Bitcoin Forum

Here's fun, how might this work?

I'm a company, I want to reduce my profit to zero to not pay income tax. So at the end of every tax year, I invest my profit in Bitcoins, which are property, rendering a zero profit.

After N years, I "lose" the private key or my coins are "stolen", so we right off the property and close the business down. I now move to another country, miraculously find my private key, tumble the coins and buy a small Island in the South Pacific.

Would this be awesomeness?

Do that and tell us how it works out for you.

I don't need to. I don't give the illusion of paying taxes :)

There's a word for that I think it's fraud? This is similar to someone running up a credit card balance with no intention of paying it, then declaring bankruptcy. If they can prove you did it intentionally, you are in a world of shit.

Not a good idea. I'm sure there is some sort of international law that would prevent you from doing this

Of course it would be illegal in the state in which your company was registered...I wasn't suggesting it would be legal. But I was suggesting that you would be in a different country.

Tax matters aren't governed by international law, but by domestic law and by treaty. If the coins remained dormant for years, how would they know that they weren't actually stolen?

Ever heard of extradition? Country B captures you and sends you back to country A to face charges.

Well, people who really want will always find how to bypass a law. But i doubt this would work

No, probably not :) My mind just tends to wander in the afternoon...

I was just about to add that in. Im sure any country would want to comply with the US if they asked to extradite you.

Sure, but of course the easiest way to get away with not paying taxes is if the tax man doesn't think you owe him anything. If you "really did lose your private key" - you'd have to write off the coins as a loss.

Sure, but it's like with anything else - why would they be looking for you? You filed your documents, paid your bill, explained your losses...

Good point. The IRS is too lazy to dig that deep and keep track of you...

Well, if you reported some massive loss in terms of bitcoin, especially across multiple years, they might just have the intelligence to note the address the coins were stored in and check up on it in the future, and when they find that there have been outbound transactions from that address since you "lost" the private key...

Even better, you could get a commercial mortgage to buy the bitcoins (they're property after all right? :>) and that way you can fuck over both a bank and the IRS. That feeling of a job well done would help sustain you through the tedious days sunning yourself on a yacht somewhere tropical with a hot babe. Supermodels aren't usually the best conversationalists you know.

There's a way around that. Report them stolen, write it off on the taxes as a lost. Sometime in the future or right now it doesn't matter just send the coins to a new address but use a coin mix site. No way to find out where they went. As far as getting fiat for them, I don't recommend using bank transfers after pulling this off. One is better off exchanging for cash using localbitcoin (https://localbitcoins.com/?ch=169p) or some other site.

Investments don't reduce profit.  You would pay taxes on your profit as corporate income and then if you so choose you could invest the after tax earnings.  Of course you could do the same thing as an individual.

Whats better than a supermodel? A supermodel educated on the workings of bitcoin.

Simple. Stage a theft, then tumble the coins, then "notice" the theft and report it as a loss.

I would learn to overlook a supermodel's shortcomings.

+1

It would be like Goxxing the IRS :)

I'm in a room containing 15 developers. Penis count? 15.

My expectations are low.

Good point. Pay off your taxes with your credit card and then declare bankruptcy. I would rather piss off the credit card company than the IRS.

The credit card companies aren't trying to get money out of me, I don't use them. The government feels entitled to take my money to fund its wars, its domestic surveillance programs etc. They are welcome to try.

Karpeles did it.

I guess it's true that the average american has taken 30 years longer than any other western population (courtesy of snowden) to even begin to discover that government is about repeating a lie over and over and over ad infinitum until a good proportion of the population become converts, and skeptics are shouted down for being unpatriotic or right wing deniers: think global warming, fiber is good for you, unnecessary wars, vegetables are good for you, salt is bad for you, weapons of mass destruction, hope and change etc. Americans defend paying taxes even though the banks have been given well over $35T of tax payers' money to keep those totally bankrupt zombies afloat and to stop their CEOs going to jail. Why not just print the comparatively paltry and trivial $2.6 trillion that comes in each year as tax revenue instead of requiring 2+ million accountants to process 13K pages of tax rules compared with say hong kong's four pages?

Most Americans are so well trained that they have been able to ignore Snowden's revelations and continued their slavish devotion to the state. There has been amazingly little outrage over it.

sounds like a game show, and if i was a contestant

"i will take: 'who is mark karpeles' for $500"

Correct. 

There are ways to reduce or eliminate tax liability (many huge corporations actually have hundreds of millions of dollars in tax CREDITS).... And there are moves you can do even as a tiny llc or sp to legally avoid taxes, but I doubt you'll find them on a bitcoin forum.  :)

Perhaps it works differently in the US, although I would be surprised if it worked that differently. Do US companies pay tax on income rather than profit? I would be surprised if that was the case.

If I buy a new laptop, it is property owned by the business and it reduces my profit and hence my tax. If a Bitcoin is property, why is it treated differently?

(Genuine question)

Well, its because an investment is not considered a depreciating asset, whereas a computer is. 

(Even equipment like computers, is not always immediately tax deductible. Some of it must be ammortized over
a period of several years depending on what kind of equipment it is)

Meanwhile US still can't capture Snowden