "pay[ing] for their part"? This is exactly paying for their part: everybody feel their effort as the same as their neighbor. And if you're about to say that poor people are abusing that and st…

I'm linking "people in the street" to unemployment, because you didn't mention how it relates to taxes.

Make statements like "I live in a country where we're not OK seeing" only if the solutions to these problems in your own country is stable - many European countries aren't clearly so, so the idea that these are just matters of public choice isn't fair.

Choice WP snippets:

"The French healthcare system was named by the WHO as the best performing system in the world"

"the rising cost of the system has been a source of concern"

The latter seems to be a common problem, and is what I mean by "stable".

> everybody feel their effort as the same as their neighbor

If this is true, do the rich use public services proportionally more wrt their tax contributions?

What does "feel" the same as their neighbor mean - a service costs $10, my neighbor pays $1.50, I pay $8.50, which is fair because I earn more? Who says I didn't work harder in order to earn more; Where does my neighbor share the burden in that? Maybe I contribute more value to society, which is why I earn more; Why is my reward for that reduced?

Aren't the fixed tax band fairly arbitrary? Let's actually work to reduce corruption and un-fair money-making, but otherwise tax people in proportion to the value they get from society.

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#67

Post by olegkikin »

smokeyj wrote: post #65
ryaniscool wrote: post #36

Earlier quoted context omitted.

In the linked article, the IRS is quoted as saying they are treating BitCoin like property. Essentially, they are looking to tax people who made a profit from selling Bitcoins using Coinbase. They don't seem concerned with the currency aspect at all.

Say I buy two bitcoins, A and B, and combine them into a wallet C. Bitcoin A was purchased for $100 and Bitcoin B was purchased for $1000. If I sell half of wallet C for $500 - can I pick "which" bitcoin was sold? Because depending on which coin was sold the tax implication may change.

I think you have to count the earliest purchase first for taxes. So you can't use the $500 base until you exhaust all of the $100 when counting buy-sell events.

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#68

Post by smokeyj »

ceejay wrote: post #51
delegate wrote: post #40

Earlier quoted context omitted.

>I take it you live in a country where people are ok to see other people living off the street because they presumably "failed"? I live in Spain, there's no such thing here. What I propose is for people to have the ability to specify what their taxes are spent on. I dislike it when government wastes tax money on useless or corrupt projects, military, police, surveillance and other such things, which I personally woul…

There appears to be some merit to what you're proposing. But what about long-term issues, such as climate change, etc. How are a group of people going to convince a large enough group to pay money for it, and who is going to enforce it? Also, things that don't affect majority of people will probably never get enough funding. For example blindness. How many blind people do you know? And do you think anyone is going to…

OP was making a principled stance for a more direct democracy. When you argue against a more direct democracy, doesn't that make you scratch your chin and wonder if you really support democracy at all? Do you really support your fellow man and his pursuit of happiness, or do you know what's best for him and wish to dictate how he lives. Based on what you wrote, you don't support democracy at all - which may possibly be a valid view.

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#69

Post by digler999 »

I get that taxes are one of the few certainties of life, but this article makes me think of yesterdays "how to hide $400m" article about tax sheltering and offshore incorporation.

I wish there were a way to ruin tax sheltering for the wealthy by finding out the exact formula for what they're doing (say register a business in the Cook Islands ), then commoditizing that via an online service (like Wordpress does for websites), and using bitcoin. Now the masses can pay $29.95 to have a VPS on the Cook Islands, set up their bitcoin wallet on it, and have their own little tax-exempt haven.

Try to structure the system the exact same way the rich people do it, so that authorities necessarily have to shut down the rich at the same time.

Re: Court Rules IRS Can Seek Information on Bitcoin Customers

#70

Post by AtheistOfFail »

smokeyj wrote: post #65
ryaniscool wrote: post #36

Earlier quoted context omitted.

In the linked article, the IRS is quoted as saying they are treating BitCoin like property. Essentially, they are looking to tax people who made a profit from selling Bitcoins using Coinbase. They don't seem concerned with the currency aspect at all.

Say I buy two bitcoins, A and B, and combine them into a wallet C. Bitcoin A was purchased for $100 and Bitcoin B was purchased for $1000. If I sell half of wallet C for $500 - can I pick "which" bitcoin was sold? Because depending on which coin was sold the tax implication may change.

I've always been told to cost average this.

However, I've never had to sell a single Bitcoin.

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