Bitcoin Forum

On Intuit's TurboTax blog, they posted an infographic that explains Bitcoin and mentions its use to avoid taxes:

http://blog.turbotax.intuit.com/tax-tips/bitcoins-the-taxless-currency/07182011-7115 (http://blog.turbotax.intuit.com/tax-tips/bitcoins-the-taxless-currency/07182011-7115)

It's always nice to see the Bitcoin meme spreading!

I was a bit confused when I read this.  TurboTax endorsing bitcoin as a means of legal tax avoidance?  Cool

Tax avoidance is legal, tax evasion isn't :D

So if there isn't a law in your country definitively dealing with bitcoin , there may be, depending on how your legal framework treats these situations, nothing illegal about storing wealth in bitcoin.

An example of Tax Avoidance would be using loopholes in the system.  An example of Tax Evasion would be lying about the amount of money you made on your Tax Return.

Wow... TurboTax? Really? We're just inches away from mainstream  :D

Er, this doesn't give much of a reason for how it avoids taxes.  The only argument I can discern from the graphic is that it's not taxable because the bitcoins are produced "without the involvement of government or banks".

Um ... yeah.  Good luck using that argument with an IRS agent.

(Note: this is separate from the issue of whether you can conceal your transactions from the IRS with bitcoin, keeping the government from ever finding out about this barter/private currency/whatever income.  But that's tax evasion, which is illegal.  That doesn't mean the TurboTax graphic's argument is remotely plausible if you ever do have to justify why you didn't list it as taxable income.)

I'm not so sure... and I'm also not too savvy on the differences between tax law in the US vs. Canada and Europe. But suppose I'm on vacation in Brazil and I buy an amethyst necklace for 20 USD. Then, a few weeks later, someone discovers the cure for cancer that requires amethyst and suddenly a gramme of it rises in price to several thousand dollars. Technically, it makes me a millionaire, but for tax purposes, at least in Canada, I wouldn't have to declare it till I started selling the amethyst gramme by gramme... and then I'd only have to declare it as income derived from the appreciation of an asset. The necklace itself would still be tax free... if I moved away from Canada, whatever bits of the necklace I still kept would still be tax free, etc.

On a related note, a merchant could probably easily hide all evidence of having received bitcoins, and then record any product dispensed in return for those bitcoins as a "promotional giveaway", deducting the "forgone income" on their taxes.  Not recommending it, but I don't know how they'd enforce this if the buyer didn't say anything...

Same in most parts of europe.

BTC are not money legally ;) So...

...I operate a mining farm, all expenses are expenses ;) Nice. Recudeds my tax income.
...all sold BTC are income. Good. I need some - dont wan to run at a loss ;)

...all KEPT btc are inventory - and unless I get really large otherwise, this is not reported, as I report profit/loss, not goods are hand ;)

So, I sell some, to pay and expand, and keep some fo which I dont pay income tax until I sell them and get "real" currencyl.

Real and not currency totally in the definition of the law here ;)

yes.  if you keep them they're not taxable, but if you sell them for the currency of your country, they are.  turbotax didn't make this even slightly clear with their little infographic.

the real question is how is income from selling them taxed?  long- or short-term capital gain?  which is why i think the client needs to be able to send specific coins - so those bitcoin which were mined more recently, and have a higher cost of production [for miners], can be exchanged.

if Bitcoin are taxed as hobby income (in the US - a pleasant and peculiar tax designation...), what can be offset?

in any case, it's remarkable to see an entity like turbotax deal with Bitcoin - it'll do us good.  i doubt the information they're putting out about it will remain unchanged, however.

If I were the IRS I would just wait until he'd encash the BTCs or when he's receiving deliveries with no USD transactions associated to them.

Nah, for me they are taxes like... well... normal capital gins tax, 19% like all income I have ;)

Simplified taxation for entrepeneurs ;) I love it.

Gotta submit this to the John and Ken Show.

I've always used TaxAct software, so I thought I would see what they say about bitcoins:


Here is the response I got:

Turbotax is one of the last companies I would have expected to talk about bitcoins.

Maybe in the 2012 software, they'll include the question, "Have you mined or sold any bitcoins this year?"  Rofl.  :D

Are you sure?  The IRS pages linked above suggest that merely receiving bitcoins would count as barter income and so is taxable at its market exchange rate to dollars :(

no, i'm not sure.  but that appears to be the consensus here, among those who claim (such claims taken with the appropriate number of salt grains) to have had tax-preparer advice and filed that way.

i can't really say i believe any of the info that's out there right now - including that info from the IRS, who have not exactly been stellar, even when it comes to interpreting their own rules.

i think that, realistically, we'll just have to wait for some poor slob to get taken to court.  just hope it isn't you or i.

Spelling-corrected version of my response:
I like some of the inforgraphics too, but fail to understand why Bitcoin would be the “taxless currency.”

An accountant I know pointed me to IT-95R
http://www.cra-arc.gc.ca/E/pub/tp/it95r/it95r-e.txt

when I asked about the tax implications of holding a currency experiencing hyper-deflation (not guaranteed to continue).

Note that bitcoin is not actually a “foreign currency” because it is not actually backed by any government. They are backed by proof-of-work and the anonymized public transaction history.

If you're growing say cucumbers in your backyard and pickled them for storage. How would your taxman view that? Logically it seems to me that if you're not selling away your pickles, then there's no tax. But if you start selling them or trading them regularly on significant volumes, then there might be a tax.

The simple answer is, once they realize there is money flowing - they will want their piece of the pie. Of course, that could have unintended consequences of spurring growth into bitcoin in general, since if you don't exchange it at the 'edges' for anything, how do you tax the blockchain?

You don't. Pure bitcoin transactions with no edge currency transfer would fall out of the domain of conventional trade, at least for a while. Perhaps long enough to incubate some serious growth.

Right, cucumber growing would be like Bitcoin mining, and I agree the IRS probably doesn't see that as income.  But if you trade cucumbers for carrots, the IRS sees that as barter income, which they claim is taxable (at least if over a certain volume) at the market rate for what you received.  So it would follow if you traded bitcoins for condoms, they would view the condoms as taxable income at their market value  :-\

Example 3 on Page 19 seems like the most relevant tax information... talks about a barter club giving people credits to use.


http://www.irs.gov/pub/irs-pdf/p525.pdf

So, you should record taxable income when you mine or receive bitcoins for any purpose at the value of the bitcoins at that time.  Then, at the time you sell or use said bitcoins, and they have increased or decreased in value, you would record a capital gain/loss in the extended amount of the difference between the value of the bitcoins at time of receipt, and the fair market value of the goods/services purchased with the same number of bitcoins.

Well, that f***ing sucks.

Why does it suck? You are only paying if you are MAKING money, profit, income, Earning, dropping fat stacks, be happy you arent in debt.

I guess if you wanted to volunteer information on totaly anonymous and unconfiscatable transactions in a virtual currency it might suck.

Tax man- "Do you have any bitcoin income to declare?"

You- "What are bitcoins?"


Also did an article on my bitcoin blog pointing out the errors in turbotax's little infographic http://www.bitcoinjunkie.wordpress.com (http://www.bitcoinjunkie.wordpress.com)

If tax laws in the US are anything like they are here, then tax agents are reaching beyond their scope when they give an opinion on how something new will be treated for tax purposes and you're better off asking for a private ruling from the Tax Office than relying on the Tax agent's opinion.

Interesting idea.


I think it's quite irresponsible of Intuit to even recognize Bitcoin, much less comment on its tax implications. Their lawyers should know better.

Taxman - "the things that you buy and sell on Mt. Gox, the exchange which we have receipts of being funded by transaction you've made with an intermediary called Dwolla. Still want to play dumb?"

Give it up on the anonymity routine guys. Unless you are mining and hoarding with no tie to the exchanges, this isn't an anonymous game for you all.

It sucks because if I mine just 1 BTC, then, to stay compliant with the law (which would be a nice bonus regardless), I have to report that "income" at its present USD exchange rate, even though:

- I haven't converted it into USD
- I may *have* to convert it just to pay the taxes on it
- it could be worth less when I do convert it, meaning I have to keep records just because of this tiny transaction.

And remember, even if I get bitcoins, that doesn't mean I made a profit!  I have to deduct the cost of the mining rig I put together to get that, which (in the case of receiving just 1 BTC) is a lot more than revenue.  Now, if the IRS actually allows those deductions, it's not so bad.  But really, how much crap do you think you'll have to go through when they see you trying to deduct high-end computing/graphics equipment, and audit you, and you have to convince them the machine just sat in the corner and computed hashes?

Most likely outcome is that they'll declare some arbitrary fraction of its cost to be "personal use" and non-deductible, and then fine you for not guessing that number.

F*** that.  From now on, I'll shut up about how many bitcoins I have, and I'll leave it to them to prove I know the trapdoor information about this or that elliptic curve (i.e. the private keys to certain addresses, in case you missed the reference).

EDIT: OTOH, if the IRS decides to be cool and accept payment directly in BTC, that's one more argument the haters can't use  :D "Bitcoin's stupid because, unlike the dollar, you can't pay your taxes in it."  "Actually, you can.  See this IRS ruling." "Oh.  Nevermind!  Wait, I've got another one..."

Say I play World of Warcraft and I kill a boss and get an item worth 10 gold. If the fair market value of that 10 gold is $5, do I have a taxable gain of $5? (As I understand it, the answer in the United States is "nobody knows".)

Except, if you just buy Bitcoins, using US dollars, then in that case the BTC shouldn't count as income, right?  Because, you have already paid income tax on the US dollars, and now you are just spending them to buy something.  At most, you should just have to pay a sales or use tax (or a VAT)...

E.g., if I used USD$100 to buy myself a gift card worth $100 at Borders (say), then the gift card shouldn't count as income.

However, if those gift cards later became rare & valuable collector's items, then I can see paying capital gains on the appreciation in value.  Same as for the BTC, if they appreciate.  But, you only have to pay capital gains if/when the item is sold.  What if the Bitcoins appreciate to the point where I can use 1 BTC to buy a million loaves of bread from a baker who accepts BTC?  Then do I have to count the bread so purchased as capital gains in a barter trade?

I would guess the IRS isn't interested in WoW gold.  Although that might be a mistake on their part.  Some people have made a lot of money off of Chinese sweatshops that play WoW and rake in the gold...

Playing WoW would probably be regarded as a hobby here and any income from it treated as hobby income.  While you can sell WoW gold for real money, the purpose of the game isn't to generate something of real world value.  Bitcoins, on the other hand, are intended to be a currency and there are no non-financial reasons for mining/buying them - whether people mine them or buy them, trade them or hoard them, they are doing so in expectation of a financial return - that's likely to influence how they are treated for tax purposes as opposed to WoW gold, frequent flyer points, or Facebook credits.

As far as I know the tax question hasn't been settled anywhere yet, but I do recall a Guardian article which suggested that in the UK and Australia, the tax offices would most likely treat Bitcoins as an asset.

They are definitely interested in businesses that extract money at the end. For example, if I kill WoW bosses for money and sell those items on eBay, there's no question the IRS wants me to pay income tax on the dollars I get. I can deduct my basis in the item and if I really do play WoW for profit, I can deduct my reasonable business expenses too.

The question is -- what if I never pass through to dollars? What if I earn Bitcoins for consulting -- how is that materially different from getting an item for killing a boss on WoW? And if I buy hardware with my bitcoins, how is that materially different from buying an item at auction in WoW?

The problem is that if they're not taxable if they don't contact a real currency, then you really can bypass income and sales taxes. And if they are taxable even if they don't contact a real currency, then playing WoW could run up a tax bill even if you have no intent to ever cash out.

Whether or not you intended to earn a profit only matters for tax purposes if you didn't make a profit. If you do make a profit, it matters not one bit whether it was accidental or by design.

I think the real lesson here is how f**ked up the current taxation situation is.  Of course bitcoin represents an opportunity to change that without going through representative government (ie. nothing will change).

The reason I specified "here" (Australia) in my post is because different laws apply in different jurisdictions.  Not all profit is regarded as taxable income here.  The most well known example of that is us not usually having to pay tax on gambling wins or on income generated from hobbies.

Intention also matters here when the Tax Office is determining whether an activity is a hobby or a business.  If it's a hobby, the income and profit aren't taxable but nor can you claim deductions or losses.


http://www.ato.gov.au/corporate/content.aspx?doc=/content/00199712.htm

It's a good time for this topic to come up as it's tax time in Australia right now and people need to make choices about whether or not they're going to declare Bitcoin income and if so as what type of income.

the best reason to avoid taxes:

http://readersupportednews.org/opinion2/268-35/5671-we-cant-afford-the-war-in-afghanistan


On this Tax Day, many Americans are likely taking a moment to consider the costs associated with funding the public services that, among other things, keep our air and water clean, create educational opportunities for our children, and provide financial security to our most vulnerable fellow citizens. Although no one likes to pay taxes, most Americans understand that our country is stronger because we collectively fund our national priorities and promote the common good.

Unfortunately, Americans are all too aware that they are bearing another, highly unpopular, financial burden: the direct and indirect costs of the wars in Iraq and Afghanistan.

This year, the government will spend $159.3 billion in direct spending on these wars. In the decade since these conflicts began, we've spent approximately $1 trillion. And, if and when these wars finally end, the bills will continue to roll in, as our veterans return home with grievous mental and physical injuries. The economist Joseph Stiglitz has estimated that these legacy costs could push the final tally for our occupations to more than $3 trillion.

So what are Americans getting for their $107 billion taxpayer investment in Afghanistan this year? Troop casualties are up, civilian deaths are at an all-time high, and, according to our own CIA Director, there are fewer than 100 Al-Qaeda remaining in the country.

The American people are willing to pay their fair share and engage in shared sacrifice for the good of the country. It's all a part of being a responsible, patriotic citizen. However, as elected officials, we should not be asking our constituents to sacrifice unnecessarily. Right now, we just can't afford it. For example, according to the Rethink Afghanistan campaign, a household bringing in the median income in my district in Detroit, Michigan - a mere $32,365 - will pay $1,250 in taxes to support the War in Afghanistan and other military spending.

We shouldn't be asking Americans to spend more than $1,000 a year on a counterproductive and wasteful war when they're struggling to get by. Wouldn't it be better to put that money into popular programs that help working families? With the money spent on the wars this year, we could put 14.1 million children into the Head Start program or put 1.6 million additional cops on the beat or give 19.3 million low-income students a $5,000 Pell Grant scholarship. The math is clear. For the sake of working people across this country, for the health of our troops, for a more responsive democracy, and a stronger and smarter national security posture, we need to start bringing our troops home now.

Wouldn't that be a difficult conundrum for the IRS if a majority of taxpayers withheld 30% of their taxes because they didnt want to contribute to the war (I guess if its like stranger than fiction, a bunch of auditors will get layed for once)

Wow. In the United States, hobby income is fully taxable though you don't have to pay self-employment taxes on it. Hobby losses are deductible but only against hobby income.

You can and should deduct the cost of the rigs themselves (either amortized through depreciation, or expensed during the tax year they were purchased), as well as the electrical costs of mining with them.  If you keep proper records, there is no need for them to come up with "some arbitrary fraction of its costs to be personal use" either.  You can show what portion is personal use (if any), and it should be acceptable.

Right, that's true.  If you buy them directly, it's just as though you purchased an asset, and no income is reported.  If you are given them in trade for an actual good or service, then you have reportable income. 

Technically, yes.  But I believe the IRS says something along the lines of "we don't care" about amounts less than $600, especially if it's a one-time thing during the year for someone.  For many miners though, they've made a lot more than just $600.

Their lawyers are not involved at this stage of this article's writing. Only if there is a legal challenge would Legal be called in.  But I found this article dreadful, probably written by some San Jose hipster with trendy sideburns.  Really poorly researched!  (The initial two comments are great.)

But I have some insight into how these articles are put together.  Some group(s) within Intuit are assigned topics and a young-something-eager-to-please-product-of-modern-schooling takes it and runs and queues up for the next assignment.  No one is checking him/her.  At performance review him/her is graded not on IF they met their goals, but HOW they met their goals and if other managers like him/her.

Where people can get caught out here is trying to maintain that income from things like multi-level marketing is hobby income - even if the amount earned is small and the hours spent on it are few, it fits all of the criteria for business activity.

Bitcoin unit is an encrypted piece of data transmitted by p2p network, it doesn't fall under legal definition of commodity that barter taxation could be applied to nor it is security or currency http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857 (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857). And according to CampBX it is impossible to explicitly define bitcoin and therefore create a law that affects only bitcoin http://www.theregister.co.uk/2011/07/10/camp_bx_goes_live/ (http://www.theregister.co.uk/2011/07/10/camp_bx_goes_live/)

there just ain't no telling, boys and girls.

asset?  investment?  currency?

we're just going to have to wait until the lawyers hash it out.  it's a tough one - could take years.

in the meantime; make hay while the sun shines.

...and get the ability to verifiably spend specific coins into the client.

No court would agree that bitcoin is not an asset. The currency part is debatable, but doesn't really affect the tax situation. All currencies are assets, not all assets are currencies. Absolutely you should to report any income made in the trading of bitcoins to USDs and pay capital gains taxes on them. If you buy ANYTHING whether it's gold or a Euro or a brick or a chicken and sell it later at a profit, you technically owe taxes on that profit. If you haven't realized a profit in bitcoins yet (you're just holding them) then you probably don't need to report them.

Bitcoins and bitcoin profits are a lot EASIER to hide and not pay taxes on than most other assets. Sure there's the blockchain BS, but the resources required to definitively identify your wallet and link you to it would be enormous, require a court battle and not a priority for the IRS, which tries to maximize revenue recovered compared to auditing costs. Also the IRS doesn't even KNOW Bitcoins exist, so even searching the blockchain is a totally foreign concept for any auditor. It's very routine for the IRS to subpoena account records from major financial institutions when pursuing tax evaders, and since your name and signature is on the account it's very easy to prove it's yours. Just because you CAN evade taxes with bitcoins and probably get away with it doesn't mean you should.

You're crazy if you don't think this is among the best coverage bitcoin has had so far.  Regardless of inaccuracy this is a legit company utilized by millions of people showing how it has practical use economically. 

Yea thats how it works. The IRS has this saying, "all income from whatever source derived is taxable." It defines income as anything of value. So bitcoin income is indeed taxable.

Why doesn't Bitcoin qualify as currency from another country, where it would only be taxable when you "repatriate" the currency into USD?

Because there is no other country that backs bitcoin; so it is not actually a "foreign currency." I am not a lawyer though YMMV.

And just because they CAN force you to give them an arbitrary percentage of your income doesn't mean they should.

Did anyone mention that you do not have to file taxes as long as you do not make over a certain amount? even if you solved 1 block youself, you still would not have made enough to pay any taxes in any state. this also assumes you do not make any money elsewhere.

But the easy solution is to simply "forget" that you made money via bitcoin when the 1st rolls around  ::)

What do you mean their lawyers aren't involved at this stage? That in itself is even more irresponsible. When a company issues a statement providing legal interpretation of the law - even when they disclaim otherwise, and especially in a grey area - such statement should be carefully vetted by their counsel. If what you say regarding the publication process is true, then I've just lost a lot of faith in Intuit.

$600 is the taxable minimum.  A block = $13.6 x 50 = $680.  And technically, since you received the "value" of those "credits" during the tax year, even though you didn't sell them, you should report it as income with the basis equal to the value of the coins at the time of acquisition.

I'm going to made a SWAG at this point that if you actually declared X Bitcoins as income on your taxes, the IRS would just go, "WTF?  Whatever" and move on.  That may change in the future.

Not necessarily.  I believe they would consider bitcoins to be credits in an unregistered barter exchange, which counts as taxable income as soon as you receive them.

That said, I'm not going to report them that way unless requested by an auditor.  It would just be a mess trying to account for them.

The Good/Bad news is that your accounting software can check the block-chain after the fact: If you have kept track of all of the addresses you have used. Based on the OP, TurboTax won't have that feature in 2011/2012.

All that will tell the software is how much has gone in and out of your wallet.  Just as important is WHY it went in and out of your wallet.

I think this opens the market for a client that has a comment section for each transaction, or a label or something

you mark what transactions are taxable and such and leave a comment on each one, why that transaction exists. obviously this would only work for people that DO want to pay taxes, but it would help people that do pay.

Indeed, I agree.

Also nice would be software that would automatically track the value at time of receipt of any bitcoins, as well as any capital gains/losses that result from the sale or use of them afterward.

Really though, someone should talk to an IRS representative to find out how bitcoin transactions should be valued and taxed.  Building accounting software around the wrong ideas (even though they seem right to us, they might not be), would just be a waste of time.

I think it would be best to have the irs set the exchange rate to the average of that year, it would make things way easier for the irs and the people that pay the taxes.

I don't know about anyone else, but after reading this discussion and reviewing some other sources, I'm going to treat my Bitcoins as inventory of my Bitcoin mining/trading business, just as if I was manufacturing, I don't know, glass figurines, and selling some and holding others, and buying some more in the hopes that their market value will appreciate.  And I will depreciate & deduct the cost of my mining hardware like any other capital expenditure.  I don't see how any auditor could fault me for that approach.  If your existing inventory appreciates in value between the start and end of a year, if I recall, that still counts as a form of income even if you don't actually sell the inventory (as long as you can assign a market value to it).

What is your cost basis for each coin?  $0?  The cost of electricity to mine each one?  Something else?

I've really never heard of intangibles being treated as inventory, so I am curious to see whatever sources you were reviewing (if you don't mind sharing).

Yes, but the income from selling the bitcoins on the open market is still taxable. You might be able to argue it is capital gains instead of income, but then you have to prove when you acquired the coins.

and that is why we need the client upgraded with the ability to send specific coins.

the cost basis for a coin i mined in march is entirely different than one i mined last week.  if we don't get the ability to cost out Bitcoin, the IRS will do it for us, in some kind of catch-all fashion.  and they'll do that sooner, rather than later.  and it will suck.

Agreed.  A patch was made so that one can specify a send from address, but I think that patch should be pulled into the main release.

You don't need to track specific coins I don't think. From what I remember of doing my investment related taxes in TurboTax last January, I just needed to know how much it was worth when I bought and how much it was worth when I sold. It then just calculated by gains and losses from that, I think maybe even using weighted averages for number of shares, or something...

If you buy a stock at different prices you can choose which cost basis to apply when you sell them, or use the average price as the cost basis.

You don't need to pick and choose which coins you spent, only keep careful records of how many coins you mined at each difficulty and how much you spent to mine them. As long as you don't try and switch back and forth between methods, you'll be fine.

This sort of accounting situation, where a particular set of assets/inventory/whatever cannot be easily distinguished, is quite well defined/resolved. There are a few ways to account for them such as LIFO, FIFO and weighted average. Like Jamie Frontero pointed out, the most important thing is that you don't switch between methods without a good reason to give the taxman/auditor.

If I recall, all that the IRS goes by is:

• The value of your inventory at the end of the previous tax year (from your prior year's return)
• The value of your inventory at the end of the current tax year (which you estimate based on the current market price)
• Method used for estimating the total cost basis of your inventory produced/purchased during the tax year, for which you can use any of several standard methods (although you shouldn't change methods without justification/explanation). 

It seems to me that a simple way to estimate the cost basis of net bitcoins gained via trading BTC on exchanges is [money spent in exchanges] minus [money earned on exchanges], which is easy enough to calculate from your transaction histories (or Dwolla transfers plus exchange balances).

So, if the total value of the Bitcoins you hold at the end of the tax year is greater than the value of Bitcoins you had the prev. Dec. 31st (based on their price at that time) by more than the net amount of money you spent buying Bitcoins in the interim, then the difference is a taxable gain in value of your inventory, and you owe tax on it (minus deductions for your other costs like mining hardware & electricity).

I ran into a closely analogous situation in my previous business (running a bookstore).  I accepted book donations/exchanges, so I ended up at the end of the year with a lot more book inventory than you would expect based on books I had actually purchased.  If I recall, I had to count the value of the excess inventory as income, based on an estimated fair market value of the books that I ended up with at the end of the year. 

I think the situation for Bitcoins would be similar - unless you counted them as a capital investment instead of as inventory, but I'm not sure how/whether you could justify that to the IRS.

As for estimating electricity costs, that is easy enough to do given known electrical rates and the power consumption of your graphics card, from its specifications.

I don't believe you are permitted to choose the item to sell or transfer based on its basis. As I understand it, GAAP and the IRS insist that you use some consistent mechanism to determine the basis of an item. You cannot choose an item to get the tax-optimal basis.

If I'm selling video cards and I have two identical video cards, one that I paid $75 for and one that I paid $85 for, I am not permitted to say "I choose to have sold the $85 video card", regardless of which physical video card I sold. If they're functionally identical, I'm required to consider the basis using generally accepted accounting practices. Tracking the actual basis of each item is not such a practice. FIFO, for example, is one such practice. Weighted average is another.

Specific identification is not generally accepted for fungible goods. "When a company deals in items that are seen as identical by the market but that it bought at different prices, deciding which items were sold is completely arbitrary. If the specific identification method were permitted, a company could raise or lower income and taxes merely by choosing the lower- or higher-priced items without that reflecting any actual difference in their real income."

Why should their lawyers care what is said in this frivolous article?  No one is being damaged by the article.  No one has standing to sue over it.  I think we are still at a point where very few people have heard of bitcoin much less have really pondered it.

and how many people read the turbo tax blog? i for one have never even pondered if they had one, let alone look at their website more than 3 times a year.

Tim Geithner- I Used TurboTax!‏ - YouTube
http://www.youtube.com/watch?v=eKVxGlkPRlo (http://www.youtube.com/watch?v=eKVxGlkPRlo)

that grin made me laugh

If they don't take the time to actually tell us what it is then clearly we should be doing whatever is the most benefit to us. Until we are told definitively during an audit.

So the logical thing is to avoid taxes by keeping your bitcoins and exchanging them for goods and services. IF you ever change it back to cash thats when you would need to pay taxes, because that is the only time they will track and audit it.  If they do decide you need to pay for any profits still kept in bitcoins, then the auditor will need to do their own blockchain investigation, dont do it for them!

Until they write it into the tax code, and are able to audit it, the onus is on them.

Don't cooperate with the IRS.  I think we are at the point in history where social disobedience is called for.

How does the IRS send a tax form to the block chain ?

 :)

Whatever the bitcoin equivelent of stegenography is! Anyone who doesn't decipher and understand their notice will be immediately thrust into prison!