Things getting interesting once we past $100

[SgtSpike]

I talked to my accountant yesterday, and he'd already heard of Bitcoin. If you intend to sell for USD you should take note of what price you initially bought for so you can call it a capital gain/loss.

I should take note?
So the IRS is going to take my word for it?
I can easily say I bought at 72 and sold at 73.5

Yes, the IRS will take your word for it.  That is, unless you get selected to be audited.  Then you'd better be damn sure you have a paper trail to back up every dollar you report (or don't report) on your income tax.

FIne by me.. Since they won't be able to prove that I bought/sold at any point and even if they trace where bitcoins are going using the blockchain, they don't know what address is mine or not, therefore, irrelevant. So I can't prove when and at what price I bought/sold and they can't prove it either.
Since they are the ones that have to prove I committed fraud and not me the one that has to prove that I'm innocent, then I win
Obviously I wouldn't want to be in that legal hassle, but it's nice to know bitcoin offers that level of anonymity

Usually, they take a look at your bank account(s) and count every deposit into them as "income", then work backwards from there.  It is on you to prove what is deductible from that income by showing them how much you paid for the Bitcoins you just sold for $8k, or showing them how much you spent on electricity to mine them, etc.

IRS audits on individuals aren't usually about fraud - they're more about making sure you're paying all the taxes you actually owe.  Sometimes they can reveal true fraud, but most of the time, they just find a bunch of accidentally unreported income and fine you for it.

I understand that process, however, we are talking specifically related to bitcoin. Yes they will see a withdrawal in my account from fiat and if I chose to deposit money back, they will see a deposit back and they can extrapolate the difference from there. Beyond that, it's a big black hole called bitcoin..

Well, exactly.  I don't think accrual accounting is required for calculating taxation in most cases anyway (with a few mark-to-market exceptions), so anything not based directly on a USD transaction isn't going to be relevant to the IRS.  They don't care when you bought Bitcoin, and at what price, and if you sold it again later, and what price you bought back in at after that.  And if you buy BTC and spend it within the BTC world, I wouldn't expect an IRS audit to reveal anything.  It's the deposits they care about, because that's where they see it as "cashing out" your investment for a gain or loss, and the point at which those gains/losses become taxable.

I would expect to see changes to this in the future, where they'll want you to report gains/losses on digital currencies through some sort of mark-to-market scheme, but that'll probably be a long time in the future yet, and from what I know, this would absolutely not be required with today's tax code.

[Fuzzy]

Since they are the ones that have to prove I committed fraud and not me the one that has to prove that I'm innocent, then I win

If that's how you think they work, you're in for a shock.

That's how the justice system in the US works... (The litigator has to prove you did something wrong) Not sure where you live but I experienced it first hand and I was actually surprised!

I don't know what you did that you got off lightly, but if they so much as suspect that you tried to evade taxation, they're gonna throw the book at you. They have all the wiggle in interpreting their laws however they see fit.

[Fuzzy]

Since they are the ones that have to prove I committed fraud and not me the one that has to prove that I'm innocent, then I win

If that's how you think they work, you're in for a shock.

That's how the justice system in the US works... (The litigator has to prove you did something wrong) Not sure where you live but I experienced it first hand and I was actually surprised!

I don't know what you did that you got off lightly, but if they so much as suspect that you tried to evade taxation, they're gonna throw the book at you. They have all the wiggle in interpreting their laws however they see fit.

and thats why lawyers exist to make sure they don't "wiggle" the laws in their favor.

You have a lot of faith in the fairness of the system.

[Fuzzy]

[...] I'm not subject to the full extend of the laws in the US [...]

That's great for you, but not really fair to the people who look at your methodology and think they can do the same with immunity. 

[Fuzzy]

[...] I'm not subject to the full extend of the laws in the US [...]

That's great for you, but not really fair to the people who look at your methodology and think they can do the same with immunity. 

Again, I'm not planning on getting to that point. Also, bitcoin won't be regulated. Just tell torrents, mp3s, and other systems that change the way we consume media and how those systems have destroyed industries that were abusing their power. Namely, the USPS, the music labels, movie renting companies and or theaters.... government is next... people are sick and fucking tired of the government's ineptitude....
I see bitcoin as a huge threat to governments, because governments don't care about mp3, they don't care about torrents, but wait until the people is able to control their own money and you'll see!

None of that stuff is news to anyone on here, I was referring to your comments on tax havens.

[Fuzzy]

[...] Worst case scenario I will withdraw in a tax haven account.

bitcoin is a tax haven on itself as long as you don't convert to fiat what's your point?

[Fuzzy]

[...] Worst case scenario I will withdraw in a tax haven account.

bitcoin is a tax haven on itself as long as you don't convert to fiat what's your point?

correct to both statements...

no taxes regulate bitcoin as long as it stays bitcoin.
And if you want to withdraw in a tax haven, then you can safely convert bitcoin into USD.

Again, your point is?

No, they can't, that's my point, not with the same immunity to US law that you have.

It's irresponsible to make such suggestions when the rules don't apply to you the way they do for most everyone else.

[Fuzzy]

[...] Worst case scenario I will withdraw in a tax haven account.

bitcoin is a tax haven on itself as long as you don't convert to fiat what's your point?

correct to both statements...

no taxes regulate bitcoin as long as it stays bitcoin.
And if you want to withdraw in a tax haven, then you can safely convert bitcoin into USD.

Again, your point is?

No, they can't, that's my point, not with the same immunity to US law that you have.

It's irresponsible to make such suggestions when the rules don't apply to you the way they do for most everyone else.

How is it irresponsible? rules apply to everyone differently.. you're talking about a currency that can reach every corner of this world, where there are different laws and different people subject to them.
US citizens have laws that protect them from things that other citizens in other countries do not have such privilege. That's not irresponsible, that's the way the world works, otherwise you are a communist or your ideas are.

I'm not worried about the laws that protect people, I'm concerned about the laws that are in place to punish them for tax evasion, which is illegal for most of the middle and lower class.

If you can convert bitcoins into fiat in a tax haven legally, good for you, and go ahead, but for most people here, it's illegal and the penalties are severe.

[bubblesort]

um, you know that almost every country does tax capital gains, right?  I mean, profits from BTC investment are taxed as capital gains, aren't they?

Here is a useful capital gains tax calculator.

[Vladimir]

um, you know that almost every country does tax capital gains, right?  I mean, profits from BTC investment are taxed as capital gains, aren't they?

Here is a useful capital gains tax calculator.

If you do not sell bitcoins, there is no tax event for capital gains. This means you can use it as collateral for loans, for example. There are ways to profit from having bitcoins without selling them.

Lots of tax heavens out there with no capital gain taxes as well.

There are also various trust based offshore structures that could be used for legal tax avoidance.

Of course a lot depends on specific jurisdiction and professional advise could be highly valuable.

[jubalix]

How do I avoid uncle sam to stick its hand in my cookie jar and takes the tax share?
What if I don't report it?

Face to face trades.

Of course, not paying your share into a system that you benefit from makes you a freeloader (or at the very least a leech).

I'll gladly pay the transaction fees/withdrawal fees of trading my bitcoins into USD and then transfering USD to my bank account.
I'm paying  my share to the system I benefitted from, BTC that is. I didn't benefit from USD.

So you don't use roads?  You don't take advantage of the electrical grid?  You aren't protected by the US army?  You won't receive social security?

/devilsadvocate

No, i hate roads my comunity work etc should not be spwalling to keep me paying high transport costs, also playing roullete with your life

The energy grid, i could have had any number of alternative energy supplies by now, without the grid

Us army scratch that

Social,security? You mean the sequestered wealth system by carveing back your oppourtunity to work, yeah wish that would go away to

[Jillybean]

You did not ask me, but I feel compelled to answer.

Roads: Irreverent. Fuel Tax, local extortion taxes pay for these things.
Electric Grid:  Irreverent. Electric grid is payed for and maintained by people who buy electricity.
US army: NO. The military in it's current state is currently creating a tangible threat to the US through current actions around the globe that protect corporate interests, not those of US citizens.
Social Security: NO.  Is payed for through your voluntary contribution into the SS system. I have never paid a dime into it therefor I am not eligible.

Can you link a reliable source, like a .gov website that states that social security is voluntary? I'm genuinely interested.

[vvic]

ohoho! Don't even get me started WHY I'm pissed about taxes...  This is going to be long post, but with valid arguments. If not, I'm opened for discussion

So now that there's another "bubble" at full speed, I'm reaching a point where crossing $100 will mean that me as well as others are making some serious money (I'll leave up to you to define what serious money is)
My concern now is, what if i want to sell and withdraw the money to my US Bank Account.
How do I avoid uncle sam to stick its hand in my cookie jar and takes the tax share?
What if I don't report it?
What if I transfer small amounts ($1000 at a time ever week or so..)
Any accountants in the forum to help me do the laundry?

I so feel you, bro. I so feel you. Some people here say thing like

Yeah. Benefit.

As in Fire department, police, military, roads, education, food safety and other consumer protection, social safety net, etc.

So I get benefit from taxation. Well, if I could only pay for those things I wouldn't whine at all. My biggest crying are federal taxes. Why should I pay those bastards?
Fire / police dept are payed by state income tax. Roads payed by gasoline tax. I get state sales tax, I get city sales tax. I get property tax. I get vehicle ownership tax (and no, I can't ditch the car, this wild midwest here, no fancy public transportation like both coasts have)
And then I lose $1000/mo in freaking federal taxes. and then I have to pay more at the end of the year. And I am broke all the time, I have no freely available money (just necessities, plus little extra and tons of taxes). So people say I benefit from military. Or states benefit from FEMA (those lousy bastards, I've seen their work)
Well let's see. Let's start with military.  Shit like this was going on forever http://www.wnd.com/2000/10/4314/   crazy overcharges at tax payer's expense. Why? Because people in charge of those contracts are getting kickbacks. Crap like this still going on today. That's just SUPPLYING the army. Then there was that fucking Iraq war. I didn't need that war. That was wasn't to protect the US.
That war simply allowed bullshit like this to happen http://edition.cnn.com/2005/WORLD/meast/01/30/iraq.audit/ Just like that. They lost 9 billion. Who gives the shit, it's just some shitty change. Besides I didn't ask for US to destroy Iraq and then rebuild it with MY and other tax payer's money.
Then there is shit like welfare. Those freaking leeches.  I'm not talking about people who really needed it, I'm talking about freaking leeches, welfare queens. Like this one http://fellowshipofminds.wordpress.com/2012/02/20/woman-complains-about-her-taxpayer-paid-rent-free-apartment/  why should I pay for that crap??
Then there is freaking IRS. the most freaking useless dept in the federal govt.  I would much prefer state sales tax and no income tax at all. These bastards are so useless. Crap like this
http://www.forbes.com/sites/janetnovack/2012/04/24/refund-tax-fraud-iphone-feed-identity-theft-by-employees/ IRS doesn't even give a damn about.
The IRS, these dumb f...ks allow crap like this to happen http://www.youtube.com/watch?v=3eQZoXAU7X0
Why care? Why to do anything to prevent this from happening? Why change anything? We'll milk a lot more!
Obama says spending isn't the problem. Of course not!
Speaking of Obama and whitehouse expenses...

Not too shabby, huh? to keep that dog it cots 102k/year. Amazing. Why don't they send it to Korea? They love dogs there   http://whitehouseexpenses.com/?cat=3  not too bad, huh?
Why should I pay for this crap? They sure don't http://dailycaller.com/2013/03/20/federal-employees-who-dont-pay-taxes-would-be-fired-under-bill-that-passed-committee/
So... remind me again, how am benefiting from losing 1k/mo?  And you wondering WHY I DO NOT WANT TO PAY TAXES
 

[SgtSpike]

Dude... vvic, I completely agree with you.

[CharlesPonzi]

Buy a shitload of gold.
Sell it.

$$profit

[lebing]

Buy a shitload of gold.
Sell it.

$$profit

theres no AML/ KYC for this?

[HBBZ]

DONATE

[Razick]

So now that there's another "bubble" at full speed, I'm reaching a point where crossing $100 will mean that me as well as others are making some serious money (I'll leave up to you to define what serious money is)
My concern now is, what if i want to sell and withdraw the money to my US Bank Account.
How do I avoid uncle sam to stick its hand in my cookie jar and takes the tax share?
What if I don't report it?
What if I transfer small amounts ($1000 at a time ever week or so..)
Any accountants in the forum to help me do the laundry?

I don't like taxes either, but as far as I know, most Bitcoin users aren't anarchists, they are Libertarians (I'm a moderate Libertarian), so why not pay the tax? The government may be to large, but you are still getting a service and need to pay what you owe.

[oleganza]

I don't like taxes either, but as far as I know, most Bitcoin users aren't anarchists, they are Libertarians (I'm a moderate Libertarian), so why not pay the tax? The government may be to large, but you are still getting a service and need to pay what you owe.

You do not "pay" your taxes. The taxes are taken from you. It does not matter if you send the wire transfer yourself. You do that because you want to avoid more severe penalty and direct confiscation and arrest.

As long as property is taken from you under threat of murder (if you try to protect yourself against the policeman, you'll be shot down, so every law is basically a threat of murder), it does not matter how many goodies you get back. Because whether you like the goodies or not, you are not in control of that. If you like your fire department, good for you, but it's not a result of your choice, it is done without your input whatsoever. And whatever "voice" or "vote" you have is not what you were using to establish the fire dept, but it is *given* to you in a limited way to serve the interests of those who define how to use the budget.

If this situation does not bother you, then why don't you allow me to unilaterally manage your money and buy you stuff without asking you first? If you don't want to give me such right, then why do you allow such right for gov, even though you never have given it explicitly? This just seems illogical.

In the end, being moderate libertarian is like being a little pregnant. Something is either moral or immoral. If you think the idea of gov is morally okay, then how do you draw the line between gov and non-gov? And why the government cannot be absolute? Why democratic majority cannot kill minority? Why certain actions on part of some people are evil (theft, threat of murder), but on part of others are moral (taxation, arrests)?

[Amitabh S]

Stop worrying about $100 and start worrying about $1000, if you can call it "worry"