Is it every transaction, or just those $600 or more?
The 600-or-more rule refers to reporting of payments in trade or business (1099s). It has nothing to do with capital gains. |
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Okay, now I understand what you're talking about. That won't work. You're saying the wallet is set up where the coins you spend are always spent at a time when their value with respect to U.S. dollars has declined, so that there is no capital gain on the trade and nothing to report. He's not proposing that. You need to go back and reread the OP. There will still be capital gains, just not on every single little transaction. There would be a smaller number of transactions with larger gains, not altogether different from cashing in shares of an appreciated mutual fund once per month and then spending that money out of your checking account, as opposed to using a debit card and charging lots of little transactions directly to the mutual fund (each of which would be a taxable event). The ZGL wallet function is like the checking account here. There might be a small amount of tax avoidance (in some cases, though in other cases taxes might increase), but that is minimal compared to the reduction in taxable events. |
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Raskolnikon loan repaid. Post #2 updated. |
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how much you want back and in how much time for 1 btc now?
What collateral will you post and how long do you need the loan? |
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A lot of farms will remove their current miners to make room for the larger units and/or sell them to fund the purchases.
Miners that are sold are still mining (for their new owners). Only when they become unprofitable relative to power or start breaking down will they come out of service altogether. That said, I don't expect difficulty to skyrocket. |
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I have not upgraded to 0.9, and I see increased GBT latency (similar in magnitude) as well. My guess would be more transactions in the mempool since the relay rules were changed. My efficiency is still good though. I think if everyone has the same increase it doesn't hurt you.
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My point is with traditional banking, there is very little work the IRS has to do. But with bitcoins, they're not happy if you hand them 40,000 pages of tx records.
With a bank there is very little to do. With stocks (or commodities, etc.) trades, there are many transaction records. In fact the IRS doesn't really get involved, the sales are reported but it is up to you to come up with documentation for the cost basis and holding period. If they have some reason to doubt your accounting (i.e. someone who claims to lose money all the time yet is buying houses and cars) it may be challenged, and the records will need to be examined. Otherwise they never look at it. Most of the tax system in the US is based on voluntary compliance. |
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I would like to inquire about a small loan. I am not familiar with your lending practices, however, I will make my case. To begin with the basics of a loan structure, I am prepared with a downpayment (collateral of approximately 22.5 litecoins). While I am a new member of the bitcointalk community, I do have a strong understanding of finance and accounting (which I can discuss in a PM), and I am confident that my business plan has a revenue stream to compensate you for the credit risk and to give me the infusion of capital to further develop my business infrastructure. My loan request is for 1.95 bitcoins.
I could speak to you further about my revenue streams in private message,and it may give you an understanding of the risk level of my business. Given my new member status and the fact I have not had the opportunity establish a reputation in this community, I will be open to your lending policies and understand your position. Please inform me of escrow procedures and the formation of a promissory note for this lending offer. Thank you, and please private message me.
I read the [EDU] post by the moderator about noobs who scam. Please no private message. I want to negotiate the terms of the loan out in public board.
I require acceptable collateral equal to or greater than the value of the loan in almost all cases (100% of cases involving unknown Newbies). Declined. |
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IRS: " you're telling me you just bought a Lambo without having to pay any capital gain tax? "
Holiday: " yes sir, here is my record to prove it" * hanging the IRS 40,000 pages of tx records *
You think they would not just slap you with a penalty and fine, and let you spend your time and money thro court process?
It doesn't work that way. If you made the money by holding btc, you will have capital gains, maybe not on that transaction, but on some other transaction. Reread the OP. It explains that this does not eliminate capital gains, it just groups them into a smaller number of larger transactions instead of throwing off a tiny bit of gain every time you buy coffee. If you made the money some other way, you would have documentation for that income and the IRS doesn't care that you are buying a Lambo. The only case where the IRS cares that you are buying a Lambo is when you don't have the documented income to justify buying one. The ZGL wallet has nothing to do with that at all. You misunderstood my example completely. The IRS WILL audit when you claim you dont have any capital gain. I'm fully aware that the wallet client doesnt not eliminate tax, but helping you to avoid paying tx thro book keeping. You still don't understand. If you made $200K from bitcoin, you WILL have a capital gain, which you should report, and if you report a 200K capital gain and buy a Lambo, you should not have an issue with the IRS. The only way ZGL avoids having a capital gain is if you BOUGHT a sufficient number of coins ABOVE the price at which you are selling them. If you did that, then you very likely have USD income you are supposed to be reporting. Nothing you can do will prevent you from being audited. If you report a $200K capital gain, they may still audit you, in fact the more income you report the more likely you are to get audited, all else being equal. |
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IRS: " you're telling me you just bought a Lambo without having to pay any capital gain tax? "
Holiday: " yes sir, here is my record to prove it" * hanging the IRS 40,000 pages of tx records *
You think they would not just slap you with a penalty and fine, and let you spend your time and money thro court process?
It doesn't work that way. If you made the money by holding btc, you will have capital gains, maybe not on that transaction, but on some other transaction. Reread the OP. It explains that this does not eliminate capital gains, it just groups them into a smaller number of larger transactions instead of throwing off a tiny bit of gain every time you buy coffee. If you made the money some other way, you would have documentation for that income and the IRS doesn't care that you are buying a Lambo. The only case where the IRS cares that you are buying a Lambo is when you don't have the documented income to justify buying one. The ZGL wallet has nothing to do with that at all. |
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I have a 2 BTC output in my wallet that was purchased for $2 ($1 per BTC)
I have a 2 BTC output in my wallet that was purchased for $2000 ($1000 per BTC)
I need to make a 0.05 BTC payment to someone and the current exchange rate is $500.
How to I properly create the transaction for zero gain/loss, and what is the cost basis of each the new unspent outputs?
You can't reset your basis (or holding period) by trading with yourself, so any change outputs would retain their original basis. Moving your own asset around, for example moving a stock between certificate form and book entry form, does not change your basis. The outputs that represent spending would have a new basis (to the recipient), and would be a sale by you. Of course, I am not the IRS. They might see it differently. |
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CIMF loan repaid 3 days early. Collateral in the process of being returned.
Returned now. Successful transaction. Post #2 updated. |
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Is it possible to manually add a node IP:port to my bitcoin.conf?
Yes just use addnode there |
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I don't think this would work. This tax attorney advises using the FIFO method and nothing else for bitcoins. I don't follow his reasoning. Because bitcoins are fungible, you run into the problem of tracing the cost of each bitcoin you hold. Yet stock shares are fungible and the specific lot method is definitely allowed for stock shares. |
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What I don`t understand is, if 1 bitcoin = 1 bitcoin, and in my bitcoin wallet all my coins are lumped together, how do I know how much capital gains I have made on a PORTION of those bitcoins? I don`t know which bitcoin is which or when/where I bought each one, it`s not like they`re physical objects I can easily distinguish between. Do we average all of our fiat-to-bitcoin conversions to determine the starting basis?
The default method is LIFO which means the earliest bitcoins you bought are the ones assumed to be sold (or spent). You can also identify specific bitcoins, and that may well be useful with the ZGL-coin technique, but from the IRS point of view that is optional. With mutual funds you can use an average cost basis technique, and on the surface that would seem reasonable for bitcoin as well, further simplifying accounting (you need only track a single number). But the IRS has not stated this method is allowed for bitcoins. Correct except it is FIFO (likely a typo). First In - First Out. Yes typo. Text following is correct. |
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What I don`t understand is, if 1 bitcoin = 1 bitcoin, and in my bitcoin wallet all my coins are lumped together, how do I know how much capital gains I have made on a PORTION of those bitcoins? I don`t know which bitcoin is which or when/where I bought each one, it`s not like they`re physical objects I can easily distinguish between. Do we average all of our fiat-to-bitcoin conversions to determine the starting basis?
The default method is LIFO which means the earliest bitcoins you bought are the ones assumed to be sold (or spent). You can also identify specific bitcoins, and that may well be useful with the ZGL-coin technique, but from the IRS point of view that is optional. With mutual funds you can use an average cost basis technique, and on the surface that would seem reasonable for bitcoin as well, further simplifying accounting (you need only track a single number). But the IRS has not stated this method is allowed for bitcoins. EDIT: LIFO above is a typo. Correct default method is FIFO (first in first out). |
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so everytime we get a bitcoin payout from our pool we need to go look up it's value on bitcoin charts at the that time to figure out its worth. its going to be an accounting nigtemare. It is not an "accounting nightmare" it is a simple program, sort of like this one which already exists one day after the IRS ruling. https://bitcointaxes.info/No doubt people can and will create more such programs. These are not even hard programs, they would work fine on an 80s vintage PC. |
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Thank you wiz. Didn't know how to pull the raw data but that definitely answers it. The labels on the graph axis could use a little work, but no worries on the payouts. Thanks again. |
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Send you a pm about a 1 BTC loan.
Declined. No adequate collateral and promising to pay with Paypal. |
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My point is, it might be that the 0.04 marking on the graph IS in fact 0.035, but rounded to 0.04, which would then be a display error. If you notice, the graph has TWO markings for 0.03, and TWO markings for 0.02: there is something wrong with how the graph displays it's markings. Further more, you can see that there is a marking for 0.01, and just below, a marking for 0.005. So, if each line means 0.005, then the 0.04 line we speak of is indeed, in fact, 0.005 Yes I think you are right. Thank you for pointing that out. |
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