Tax on alternate currencies

[soades]

Barter is exempt from tax, but when you use government sanctioned FRN's you are taxed.  What about Bitcoins? Where do they fall under?   

The tax man is so hungry for the fruit of your labor he considers adding a value tax to barter situations.  Bitcoins could be seen as a way to avoid tax for consumer transactions, TPTB will stop at nothing to glean their unearned share.

"Alternative currency is a term that refers to any currency used as an alternative to the dominant national or multinational currency systems (usually referred to as national or fiat money). Alternative currencies can be created by an individual, corporation, or organization, they can be created by national, state, or local governments, or they can arise naturally as people begin to use a certain commodity as a currency. Mutual credit is a form of alternative currency, and thus any form of lending that does not go through the banking system can be considered a form of alternative currency."

"Often there are issues related to paying tax. Some alternative currencies are considered tax-exempt, but most of them are fully taxed as if they were national currency, with the caveat that the tax must be paid in the national currency. The legality and tax-status of alternative currencies varies widely from country to country; some systems in use in some countries would be illegal in others."

http://en.wikipedia.org/wiki/Alternative_currency       

[digdugg67]

Soades,

Must be nice to live somewhere that barter is not taxed.

In Michigan, there is tax on barter of goods and services.

Not a lot of people report it but there are taxes due.

If i trade my apples for a share of the neighbors cow, we both owe taxes on the trade at fair market value, no ifs ands or buts. So the fair market price is 1 dollar ;-)

Tax man wants his cut here.  I think a lot of states have tax regs on swaps and barter buried somewhere in their tax code.

[soades]

Soades,

Must be nice to live somewhere that barter is not taxed.

In Michigan, there is tax on barter of goods and services.

Not a lot of people report it but there are taxes due.

If i trade my apples for a share of the neighbors cow, we both owe taxes on the trade at fair market value, no ifs ands or buts. So the fair market price is 1 dollar ;-)

Tax man wants his cut here.  I think a lot of states have tax regs on swaps and barter buried somewhere in their tax code.

I did not know that, recently they were talking about a value barter tax here in Cali.  Seems there is no legal way for a man to self-sustain by his own resources, farming, trading, bartering with his neighbor is against the law of the land. 

[echO]

Wouldn't the issue but, sure BTC to BTC is barter, but once you exchange BTC say for USD, that is essentially "income" and therefore taxable?

BTW: I'm not a tax lawyer, or any sort of lawyer. This is just me musing.

[soades]

Wouldn't the issue but, sure BTC to BTC is barter, but once you exchange BTC say for USD, that is essentially "income" and therefore taxable?

BTW: I'm not a tax lawyer, or any sort of lawyer. This is just me musing.

yes, transfer too FRN's means a tax, but if you exchange BTC for products there could be a "value" then tax could be fiendishly applied, or that alternative currency itself BTC could be taxed... but if it is hard for TPTB to record BTC exchanges, then BTC itself becomes the enemy to be destroyed (outlawed).     

[Alik]

Just sweep it all under the rug. What "they" don't know won't hurt them.

[Bitatoes]

I think the issue of tax is actually potentially good for bitcoin, now hear me out. It may be that they won't even attempt to make it illegal because they won't want to try to make it illegal, admit they failed(like the way of the torrent), then try to tax, so they may just skip right over trying to make it illegal and go straight for the tax, which, granted would be tough for them to enforce considering the nature of the project. Many people would most likely willingly pay taxes on their profits though, at least somewhat, so that they can spend there money openly on things like houses and cars, anything that will easily be noticed by them.

[mckmuze]

I must say, it is amusing to see this scramble by central authority to regulate something out of control.  I think at this point it is safe to say that without an all out public assault on whats left of our sovereignty is the only option they have left. We will see what happens.

[Gordonium]

Taxation and Bitcoin?

[MegatonWarrior]

Anyone earning profits trading on exchanges like Mt Gox better think about the taxman.  Mt Gox has all your info to track you down.

[AnonyMint]

In many jurisdictions, on each P2P currency transaction, you are liable to report only the capital gain or loss, i.e. the change in value of the currency since you acquired it. So you are paying tax only on gains, not on the total price of what you are purchasing with the P2P currency.

Still it sucks!

If you don't report, this is at your risk of being caught and going to jail.


Disclaimer: I am not giving tax advice, please consult your own expert.