Bitcoin Forum

First of all, I know I'm going to have to pay taxes on my bitcoin. Yes, I know this is partially against what the foundation of bitcoin is etc. etc., but I believe just because you can do something doesn't mean you should. Risk/Reward is also devastating. I'd rather pay 28% on my gains than spend time in jail, or have a criminal record.

So besides that, I know that you can't get taxed if you spend bitcoin on items. I would want to buy something that doesn't lose a lot of value quickly, such as gold. If you have another idea for this, please let me know. Gold was just the easiest I could think of.

Situation: Bitcoin goes way up in a bubble like scenario, and I want to cash out. Could I buy something, like gold, and hold onto it for a year, then sell so I don't get short term capital gains? With long-term capital gains, I may actually be able to get into the 0% tax bracket, so I stand to gain a lot this way.

Is something like the above feasible? Or is there an easier way to do it?

In the US by the current IRS guidance this is incorrect.  Sell your BTC for dollars or use your BTC to buy gold both are taxable events based on the price of BTC at the time of the transaction.

And what is your evidence that those rules apply?

None.  I don't care but the OP point was a way to avoid taxation.  What is your evidence that any taxes are owed on BTC in any situation in any country?  If you want to violate the tax law, then just violate the tax tax.  If you intend to comply with the tax law then doing an interim conversion to gold changes nothing.

Either Bitcoin tx are taxable are they aren't.  BTC -> GLD -> USD doesn't magically make it nontaxable, if BTC -> USD is taxable.  If BTC -> USD is nontaxable because you believe (insert latest dubious scheme here) the it is already nontaxable so there is no need to convert to gold first.

...

My understanding is that my buying gold w/ BTC is taxable, I will give the info to our tax people later this year.  I bought a 0.25 oz Gold Eagle using BTC when it (the BTC) was at a price close to what I paid for it.  So any tax consequence will be negligible

If I buy gold now, it would be at a loss, as my average cost basis for my BTC is some $760.  I could buy gold, and get a tax write-off.

***

Buying gold is about the best use there is for BTC other than the ability to take it out of the country...

 ;D

 8)

Since when does gold not lose value? There's probably much more to be made from investing in Bitcoin right now than gold. Just hold until the next big price hike then sell.

You'll pay a  tax when you buy the gold since bitcoin increased in value since you bought it. Cashing out is a taxable event. The tax you pay is based on how long you held the property - basically more if you held it less than a year.

Yes I do sell silver, but I do not reply because I want to sell it and do not do advertisement here ;)

But:

If you buy gold/silver - you have to decide:

1, real bullion ?
2, electronic silver/gold

Both have pros and cons ...

Investing in precious metals may be profitable but you also may suffer losses for 1,2, 3 years .. .but right now, price of gold and silver is on few years lows, so this kind of investment is very interesting nowadays ;)

Are you trying to imply that I should pay tax for my order of pizza bought with cheaply bought bitcoins?
Sounds ridiculous.
Cashing out to pizzas or gold doesn't seem to me like a taxable event.
This is not my field of expertise nor am I American - but it could be interesting to get some true information regarding this issue.

still laughing at the idea Gold doesn't lose Value - have you checked out the price of Gold/BTC over the last four years.
Even Gold vs USD might give you an indication that gold can lose purchasing power over the short term. If you have twenty years to wait then ok, but you might have said that in 1980 and cashed out in 2000 with about 60% of what you invested originally.

why you laughing at that ? Whosaid that gold doesnt lose value ? Everthing lose value, but important is: how may % of value for any certain period of time.

Btc loses value, gold loses value, Usd loses value ... but something losses it value for last 100 years something for last 2 years ... something went up 1000 % in last decade .something will go up ...

its relatitivy

but only stupid one would laugh and someone else point of view

so what will happen if this new company comes out with that debit card where i can spend my bitcoin anywhere? will that always be traced back to me or will i be able to shop in freedom and tax free. im scared of the irs when it comes to bitcoin and the last ting i want is to get fined for not paying taxes when i should have


although i dont agree with them taxing bitcoin.

I think you are asking two different questions.

The following questions are not the same:
What is the tax liability as advised by the IRS regarding Bitcoins for US taxpayers?
vs
If I break the tax law will I get caught?

Since you seem to be mixing the two together as if it is a single question it is hard to provide an answer.

I don't necessarily agree with it but until someone wins in court the guidance from the IRS is the best we have.

If you spend Bitcoins then you are liable for any gains on them at the time you spend them.  If you have held the Bitcoins for 365+ days then the gain will be taxed as a long term capital gain, if you held the Bitcoins for 364 or less days before spending them, then the gain will be taxed as a short term capital gain.  

What you purchase with the Bitcoins, how you spend them, or why is utterly irrelevant.
http://www.irs.gov/pub/irs-drop/n-14-21.pdf
(See specifically Q-1, Q-2, & Q-6)

"If you spend Bitcoins then you are liable for any gains on them at the time you spend them."

paying with bitcoin then requires a lot of paperwork and calculations when you buy anything with it!
in that kind of environment, such a payment system is useless.

I  hope Bitcoin can be used as gold.

If my understanding of the IRS guidance is correct then your statement is not true.

My understanding is that, if for example you buy 1 BTC for $10, and then sell the BTC for $660 worth of goods/services then you would owe capital gains on $650 (the difference of your cost basis and the value of the goods/services that you bought with your BTC). This would apply regardless if you were to purchase coffee at Starbucks, gold or any Fiat currency.

If BTC were to be treated as a currency then this would not apply. These rules would only apply if you were to convert BTC back into US Dollars (as per my understanding of how gains/losses on currencies are treated).

Depending on how much you want to cash out I can help you!

For a small fee I can cash out your BTC and the send you the money!

My fee is negotiable and it all depends on the amount of BTC you sell!

I accept my fee in BTC or in FIAT!

You'd be able to do that no problems. Just sell the BTC for cash money and invest in gold/silver.

ehh it's not always that easy converting BTC to cash, I think he means BTC to gold/silver

Doing it off line is the only way to avoid taxes. Beware of the risk though.

http://www.investmentu.com/images/gold-vs-currencies_4.jpg


Gold/Silver investing really should be thought of as retaining value, rather than say, owning a speculative stock in the hope of making gains. $1 in pre-1964 coins is worth $13.5 today. $1 in pre-1964 fiat paper is still worth $1.

The usual mistake here to over invest.  How many people here need to own gold and how many have a tax bill to pay, problem is you need to own fiat and not many of us are jewellers or about to marry

  It keeps its value, problem is we dont have that much time and taxes are annual so maybe gold does look bad as demands elsewhere can be far greater.
  Ironically the people who should keep gold are those who can last 100 years or more like government or banks and similar but now they dont value it which means we have to learn the hard way again

http://www.dollartimes.com/inflation/inflation.php?amount=100&year=1929

100 dollars fiat  1929
1370 dollars adjusted for inflation 2014 - lets say the bank pays this in interest and so you were a saver but a saver of fiat all the same. call it 2000
100 dollars 1929 got you 5 or 4 ounces of gold.  Round it down for fees and call it 4oz.    Thats $5000 now or a fire sale car ?  see below, the value was kept


https://i.imgur.com/ge3AfRC.jpg

This is the solution I've been thinking about (though many bubbles need to pass for me to cash out).
But I've also been thinking of two way atm's, I just didn't have the chance to try one yet. Probably this wouldn't be the solution for large amounts tho.

I don't think this is how this works.

You should consult a tax attorney/professional for tax advise however below is my interpretation of how BTC is taxed:

on 1/1/14 The price of BTC is 800 - you buy one BTC for 800
on 9/1/14 the price of BTC is 4,000 - you sell one BTC for four oz of gold - the value of this gold is 4,000
on 10/1/15 the price of gold is 1100 per oz - you sell this gold for 4,400

You would owe taxes on $3,200 gain of your one BTC that you bought on 1/1/14 and sold on 9/1/14 for the 2014 tax year. This would be taxed at the short term capital gains tax rate.

You would owe taxes on $400 gain on your 4 oz of gold that your purchased on 9/1/14 and sold on 101/15. Since this was held for more then one year you would be taxed at the long term capital gains tax rate. This would be taxed in the 2015 tax year.

maybe buy a house and land where good investment.
Gold is also the right choice, but you should be wary of inflation in your country