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I'm interested in trading HKD for BTC. What is the rate you're offering now?
sent you a PM |
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New Bitcoiner in HK. Able to buy/sell BTC for HKD/USD/CNY. Want to trade and meet all the Satoshi disciples in HK. Interested in trading, bitcoin business startups, and anything bitcoin related. I hope to meet you all soon!
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when is the next meetup? Somebody organize pls.
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New Bitcoiner in HK. Able to buy/sell BTC for HKD/USD/CNY. Want to trade and meet all the Satoshi disciples in HK. Interested in trading, bitcoin business startups, and anything bitcoin related. I hope to meet you all soon!
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New Bitcoiner in HK. Able to buy/sell BTC for HKD/USD/CNY. Want to trade and meet all the Satoshi disciples in HK. Interested in trading, bitcoin business startups, and anything bitcoin related. I hope to meet you all soon!
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Top of the line wheelchair accessible Toyota Sienna up for sale in NYC tri state area.
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Without knowing the specifics of your personal situation I have no comment on your IRS notices. I wasn't and will not in the future comment on a public forum regarding private personal information. In general however, tax protests do fail. If it worked for you, more power to you. As I've stated, my goal as an accountant is to help my clients have the lowest tax bill allowed under the law. If you have found a legal way of reducing your tax bill, then you deserve praise. But I suspect the reason for any tax benefit you received had to do with reasons other than a tax protest argument.
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OK, I don't know why I'm getting involved in this conversation, but I'll do it. Must be the after the tax season boredom.
I honestly didn't read the entirety of your link or your argument against paying taxes. Not because it is detrimental to my business, but because anytime I see or hear arguments against paying your taxes, I just have the natural reaction of most accountants, "oh here comes another pointless conversation of people trying to get out of paying taxes." I hear these claims all the time. Many people call it sovereign rights or something like that. I even sat through a few minutes of a video on youtube espousing this viewpoint. Whatever your reasoning for not paying taxes, might or might not be legal, ethical, or moral. I'm no judge. What I do know is that anytime anyone brings up similar arguments, a real judge ALWAYS dismisses these arguments. You might say I'm being brainwashed by the system which is set up to confine and contain tax protesters. That might be true. But the reality, and I have to deal with reality because I, my family, and my clients have to live in reality...the reality of the situation is that tax protesters always loose. If the point of your tax protest is a philosophical argument against paying taxes, then you should have a discussion with a philosopher. But if your purpose of being a tax protester is to reduce your tax bill, then as a professional accountant I will advise there are other ways to reach your goal.
In regards to the education you are offering, may I ask have you applied what you preach? Have you actively contested your federal tax bill? If so what was the IRS reaction when you brought up your arguments? I really don't need to hear your answers because I know what the IRS reaction is. Slap on the cuffs. And to be quite honest, whether the IRS is morally right or not in their actions, they have more guns than me or you. So what they say, goes. Again I go back to the point that I have to live in the real world where the IRS has the power and most of us have to play by their rules. I personally don't view my chosen profession as living off the ignorance of others. I view being a good accountant as knowing the rules of the road and helping people learn these rules, without any judgement as to the morality of the rules, and to get through life as best they can with the rules that we all choose to live by.
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I could certainly comment on those issues. I'll even include a basic thought process here for the first question to provide some evidence of my qualifications. Payment of payroll in Bitcoin would appear to require an immediate valuation of the compensation on the date paid. The source of the valuation is probably a bit flexible, but consistency would likely be the rule that would be most important. Thus if you valued with Mt.Gox once, you should probably do so every time (unless you can document a very specific reason why you change, such as the site is not available on the date). Might make sense to build a formula that does a weighted average of multiple sources just to try and smooth out some volatility.
You would report the dollar-value estimate as compensation and withhold an amount of cash valued at the required tax table rate. If you're trying to pay only in Bitcoin though (no cash portion of payment), you'd need essentially build an employment agreement that included an "employer buy back" of the right amount of Bitcoin to withhold for the tax. I.e., employee is to be paid 10 bitcoin, withholding requirement is 1 BTC, you agree to buy (for cash) the one bitcoin back immediately at payroll, thus providing sufficient cash to cover the employee's withholding.
The amounts granted as compensation and withheld would then feed directly into the appropriate W-2. Of course, this is all assuming a W-2 employee, if you're looking at 1099s it would be far simpler.
Great analysis, I'm persuaded enough to pursue further. Sending PM. As an E.A., I agree with the above analysis of the treatment and implementation of a bitcoin payroll system. I would add, make sure you have a record of your bitcoin payroll "checks." Since bitcoin is pseudo-anonymous and there is little evidence of bitcoin transfers, you would need to have a system where the employee and employer both sign some kind of statement on each pay date that states the amount paid in bitcoins paid, the salary rate, the amount of hours worked,the withholding amounts. Basically everything that is reflected in a regular W-2. I'm not an expert in payroll taxes, so I would raise this question. Are there any special issues relating to your plan to pay employees in bitcoins when it comes to filing W-2 and form 941? Would you simply convert all bitcoin payments into USD, at the time of payment, and report all earnings and withholding as USD as usual? |
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To the OP, Our system (I assume you are in the USA) is a voluntary reporting tax system. The IRS does not actively verify or audit every piece of reportable information every tax payer reports. The IRS will audit and require evidence of the information you voluntarily report when they initiate an investigation, but as a matter of procedure, they do not check up on you if there is no reason to do so. This is in part, a big reason why in recent years, they have pushed many businesses to file 1099 (information returns.) The IRS uses these electronic information returns to verify the information that is voluntarily reported by taxpayers. Information returns is the IRS's electronic method of checking up on you to make sure you are telling the truth, without having to go through the entire and very expensive process of auditing every American. But just because there is no 1099 against your name and no electronic method to check that you are connected to Bitcoins, does not mean you are given permission to break the voluntary reporting rules of the tax system. Assuming you still want to stay on the right side of the tax system, you must still voluntarily report all income regardless whether there is an electronic record of it for the IRS to match up against.
Please don't flame me and say that I said "you MUST" and "voluntarily" in the same sentence. I get it all day long from clients who pay me money to tell them what the IRS rules are. You should simply understand what the IRS rules are in regards to voluntary reporting. Then you can make your own decision based on your own personal financial situation. The above was not intended as advice. Find a trusted source and a licensed professional and pay them for professional advice.
https://bitcointalk.org/index.php?topic=169198.msg1808809#msg1808809I'm not a constitutional lawyer, so I will leave the arguments about whether income tax laws, rules, and regulations are constitutional. After you have made a decision as to whether to submit to the current tax system, and your answer is yes, then I can provide information as to how our current tax system might interpret your bitcoin activities. |
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Interesting. This position assumes bitcoin is a currency, or foreign exchange. On the other hand, if bitcoin is a commodity, I think the capital gains/losses approach I outlined in my previous post applies (this is, I believe, the type of reporting required of individuals trading precious metals, for example -- see http://www.irs.gov/publications/p17/ch14.html ). You know, I believe that if one did his best to pay taxes, whether the right form and method was used or not, that'd be doing pretty good. They might or might not care or ask for a correction. But with respect to a "sort of currency that acts like a commodity but we'd like it to be a currency but it's not quite yet" you know, I'd go with considering it a currency. If one took a position that resulted in paying higher taxes, and a clear determination was later made by the IRS which resulted in lower taxes due, then one could file an amended return. A much more difficult and interesting question is something like whether it's time to get out of IRA and 401k plans entirely, and what the tax consequences for those types of actions are. This is a great common sense approach to taxation. And the IRS will look upon you kindly and will more likely than not deal with you in a "fair" manner if you take Spendulus approach. Making the effort to pay your taxes on your bitcoin gains, even though there are no regulations pertaining to it, shows a willingness to abide by current tax rules. And if you have the wrong tax treatment, whenever they do get around to enacting specific regulations to govern digital currencies, you can always amend your return. If you erred on the conservative side, then you are in line to receive some extra money back. To answer your question regarding cashing out retirement accounts, if you are under 55 for a 401K and 59.5 for a IRA and you withdraw your retirement savings without an exempted reason, then you are subject to a penalty and a tax. The penalty is 10% of the withdrawn amount. The tax is your regular income tax rate. Whatever amount you withdraw will be added to your income, subtract your deductions, exemptions, and credits, then calculate the tax. Some people make the decision to cash out early because the gains in their retirement plans have been in excess of 10% and the income tax on the withdrawal is minimal due to low taxable income. If you are planning on using the withdrawn retirement funds for a specific reason, buying a house, paying medical bills, you might be exempt from the penalty. If you want to use the funds to invest in a business, you will be able to maintain your funds in a retirement account and still invest in a business. There are many options to access your retirement savings. Speak with a professional to explore all your options and to find the best tax advantage option for your personal financial situation. The above is not advice. It is free information. You must pay for professional advice from a trusted source who is professionally licensed. |
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I found this article by Robert A. Green, CPA, published in Futures Magazine in April 2004. http://forums.babypips.com/forextown/117-how-do-taxes-work-forex-trading.htmlAccording to the article, if you trade cash forex as a speculator, the following rules apply: - Your profit / loss falls under IRC § 988. You report it as ordinary income on Form 1040 line 21. The ordinary tax rate applies. - You may elect for your profit / loss to be treated under Section 1256. Fill out Form 6781. Taxes are 60/40 (60% long term gains / 40% short term gains). - If you elect 1256, you must do so before you start trading. But this election is "internal" -- it does not have to be reported to anyone. - You do not have to report each trade -- you may use the "Performance Record Approach". Basically, ending assets minus beginning assets. The discussion here appears to support all this. http://community.intuit.com/posts/currency-trading-transactions-treat-under-988-or-1256It's interesting that according to all this, cash forex is considered ambiguous when it comes to taxes. Now, what about bitcoin trading?  If you intend on declaring yourself a specialist trader and elect 1256, I highly advise you to not prepare your own taxes and go to a professional. Yes, 1256 election will give tax benefits on capital gains income, but the tests for 1256 election is numerous and thorough. If you intent on preparing your own taxes, simply file a Schedule D along with your 1040 and treat all BTC trading activities as capital gains/losses subject to 15% tax rate for long term gains and 30% for short term gains. Yes, this is a worse tax treatment than a 1256 election. You should make your decision based on how much tax savings you will actually realize by taking the 60/40 split vs. how much it will cost you in fees to go see a tax professional. But I commend you on doing your own research and finding out about Form 6781. My personal opinion on the matter is that BTC does not count as a options or a forward contract. Section 1256 generally only applies to options and forwards. It generally does not apply to spot forex or futures, which BTC is much more closely resembles. The above is not intended as advice. Seek advice from a trusted source and a licensed professional. |
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To the OP, Our system (I assume you are in the USA) is a voluntary reporting tax system. The IRS does not actively verify or audit every piece of reportable information every tax payer reports. The IRS will audit and require evidence of the information you voluntarily report when they initiate an investigation, but as a matter of procedure, they do not check up on you if there is no reason to do so. This is in part, a big reason why in recent years, they have pushed many businesses to file 1099 (information returns.) The IRS uses these electronic information returns to verify the information that is voluntarily reported by taxpayers. Information returns is the IRS's electronic method of checking up on you to make sure you are telling the truth, without having to go through the entire and very expensive process of auditing every American. But just because there is no 1099 against your name and no electronic method to check that you are connected to Bitcoins, does not mean you are given permission to break the voluntary reporting rules of the tax system. Assuming you still want to stay on the right side of the tax system, you must still voluntarily report all income regardless whether there is an electronic record of it for the IRS to match up against.
Please don't flame me and say that I said "you MUST" and "voluntarily" in the same sentence. I get it all day long from clients who pay me money to tell them what the IRS rules are. You should simply understand what the IRS rules are in regards to voluntary reporting. Then you can make your own decision based on your own personal financial situation. The above was not intended as advice. Find a trusted source and a licensed professional and pay them for professional advice.
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great thanks me and my CPA decided to not go with FIFO or LIFO. He suggested we file my earnings as you would with stock shares. So we calculated from when the coins were mined to the end of the tax year and then "averaged" the earnings. That way when they do appreciate more i have already paid taxes on them (end of 2012 being around $15).
Since i use my mining computer for gaming and work i cannot write off the electricity he stated. But i can write off the video cards are expenses.
He stated if i build a dedicated mining rig.. or buy an ASIC that would be a pure business expense. And would be able to write it off during that tax year bought. He also stated if i mined in a dedicated room, part of my cooling bill and electricity bill can be written off.. but only if that room is used for purely business.
thought you all would want to know...
Notice how everything your CPA said is his suggestion or opinion. I am not disregarding his opinion, but the reason why he is giving you suggestions is because there are no IRS or court precedents regarding bitcoin mining or trading. The best that any professional can do, your accountant included, is apply your specific business situation to the applicable tax regulations governing capital gains and small business taxation. I tend to agree with your accountants treatment of your mining business. I would comment that he is erring on the conservative side by not allowing business percentage use of your mining rig and utility costs. This is a sensible approach as it will allow for a higher tax rate on you. This is bad because it means more money out of your pocket, but it is good in that it gives the IRS less of an incentive to ask questions regarding your Bitcoin business. The fewer questions you have to answer from the IRS the better. Many times it is better to pay a little more tax in order not to have to answer those questions. I do NOT encourage you to dodge taxes. I RECOMMAND that you declare all your incomes including incomes in Bitcoin. The explanations below are only a though experiment, for illustrative purpose, and used as an illustration of what you should seek to AVOID DOING, because that would represent an offence under income law. The question you have to ask yourself is whether there is any way your holdings in BTC can be linked back to you. - If you have been solo mining and never moving your coins, you will have in your wallet as many new private addresses containing 50 / 25 BTC each as you found blocks. These cannot be linked back to you as long as you don't send them to an address that you have used for a transaction under your real identity, or any identity that could be traced back to you (you have to assume that the IRS in 5 or 10 years may have a much better technology to analyse the blockchain + information from exchange and large merchants they could use to connect the dots).
- If you have been mining using a pool under a pseudonym while making sure that nothing was leading back to you (email address included), and you never transfered the payout to an address that you have used for a transaction under your real identity, or any identity that could be traced back to you, the only existing link is the IP if the pool logged it and still have it in X years. That's a very very weak link, and unlikely unenforceable.
So if the answer to the above is : "No, the coins I mined cannot be linked back to me at this very moment", and if you have not been declaring your mining activity in any way, then you should be safe in regard to IRS as long as you make sure not to create the missing link that would allow them in the future to prove that you had hidden holdings that led to undeclared realized capital gains. Now, if you have such coins that can't be traced back to you, and you want to redeem them for cash, there are a few ways you can do that while remaining under the radar of IRS: - OTC trading: "virgin" blocks of 25 BTC / 50 BTC sell for a premium on the off-exchange market. Make sure to do the transaction in person and in cash, and don't give your real identity to your counterparty.
- Sell stuff to yourself for Bitcoins on ebay, with "in person delivery" so you aren't supposed to know the real ID of your buyer. Make sure the proceed remains within the limit set by IRS for private selling as individual. And keep all the records.
- Send the coins to a (close, trustable, and equally tax dodgy) relative who doesn't have taxable income, or a low taxable income, and have this relative withdraw the coins under his / her real name, in amounts high enough to be effective, but low enough to remain under the tax threshold. Make sure this relative *declares* this income and effectively receive tax clearance. Now the amount is clear from taxation, and you can have the relative offer it to you either officially using a bank transfer (if under the yearly limit set for donation / gift), or withdraw it as cash and give it to you in person. You may want to prepare a scenario to explain why your relative got that free money coming from nowhere in first place (sold something in-person for Bitcoins for instance).
- Send the coins to someone who is fiscal resident in a country where capital gains are not taxable. This person can withdraw the money without bothering about hiding anything. Then have this person give you the money either officially (if under the yearly limit set for donation / gift) or by cash. Or even better, sell something to this person on ebay, and receive officially the proceeds by wire (so long as the amount remains within the limits set by IRS for private selling as individual).
No one should accept tax evasion advice in a public forum. The Common sense response to the tax evasion you are suggesting is that the IRS doesn't care if you mine $1000 worth of bitcoins and go through your whole process of selling stuff on ebay, or transfering coins to friends, in order to evade $100 worth of tax. But if you have made significant sums (maybe 100K or more) and you just bought yourself a Mercedes or a boat or opened a foreign bank account with your name and social, AND you are claiming you are a simple student with $5000 of taxable income on your tax returns, then the IRS will have an incentive to investigate you. A financial incentive because you are hiding large sums of tax revenue and a criminal incentive because you are engaging in sophisticated money laundering and tax evasion schemes that the IRS Criminal Investigations Division are tasked to prosecute. Once an investigation is opened it is up to you how you handle it. Either hire yourself a good and expensive lawyer or negotiate a plea bargain. But in the end, tax evasion doesn't pay off. The money you save today, will in all likelihood be spent tomorrow either hiring a good lawyer and accountant or directly to pay your back taxes. |
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Anyone looking to buy a wheelchair accessible minivan? This is the top of line model. This Toyota Sienna and all the mobility accessories makes transportation effortless.
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2006 Toyota Sienna XLE Handicap Ramp Access Prestine Low Miles - $33000 http://newyork.craigslist.org/que/cto/3757585793.htmlI'm located in NYC. Interested parties please contact me to set up time and location to see the vehicle. This will be like any regular vehicle sale between two private parties, except that I will accept bitcoin as payment if you choose. We'll go to the bank, get a bill of sale notarized. I will sign over title to you and receive your USD or BTC as payment. Receipt will be provided. The minivan is in near mint condition. Toyota's are known for their reliability and I (the second owner) and the previous owner have taken care of the vehicle immaculately. All service records will be provided, along with carfax upon request. The handicap access additions are top of the line. The handicap modifications are from Braun, the leader in handicap access vehicle modifications. This vehicle has all the additions to make using a handicap wheelchair as easy and effortless as possible. The van is great whether you are transporting a handicap family member, or yourself in a wheelchair and need a vehicle to drive. EZ-LOCK underneath the driver seat. All handicap accessories are under warranty from Braun. This van has served my family well, and I hope it will find a useful home in the future. And let's get a new notch in the bitcoin economy. I don't know of any handicap access vans that have been sold for BTC. http://newyork.craigslist.org/que/cto/3757585793.html |
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Sorry for the late reply. Tax season and all... How can I tell how much $ to pay in taxes when I receive a bitcoin and all the exchanges say something different?
What if there's an exchange trading at $0.01 (that nobody sells on lol) and another trading at $100, can I calculate the tax from the $0.01 one?
Why not just pay taxes from the income you made by selling the bitcoin?
The IRS accepts fair market value. The exchange that displays a price quote of $0.01 is neither fair nor market value. The fair value of anything is the value that two knowledgeable and willing counterparties are able to trade without being forced to trade. There have been no IRS precedents on BTC, but I'm sure the first BTC audit, whenever that happens, the IRS will use the MTgox price on the date of your trade as the fair market value of your trade. re: mining, the question is: when is the income recognized?
If I start a mining business, I am expensing the hardware and the electricity, pool management fees, etc.
If I keep all the coins I've mined for two years, there would be no income generated by my mining business until I actually decide to exchange it for fiat. My business would be showing a loss for those years. I am recognizing the income when I sell off my BTC.
If I report the current value of BTC when they are generated as income, I would pay tax once, and then once again on any gains if the value of BTC were to appreciate.
What approach is everyone else taking?
You are looking for an answer to a question the IRS has not answered. As there are no BTC audit decisions I am aware of, there are currently no IRS precedents to guide BTC mining businesses. In the absence of precedence, IRS rules state you should use a "fair and accurate" reflection of your business income and expenses. My opinion on your situation, albeit with little knowledge of your full situation, is that you must recognize regular business income when you receive BTC from the blockchain at the market price at the time of receipt. Then if you hold your BTC for two years, you must then recognize capital gains/losses from your basis price (the price you received your BTC at time of mining) to your sales price at the time of sale of your BTC. You essentially have two business activities, mining (your regular business where you are able to deduct your ordinary and regular business expenses of hardware, electricity, pool management fees) and your secondary business of BTC investment management (which will have investment expenses of it's own that you may deduct.) I saw this thread got bumped, and it got me thinking. Well, if you buy & sell bitcoins, or if you trade for bitcoins, the tax implications should be fairly clear. I think in the former case, you declare capital gains when you realise the profit, and in the latter, you declare a dollar-equivalent income at the time of the trade. Right?
The interesting thing is mining. How do you tax wealth that comes "out of nowhere"? Well, let's examine more closely where it does actually come from.
Well, suppose I were to invent a new currency based on... peculiarly shaped stones that only I can find. Well, if no-one accepts my new currency the value is zero. If people start accepting them, then by their very acceptance, they ascribe a value to the stones. So, it's more like a gift than anything. So I might hold up a stone and shout to the masses: "what'll you give me for this?" and everyone shouts back "$100", and someone "gifts" me $100 for my (previously) worthless stone.
Of course, now that bitcoins are somewhat established, and mining is a big business, I suppose calling it a gift wouldn't cut any more. Yeah, it'd have to be income-taxed.
Your mental exercise is interesting involving magical stones, but ultimately fruitless. Anyone, laymen and tax experts alike, can speculate as to the true tax treatment of mining. Tax experts can use their knowledge of existing tax regulations combined with their client's specific business operations and develop a stated opinion. That opinion, however, is not worth the paper it's printed on until the opinion is challenged and ruled upon by the IRS and if necessary, the tax court. When dealing with the IRS, a good general rule to follow is to be open to negotiations. Eventually a bitcoin business will be audited. When you go in and sit down with the IRS, the most important thing to the IRS will be how much they are going to get out of you. Everything else regarding mining, blockchain, magical stones, is just details. If you go into an audit with the IRS accepting the fact that the IRS will get X% out of your income as tax, then the IRS will deal with you "fairly." If you try to use the intricate details of hash rates, double spend, Mtgox price vs localbitcoins price in order to lower your tax rate, the IRS will start demanding that X% to be significantly higher. The above is not advice. Seek competent professional advice from a trusted source and from a licensed professional. |
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IRS does not administer sales tax. IRS administers income tax which applies to barter transactions.
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