Taxes on Bitcoin

[zeze18]

greetings all,,here I would like to inquire about bitcoin,,, if someone had a number of bitcoin is more than 10 to 100 BTC in person and not the company,what concerned required to report ownership to the appropriate government agency?
And is there any standard rules governing the taxation of bitcoin?

[marseille]

Technically to be 100% right, you should record the price after each block found with the pool you are using.  Of course that is not going to happen (although would be a great piece of software idea..) so instead I mine all coins to a single address that I dump at the end of each month and record my basis as that.  So you owe ordinary income on that part, then any fluctuation of price when you sell the assets would be capital gains.

This is interesting. The question is how the IRS will know that I mined bitcoin, if no pool reports it to the IRS. Many pools are not even in US, I doubt they will take the trouble to report to IRS, moreover the pool has no idea which country I live.

[DebitMe]

Technically to be 100% right, you should record the price after each block found with the pool you are using.  Of course that is not going to happen (although would be a great piece of software idea..) so instead I mine all coins to a single address that I dump at the end of each month and record my basis as that.  So you owe ordinary income on that part, then any fluctuation of price when you sell the assets would be capital gains.

This is interesting. The question is how the IRS will know that I mined bitcoin, if no pool reports it to the IRS. Many pools are not even in US, I doubt they will take the trouble to report to IRS, moreover the pool has no idea which country I live.

The IRS will probably not know if you mine bitcoins or not, especially on the level of home mining.  But the question was how you should report your income.  What your suggesting is tax evasion which is illegal in the United States and probably most countries in the world.  Just because the IRS doesn't know about something doesn't mean it is OK not to do it.

[ZrCoin]

It is good topic.
First of all it will depend on the country and the nature of the transaction.

If you are just doing private transactions there is anything to tax, but governments are getting more creative every day.  If the crypto transaction is part of a business deal I would assume that the same tax rules apply as would for a transaction with fiat money.

But for now I think some rules concerning cryto transactions are not described completely in laws.
I mean mechanism and system of laws and taxes has not been completely created.

[DebitMe]

It is good topic.
First of all it will depend on the country and the nature of the transaction.

If you are just doing private transactions there is anything to tax, but governments are getting more creative every day.  If the crypto transaction is part of a business deal I would assume that the same tax rules apply as would for a transaction with fiat money.

But for now I think some rules concerning cryto transactions are not described completely in laws.
I mean mechanism and system of laws and taxes has not been completely created.

Please do not give what you "think" because it is not true and frankly doesn't matter.  You need to specify what country your giving your "opinion" about also, because everything you just said above is FUD for the United States, which has actually pretty clearly laid out  how bitcoins should be taxed.

[marseille]

Technically to be 100% right, you should record the price after each block found with the pool you are using.  Of course that is not going to happen (although would be a great piece of software idea..) so instead I mine all coins to a single address that I dump at the end of each month and record my basis as that.  So you owe ordinary income on that part, then any fluctuation of price when you sell the assets would be capital gains.

This is interesting. The question is how the IRS will know that I mined bitcoin, if no pool reports it to the IRS. Many pools are not even in US, I doubt they will take the trouble to report to IRS, moreover the pool has no idea which country I live.

The IRS will probably not know if you mine bitcoins or not, especially on the level of home mining.  But the question was how you should report your income.  What your suggesting is tax evasion which is illegal in the United States and probably most countries in the world.  Just because the IRS doesn't know about something doesn't mean it is OK not to do it.

I know some friends report the bitcoin income only when they sell them. They report it like capital gains and deduct their mining efforts/cost etc. But they don't seem to report it after mining, as it seems too much cumbersome.

[DebitMe]

Technically to be 100% right, you should record the price after each block found with the pool you are using.  Of course that is not going to happen (although would be a great piece of software idea..) so instead I mine all coins to a single address that I dump at the end of each month and record my basis as that.  So you owe ordinary income on that part, then any fluctuation of price when you sell the assets would be capital gains.

This is interesting. The question is how the IRS will know that I mined bitcoin, if no pool reports it to the IRS. Many pools are not even in US, I doubt they will take the trouble to report to IRS, moreover the pool has no idea which country I live.

The IRS will probably not know if you mine bitcoins or not, especially on the level of home mining.  But the question was how you should report your income.  What your suggesting is tax evasion which is illegal in the United States and probably most countries in the world.  Just because the IRS doesn't know about something doesn't mean it is OK not to do it.

I know some friends report the bitcoin income only when they sell them. They report it like capital gains and deduct their mining efforts/cost etc. But they don't seem to report it after mining, as it seems too much cumbersome.

As a CPA I would advise against this.  They really should be reporting that income in the year it was earned.  If they get audited they would certainly be assessed penalties and interest on the unpaid taxes associated with the mining.

[marseille]

Technically to be 100% right, you should record the price after each block found with the pool you are using.  Of course that is not going to happen (although would be a great piece of software idea..) so instead I mine all coins to a single address that I dump at the end of each month and record my basis as that.  So you owe ordinary income on that part, then any fluctuation of price when you sell the assets would be capital gains.

This is interesting. The question is how the IRS will know that I mined bitcoin, if no pool reports it to the IRS. Many pools are not even in US, I doubt they will take the trouble to report to IRS, moreover the pool has no idea which country I live.

The IRS will probably not know if you mine bitcoins or not, especially on the level of home mining.  But the question was how you should report your income.  What your suggesting is tax evasion which is illegal in the United States and probably most countries in the world.  Just because the IRS doesn't know about something doesn't mean it is OK not to do it.

I know some friends report the bitcoin income only when they sell them. They report it like capital gains and deduct their mining efforts/cost etc. But they don't seem to report it after mining, as it seems too much cumbersome.

As a CPA I would advise against this.  They really should be reporting that income in the year it was earned.  If they get audited they would certainly be assessed penalties and interest on the unpaid taxes associated with the mining.

OK Got it. Thanks for the info. But if I buy bitcoin from exchanges, I don't need to report until I sell it right? It should be just like the stock trading. For mining it could be different due to the cost base. Otherwise I don't see much diff.

[DebitMe]

Technically to be 100% right, you should record the price after each block found with the pool you are using.  Of course that is not going to happen (although would be a great piece of software idea..) so instead I mine all coins to a single address that I dump at the end of each month and record my basis as that.  So you owe ordinary income on that part, then any fluctuation of price when you sell the assets would be capital gains.

This is interesting. The question is how the IRS will know that I mined bitcoin, if no pool reports it to the IRS. Many pools are not even in US, I doubt they will take the trouble to report to IRS, moreover the pool has no idea which country I live.

The IRS will probably not know if you mine bitcoins or not, especially on the level of home mining.  But the question was how you should report your income.  What your suggesting is tax evasion which is illegal in the United States and probably most countries in the world.  Just because the IRS doesn't know about something doesn't mean it is OK not to do it.

I know some friends report the bitcoin income only when they sell them. They report it like capital gains and deduct their mining efforts/cost etc. But they don't seem to report it after mining, as it seems too much cumbersome.

As a CPA I would advise against this.  They really should be reporting that income in the year it was earned.  If they get audited they would certainly be assessed penalties and interest on the unpaid taxes associated with the mining.

OK Got it. Thanks for the info. But if I buy bitcoin from exchanges, I don't need to report until I sell it right? It should be just like the stock trading. For mining it could be different due to the cost base. Otherwise I don't see much diff.

Yes I agree, if you buy it from an exchange, then your basis is whatever you paid, and when you sell it you will either recognize a gain or a loss. (hopefully a gain, lol).  Although I am unfamiliar of reporting requirements.  For example, if you have a foreign bank account, you need to report that to the IRS with amounts and what not.  I don't believe that is required with bitcoin, but I am not totally sure.

[sportis]

I live in a European country. Here there is no specific legislation about bitcoin and tax authorities apply a community directive of the European Union where bitcoin is a form of payment. Furthermore, the higher european court decided that all transactions, i.e  purchases and sales with bitcoin should be exempt from Value Added Tax (VAT) due to VAT is applied only in good and services with end consumer and bitcoin is considered as an eternally transferable value like as fiat money https://yro.slashdot.org/story/15/07/19/1235203/bitcoin-exempt-from-vat-says-european-court-of-justice

[valley365]

Good to know the rules for reporting tax in US, especially after mined bitcoin we should report, lol. Since I don't mine any more (it's too tough to do now), it doesn't really matter, but thanks to DebitMe and marseille to clarify the details.

[rajasumi3]

people from all over the world are buying bitcoins and no one is paying taxes at all ,maybe the big whales are paying taxes and even they are waiting for the price hike and and when they buy it and split it in such a way that they do not have to pay taxes a lot .

[TastyChillySauce00]

people from all over the world are buying bitcoins and no one is paying taxes at all ,maybe the big whales are paying taxes and even they are waiting for the price hike and and when they buy it and split it in such a way that they do not have to pay taxes a lot .

Exchange will probably charge taxes indirectly and sometimes I found an exchanger which clearly stated that they will charge few percents for the taxes. It means not only whales which were charged but also an individual who have the intention to buy bitcoin. Exchangers which have official company in some states also required paying taxes thus they will burden this to the customers

[bitjoin]

I have a question... so if i cashout 11k BTC in GBP i dont have to pay capital gains right since you get 11k personal allowance per year.  Does it matter what you earn as an income or does income not change captial gains tax?

[strasboug]

people from all over the world are buying bitcoins and no one is paying taxes at all ,maybe the big whales are paying taxes and even they are waiting for the price hike and and when they buy it and split it in such a way that they do not have to pay taxes a lot .

You probably not in US. In US exchange will report your sales to Internal Revenue Service, it's like selling stocks, you are liable to tax and can't avoid it unfortunately.

[mkmdoc]

Thanks everyone for your input! It's greatly appreciated. I've often wondered what people do when they win Bitcoins from a foreign online casino, for example, and whether they owed taxes to the country where those Bitcoins originated, in this case the foreign-owned casino.

Till now government have not declared any thing bitcoin taxes up to now, even with bitcoin casino also the casino owners will not announce the winner to public because government will not tolerate illegal activities. It depends on the country where you are living till now no one paying any taxes to the government who won the bitcoin in casino.

[Amph]

I have a question... so if i cashout 11k BTC in GBP i dont have to pay capital gains right since you get 11k personal allowance per year.  Does it matter what you earn as an income or does income not change captial gains tax?

you need to pay capital gay on the amount you earn by doing trading, you will be taxed on the revenue if those 11k are the net revenue than you need to declare and be taxed on that amount

[bitjoin]

I have a question... so if i cashout 11k BTC in GBP i dont have to pay capital gains right since you get 11k personal allowance per year.  Does it matter what you earn as an income or does income not change captial gains tax?

you need to pay capital gay on the amount you earn by doing trading, you will be taxed on the revenue if those 11k are the net revenue than you need to declare and be taxed on that amount

What about if you are a long term investor? and only buy 1 time and sell 1 time? to me it seems you are aloud to cash in 11.1k in GBP per year of bitcoin and not get taxed ?

[Ricky01]

This is actually an interesting question.
I doubt that 99.99% of people dealing with Simulation de rachat de crédit Bitcoin are paying any kind of tax.
Unless you are selling a lot of coins and earning a living from it, I wouldn't worry about any taxes.
(I mean serious trading where you are earning tens of thousands of dollars a year.)

Vraiment, alors ça je ne le savais même pas

[audaciousbeing]

Taxes on bitcoin is actually a dicey area for most governments of the world since its not something that has been with us for ages or time immemorial and this is something facing even the advanced countries in terms of technologies and expertise not to talk of developing countries and third world countries but I see government finding a way around the blockchain technology by getting their own share of the cake by making everyone declare his or her income from whatever means whether electronic or physical with that they get to tax bitcoin in an indirect manner.