Bitcoin Forum

My reply:

You are saying if someone gives me a $50,000 gift in Bitcoins there is no tax or reporting requirements?

I found this requirement in a few seconds on a Google search:

I.R.C. § 6115 provides that charities (donees) must

(a) Disclosure requirement
If an organization described in section 170 (c) (other than paragraph (1) thereof) receives a quid pro quo contribution in excess of $75, the organization shall, in connection with the solicitation or receipt of the contribution, provide a written statement which—

(c) Charitable contribution defined
For purposes of this section, the term “charitable contribution” means a contribution or gift to or for the use of—
(1) A State, a possession of the United States, or any political subdivision of any of the foregoing, or the United States or the District of Columbia, but only if the contribution or gift is made for exclusively public purposes.
(2) A corporation, trust, or community chest, fund, or foundation—
(A) created or organized in the United States or in any possession thereof, or under the law of the United States, any State, the District of Columbia, or any possession of the United States;
(B) organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals;
(C) no part of the net earnings of which inures to the benefit of any private shareholder or individual; and
(D) which is not disqualified for tax exemption under section 501 (c)(3) by reason of attempting to influence legislation, and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.
A contribution or gift by a corporation to a trust, chest, fund, or foundation shall be deductible by reason of this paragraph only if it is to be used within the United States or any of its possessions exclusively for purposes specified in subparagraph (B). Rules similar to the rules of section 501 (j) shall apply for purposes of this paragraph.
(3) A post or organization of war veterans, or an auxiliary unit or society of, or trust or foundation for, any such post or organization—
(A) organized in the United States or any of its possessions, and
(B) no part of the net earnings of which inures to the benefit of any private shareholder or individual.
(4) In the case of a contribution or gift by an individual, a domestic fraternal society, order, or association, operating under the lodge system, but only if such contribution or gift is to be used exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals.
(5) A cemetery company owned and operated exclusively for the benefit of its members, or any corporation chartered solely for burial purposes as a cemetery corporation and not permitted by its charter to engage in any business not necessarily incident to that purpose, if such company or corporation is not operated for profit and no part of the net earnings of such company or corporation inures to the benefit of any private shareholder or individual.
For purposes of this section, the term “charitable contribution” also means an amount treated under subsection (g) as paid for the use of an organization described in paragraph (2), (3), or (4).

Haha.  You better get an accountant.

If you would read the publication instead of picking out certain things that fit your point of view:

You are saying if someone gives me a $50,000 gift in Bitcoins there is no tax or reporting requirements?

Why someone would want to do such a thing baffles me, but they're your bitcoins.

You need other information and you have to review the specific citations to understand the exceptions.

If you would read the publication instead of picking out certain things that fit your point of view:

Or I just go to wikipedia and find the exceptions.

If the information is incorrect maybe you should edit the page so we can all benefit.

Thanks for these comments Mr. Mayer, which make sense. You are clearly more knowledgeable about Bitcoin than I am.

screwball Bitcoin schemes and lose your money, or, in this case, face prosecution for tax evasion.

That is some kind of weird false choice that makes no sense. 

When people say "Bitcoin was created for ..." that is religion and people who say that usually have some sort of agenda akin to a religious belief.  Bitcoin can be used for whatever you want to use it for.  If you want to use it as tool to bypass governments then you can do that (there is not just one "government").  If you want to use it to sell your 99 cent product and avoid the credit card fees you can do that.  If you want to invest you can do that.  If you want to avoid banks you can do that.  And on and on.  Users can use Bitcoin and still comply with regulations if they want.  Bitcoin just gives more choices.

Well said.

Users can use Bitcoin and still comply with regulations if they want.  Bitcoin just gives more choices.

Tirades about how forcing people to do things against their will is good for society in 5...4...3...2...

Really, and what exactly does that mean?  The people who bring this up and say you can't use Bitcoin for some purposes because some anonymous person wrote something in a posting or put some cryptic message in the genesis block follow some religious belief.  Try using common sense instead of looking for some mystical message in the block chain and making up some kind of interpretation.

If you work for chickens and you eat the chickens you still are supposed to pay income tax on the value of the chickens even though they were never converted to fiat. 

The point that is being missed is that only a fool tells the taxman what they won't find out unless you tell them in the first place.

hide your tracks.

Bitcoin income or gift can be taxed but not as easy as fiat.
They are some difficulties taxing it even if there are traces between the real person and the wallet:
- all taxing laws are made for fiat values
There is no law what you can break around bitcoin because it is nowhere a law about bitcoin.
- bitcoin is nowhere recognized officially as currency and their no rule how to correspond a bitcoin to a certain amount of dollar
Should be taken a 1 cent/bitcoin value as it was 3 years ago or 266$/bitcoin or something between ?
- Who is owning certain bitcoins ? Who has the private keys or who has the wallet or who has the wallet password or who has the passphrase ?
They are a lot of philosophical questions around which could be solved clearly sometimes but sometimes not.
- Even if the bitcoin transactions are recorded but who executed them ?
Let us say I you invite your neighbor and you ask him to make a certain bitcoin transaction and you give in just the wallet password have you executed the order or your neighbor ?
You may think that you in the fact.
But what about if your grandmother executes a bitcoin transaction but she cannot keep in mind the password so every time she transfers bitcoins she asks you to give in the password which you keep it for her.

What is if you make a gift to a friend of 10.000 BTC which is stored on an address which was created 3 years ago(when the bitcoin was 1cent) but you don't make any transfer but you give to him the private key then he transfers his bitcoins to another address. Gave you to him just a valueless hash or  a value ? If it was a value than 100$ or 2.5 million $ ?

Of course there can be more easy situations where they can say how much tax you should pay for ex. when you are a vendor and selling cars for bitcoin but bitcoins are immediately transformed to fiat.

Biggest question is if BTC is considered a currency or commodity by goverments around the world.

Ummm, no. There are several bigger questions, not the least being the question of what precisely is a 'bitcoin'?

Is it the private key? Is it the number in the shared public ledger, the blockchain? At present, the asset you are referring to as a 'bitcoin' has no legal definition.

For all intents and purposes people are trading coded numbers amongst themselves that have exactly zero legal standing.

Your bitcoin asset is whatever you control on your own behalf. Look in your wallet.
The private key is something you can share, like a PIN code. If your uncle gives your his PIN-code to a CC, it's still his CC and founds.

The blockchain is where the transactions are stored. The blockchain is Bitcoins central bank.

It's really not that complicated unless you want it to be complicated.

It is complicated ... you have conveniently avoided defining what is a "bitcoin".

You say "look in my wallet" ... do you even know how to do this? In the wallet is the private keys (and some other stuff). I control the private keys, but you say they are not the asset. Then you say the ledger at the central bank is the bitcoin ... but I do not control that absolutely.

Can you define precisely what is this bitcoin that one owns (in the sense of property law)?

The question was not about whether you should or should not comply with any law, that is a completely different issue.  The issue is just whether reporting transactions is required.

As a thought experiment, what if Satoshi had said the purpose of Bitcoin was to make all transactions public and verify all taxes are paid?  He could have suggested that all users should publish their Bitcoin addresses and provide them to your tax collectors.  Would that change how you use Bitcoin?

I cannot see any reason not to report it. It is a value, just as if it had been a lump of gold, a car or paper with a random number issued by a national bank.

The funny numbers in the banks fragile databases have legal standing.

Sure. But the carrier of value is irrelevant. It's weather or not you control it on your own behalf(IOW-owns it) that matters.

you are getting there .... one can control the private key, but not absolutely the blockchain ... so is there really any ownership? (unless the State decides to give the blockchain legal standing.)