Best trading practice and tax obligations

[Wilderness]

Hi all,

just wondering what is the best financial approach and potential tax obligations for the following scenario:


* Receiving BTC in exchange for another digital product
* Receiving the same digital product in exchange for BTC

the digital product can be sold for 95% to paypal or international wire transfer and purchased at normal price

so I understand the exchange rate would have to be high to cover the 5% but can anyone share info regarding tax / financial obligations?

I acknowledge I'm still a newbie to BTC but trying to get my head around the practicalities of trading and doing business with BTC

also how does it change if the market is untested? I.e.

* People might be interested in purchasing digital product with their BTC but people with the digital product might not be interested in cashing out to BTC or vice versa

thanks for any help

[Stephen Gornick]

so I understand the exchange rate would have to be high to cover the 5% but can anyone share info regarding tax / financial obligations?

It is hard to understand your question.

If you sell a digital item for PayPal and as the seller there are tax / financial oblications, then you still would have those same obligations whether you accept wire transfer, or cash, or bitcoins.

Here's more info:
 - http://en.bitcoin.it/wiki/Tax_compliance

* People might be interested in purchasing digital product with their BTC but people with the digital product might not be interested in cashing out to BTC or vice versa

If you want to sell something in exchange for bitcoins but not hold bitcoins then you can use a payment processor so that there is no (zero, nada, 0.0) exchange rate risk to you.  Meaning you sell an item for $10, you get $10 sent to you (less payment processor fee, of about 1%).  (Of course, there could be bank transfer fees for the payouts as well, but those are trivial in the U.S. and many other places.)