In most cases, yes: capital gains tax is preferable. The capital gains tax rate on long-term gains for 2011 returns in the US was 15%; this is being increased to 20% in tax years after 2012 (however, it will be 0% for taxpayers in the 10-15% tax brackets). Short-term capital gains are generally taxed at the ordinary tax rate of the taxpayer.

The IRS doesn't monitor the bank accounts of taxpayers, so they wouldn't know whether or not the taxpayer is funneling money back and forth. However, the IRS will require documentation of trading activities in the event of an audit. In that situation, the IRS can request bank statements for income verification (I have two clients now who are in a similar situation).

Generally speaking and in theory, you can claim whatever the hell you want on your taxes: you just need to be able to back it up when the IRS starts poking at it. And the more "extreme" (or for a more accurate term, questionable) your claims are, the more likely the IRS is going to grab the pokin' stick.

And it's important to remember this too: when the IRS audits a return, they audit the full return. So if the IRS looks at one thing on a return and they feel it's a questionable claim, they could audit the return and find out about something else entirely.

For example: a delivery driver has $2,000 in cash tips that he doesn't claim on his return, but he does claim mortgage interest reported on a 1098 in the amount of $10,000. The IRS reviews the return and they think the mortgage interest claimed is more than it should be. They audit the full return and notice the $2,000 worth of deposits to discover that the taxpayer didn't claim those tips. The taxpayer will end up owing more taxes, and possibly a tax penalty.

With cash and coins (both US and Bit), it's up to the individual on whether or not to report them. The IRS may not notice them since it's hard to prove, but they may find out about them if they noticed something else.

The difficulty with Bitcoin is knowing what it should be classified as. As I said before, there are no definitive tax laws regarding them at this point. If someone wants to play it safe, I would recommend they report Bitcoins received as payment for goods or services converted to USD as other income on line 21, and profit/loss from Bitcoin trading as capital gains and losses.

I'm wondering how they think they can regulate bitcoin online gambling  

https://www.btcquick.com/buy/index.php?route=product/product&path=59&product_id=50

At the end of the description they explain the fees and transaction limits for different levels of membership.

Decided to give btcQuick a try to see how it works. Membership cost $0.99 and required identity verification. I was able to take a picture of the name and address on my bank statement and upload it through the membership purchase process. I was verified very quickly (within ten minutes).

I bought BTC1 using my debit card. Fees were around $1.88, which was cheaper than the $3.95 I pay for ZipZap/BitInstant. This fee was based on a percentage, however, so BitInstant will probably be cheaper for larger orders. btcQuick had a fee of 7.5%, but your fees drop once you've bought enough BTC from the site: I think it goes down to 6%, which is still a bit higher than BitInstant. However, the slightly higher fees may be worth the convenience of paying with a debit or credit card and not having to track down a MoneyGram location.

It did take a little while to receive my BTC. I placed the order at 8:24PM EST and payment cleared my bank account at 8:39PM EST. I received the email with my BTC at 9:43PM EST. It seemed a bit long since the website says that the BTC is sent once payment clears, but it's still around the same time frame as BitInstant, minus the driving time for depositing the cash. I emailed customer support about the status of the order and they replied very quickly and in a friendly manner; I received the BTC shortly after they replied.

btcQuick sent a .zip file containing a .pdf that had both a public and a private key (and QR codes for both). I scanned the private key into my blockchain app and sent the BTC to my main client. I do like that the BTC is sent in its own wallet, which gives buyers a lot of options for using the funds.

All in all, I'm very satisfied with my order. I definitely plan on using btcQuick again!

Participate, get to know people.  Someone's gonna have to take a risk with you, and they'll probably want every security measure available to protect themselves from a scam.

With that said, if you're willing to do some trading, use escrow.  Some members here offer the service for a tip.  That way you can start building rep, and believe me, there's no shortage of people here who will thank you for your business.

Furthermore, there are always members who pretend to be nice folk, then around the 100-200 post mark, suddenly want a loan.  So expect to be here for a while before anyone really starts trusting you.

But really, just be nice, and people will be nice back    Well, within reason.

I'm still reading it at the moment, but it feels to me like the author just really does not like libertarians. I'm not a libertarian by any means, but it annoys me that he's linking the entire currency to one political party. 

I'm still reading it at the moment, but it feels to me like the author just really does not like libertarians. I'm not a libertarian by any means, but it annoys me that he's linking the entire currency to one political party. 

Yet, the question of who owns which Bitcoin in itself starts to problematise the idea of harmonic cooperation held by people about economy and Bitcoin. It indicates that in a Bitcoin transaction, or any act of exchange for that matter, it is not enough that Alice, who makes coffee, wants shoes made by Bob and vice versa. If things were as simple as that, they would discuss how many shoes and how much coffee was needed, produce it and hand it over. Everybody happy.

Instead, what Alice does is to exchange her stuff for Bob’s stuff. She uses her coffee as a lever to get access to Bob’s stuff. Bob, on the other hand, uses his shoes as a leverage against Alice. Their respective products are their means to get access to the products they actually want to consume. That is, they produce their products not to fulfil their own or somebody else’s need, but to sell their products such that they can buy what they need. When Alice buys shoes off Bob, she uses her money as a leverage to make Bob give her his shoes; in other words, she uses his dependency on money to get his shoes. Vice versa, Bob uses Alice’s dependence on shoes to make her give him money. Hence, it only makes sense for each to want more of the other’s for less of their own, which means deprive the other of her means: what I do not need immediately is still good for future trades. At the same time, the logic of exchange is that one wants to keep as much of one’s own means as possible: buy cheep, sell dear. In other words, they are not expressing this harmonious division of labour for the mutual benefit at all, but seeking to gain an advantage in exchange, because they have to. It is not that one seeks an advantage for oneself but that one party’s advantage is the other party’s disadvantage: a low price for shoes means less money for Bob and more product for her money for Alice. This conflict of interest is not suspended in exchange but only mediated: they come to an agreement because they want to but that does not mean it would not be preferable to just take what they need. This relation they have with each other produces an incentive to cheat, rob, steal. Under these conditions — a systematic reason to cross each other — answering the question who holds the tenner is very important.

Excellent summary of what I feel is the US government's current stance on Bitcoin. In the US, at least, Bitcoin is not big enough of a "problem" for them to waste time and resources on. My hope is that Bitcoin will have shed most of the misconception surrounding its use by the time that it does become big enough for them to deal with. Maybe it'll see acceptance instead of condemnation. Or, at the least, apathy on their part.