Tax & Hoarded / Hodl Coins

[Kprawn]

In my country, I only get taxed on something where I have received financial gain.

Let's say, I work online and I get paid, I have to declare that income and I get taxed on it... and when I buy something and I sell it for a profit, I pay capital gains tax on it, for the profit portion on it.

Now let's take Satoshi's 1 000 000 coins as a example. {He/she has not received ANY financial gain from it, but he/she has 1 000 000 coins with a crazy value}

If he/she lost the private key, or if he/she simply never sell them, could he/she be liable for the financial value of those coins regarding the tax? {That is to say, if he/she come forward}

Let's say, he/she spends only 1000 coins, would he/she be taxed on the profit part of those 1000 coins only? 

We pay monthly municiple property tax, based on the size and value of the plot and house we own... could the IRS not make the same ruling for Bitcoin owners?  

Let's see what you think...  

  

[Amph]

if you never exchanged your coins with anything(barter included, so selling directly without dumping for fiat first) you are not taxable not matter the amount of coins you hold

onther other hand if you sell and convert for fiat, you must report you earning for that  fiscal year to your taxman if the earning is big enough, depends on where you live

but anyway i will not delcare anything if bitcoin isn't regulated in your zone

[photon_coin]

careful there !!

[Kakmakr]

In my country, I only get taxed on something where I have received financial gain.

It would be good to know what country you live in.

In some countries BTC gains are tax-free and in some countries it's tax-free if you owned them for more than one year.

I think it's not a real gain if you don't convert it, since people don't pay tax on other asset gains (stocks, currencies or commodities) every year without selling them (you still have the risk of the asset price going down)

This is not financial or legal advice. Talk to a tax consultant if you made a significant amount of money.

If Bitcoin is seen as a asset, would we not be able to subtract depreciation or losses from it? I think it's more a commodity and we should be tax'ed in the same way that all other commodities are tax'ed.
The Tax man SHOULD only be allowed to take a piece of the profit or they should take VAT from every Bitcoin purchase, like they do in Estonia. 

[BillyBobZorton]

You have to report your BTC holdings if they pass the X limit (depending on country).
Do you think the government wouldn't love to tax someone holding 100+ BTC? of course they do.
But how can they even know you own 100+ BTC? they can't... so mix your coins before doing anything fiat related.

[aso118]

It all boils down to the country you are in

- When Satoshi mined those coins, they were worthless and there probably is no tax liability attached to that event.
- Some jurisdictions have a wealth / asset tax, apart from income tax. So if the total wealth of an individual, exceeds a threshold amount, there could be a wealth tax involved.
- On the sale / spending of bitcoins (barter transaction), there could be capital gains tax involved.

[Bit_Happy]

Generally, you should get tax advice from a qualified professional, but...
At this time, many "qualified professionals" don't know anything about BTC. Also, the laws are not always clear, yet.
Good luck.

[Kprawn]

Generally, you should get tax advice from a qualified professional, but...
At this time, many "qualified professionals" don't know anything about BTC. Also, the laws are not always clear, yet.
Good luck.

Nope, not looking for Tax advice.  ... I just thought this would be a great way to brain storm the implication of tax on coins being hoarded. The complexity of this, would be a nightmare for tax collectors or financial advisors.

Just consider the math, to determine the tax liability on coins purchased and sold on a daily basis. {Day trading}

If Satoshi ever decide to use his/her coins, he/she should budget for the tax impact this would have or just go to jail and be done with it.

Sometimes it's nice to have money, but the burden of having it, exceed the joy from having it. {This might sound cruel, but in a way it's the truth.... If you own a house, you have to maintain it, you have to keep it safe and you have to pay tax.... The person without a house, has none of those worries... They can live in a slum and be happier than the guy living in a mansion }   

The more money you have, the more money you would need to keep it. 

[edward222]

Generally, you should get tax advice from a qualified professional, but...
At this time, many "qualified professionals" don't know anything about BTC. Also, the laws are not always clear, yet.
Good luck.

The question is, how to get some qualified professionals that knows about BTC.
hhhmmm

[NUFCrichard]

In my country, I only get taxed on something where I have received financial gain.

Let's say, I work online and I get paid, I have to declare that income and I get taxed on it... and when I buy something and I sell it for a profit, I pay capital gains tax on it, for the profit portion on it.

Now let's take Satoshi's 1 000 000 coins as a example. {He/she has not received ANY financial gain from it, but he/she has 1 000 000 coins with a crazy value}

If he/she lost the private key, or if he/she simply never sell them, could he/she be liable for the financial value of those coins regarding the tax? {That is to say, if he/she come forward}

Let's say, he/she spends only 1000 coins, would he/she be taxed on the profit part of those 1000 coins only? 

We pay monthly municiple property tax, based on the size and value of the plot and house we own... could the IRS not make the same ruling for Bitcoin owners?  

Let's see what you think...  

  

I am pretty sure that only realised profits are taxable.
In Germany if you hold bitcoins for more than one year, then you can sell them at a profit without having to pay any tax, which is pretty good if you ask me.

If the rules are different elsewhere I would recommend looking at strategies to ustilize your tax free allowance as much as possible.

[Dr. Pepper]

Generally, you should get tax advice from a qualified professional, but...
At this time, many "qualified professionals" don't know anything about BTC. Also, the laws are not always clear, yet.
Good luck.

This is exactly it. If you want my advice don't take the advice of people on here who don't really know what they're talking about. The laws governing taxes vary wildly from country to country and when you throw in bitcoin in complicates it even more as its such a new tech there usually arent any or many laws or regulations governing its use. If you want to use it to try avoiding taxes they you'll very likely open yourself up for trouble at a later date so be very careful and get some proper advice if you're seriously considering using bitcoin.

[countryfree]

I advise not to buy any BTC in the country where you happen to be staying, to avoid taxation.

[Kprawn]

I advise not to buy any BTC in the country where you happen to be staying, to avoid taxation.

How does it make a difference in your country, where you have bought your Bitcoins?

People use many online methods to buy Bitcoin, and the origin of those coins cannot be traced. Well, not the origin, but the place where they were bought.

I agree tax rules & regulations differ from country to country, and my intention would never be to avoid tax.

I just find it amazing, how the tax is collected.

[Amph]

I advise not to buy any BTC in the country where you happen to be staying, to avoid taxation.

they can't tax you if you buy only, they can do it only if you trade and earns profit on that, holding only bitcoin isn't taxable ever

so as long as you are not using it, you are safe, on states that isn't regulated or where btc is free to use, i think you can do anything with it without worry too much

[thejaytiesto]

I wonder... are you guys going to report your tax gains on signature campaings?
Sure it doesn't pay much, but after a year and with this low BTC price, you could store a decent amount. Then let's say BTC goes back to 1K and beyond on 2017.
Would you report those gains? how would you do it? If you don't do it, how do you avoid revealing your total BTC stack when you buy something BTC/exchange the BTC for fiat to buy some stuff?
What is your plan with this?

All the BTC i got is from dollar cost averaging, but i've never bought anything with it yet and never left the bitcoin ecosystem.

[chmod755]

I wonder... are you guys going to report your tax gains on signature campaings?
Sure it doesn't pay much, but after a year and with this low BTC price, you could store a decent amount. Then let's say BTC goes back to 1K and beyond on 2017.
Would you report those gains? how would you do it? If you don't do it, how do you avoid revealing your total BTC stack when you buy something BTC/exchange the BTC for fiat to buy some stuff?
What is your plan with this?

I'm spending these coins so I don't need to touch other wallets to make small purchases.

[NorrisK]

I advise not to buy any BTC in the country where you happen to be staying, to avoid taxation.

they can't tax you if you buy only, they can do it only if you trade and earns profit on that, holding only bitcoin isn't taxable ever

so as long as you are not using it, you are safe, on states that isn't regulated or where btc is free to use, i think you can do anything with it without worry too much

Why not? If I hold one million euro without touching it ever, I will still have to pay tax on this. This year, we had to declare anything related to digital currencies, also just holding them.

[dothebeats]

It depends mainly on the laws regarding taxes in different countries. In my case, bitcoin isn't taxed by the government even if you got something from it. The government here in my country don't care about your gains unless it reached the million peso barrier. That would definitely ring a bell in their ears.

[manselr]

I wonder... are you guys going to report your tax gains on signature campaings?
Sure it doesn't pay much, but after a year and with this low BTC price, you could store a decent amount. Then let's say BTC goes back to 1K and beyond on 2017.
Would you report those gains? how would you do it? If you don't do it, how do you avoid revealing your total BTC stack when you buy something BTC/exchange the BTC for fiat to buy some stuff?
What is your plan with this?

I'm spending these coins so I don't need to touch other wallets to make small purchases.

Where are you spending them at?
And I don't really get what you mean. Are you using a wallet exclusively for the signature campaing?
In any case, once you pay, the shop owner knows your data (name and transaction). Could the IRS or whatever equivalent in your country end up finding the total amount of money you've used on all those small purchases? because over time, a lot of small purchases are taxable money, and it always keeps adding up.

[Amph]

I advise not to buy any BTC in the country where you happen to be staying, to avoid taxation.

they can't tax you if you buy only, they can do it only if you trade and earns profit on that, holding only bitcoin isn't taxable ever

so as long as you are not using it, you are safe, on states that isn't regulated or where btc is free to use, i think you can do anything with it without worry too much

Why not? If I hold one million euro without touching it ever, I will still have to pay tax on this. This year, we had to declare anything related to digital currencies, also just holding them.

money are declared one time only, it's not like if i hold 1 million i need to declare it every year if not more income comes in my portfolio

also bitcoin itself isn't taxable if not exchange no matter the amount