Enjoy getting raided by the IRS for not reporting income and capital gains.

[Bees Brothers]

Freedom is not free.  Your freedom is paid for with money and the blood of patriots.

That's the truth!  You have to pay the government, and then you need to help fund numerous organizations to help protect you from them!

[Dacm4n]

For the love of god, just charge a uniform added value tax or a sale tax.

Who fricking cares about capital gains, income tax, property tax, etc?

ONE TAX! ZERO LIABILITY!

And no, you can't use the tax law to implement your favorite social engineering scheme. Also, I don't give a damn about those fucking turbotax and the rest of the tax preparation industry. Go do something more productive and fulfilling than doing tax.

Yea everyone would pay taxes if they made it as simple as a flat tax on every item for sale and got rid of the rest. You shouldn't have to buy any programs or hire anyone just to pay your taxes. It would force the government to reduce it's size too.

[Aseras]

the US tax law is absurd, really. it would be so much easier to make everyone pay a flat sales tax. dump all the loopholes for corps and fat cats. 12-15% on everything, no exceptions except for perhaps good and medicine.

[Bees Brothers]

the US tax law is absurd, ...

I think a good way to start to fix it would be to allow everyone to deduct the time and money it takes to attempt to comply with their absurd tyranny.  That would clean it up real fast.

Just spent two very late nights trying to comply with this crap...should be done by this weekend.  I get more angry every year having to waste my time, and then be forced to "donate" to an organization that increasingly tramples and destroys individual rights... which is the opposite of what government should do.

I feel dirty and abused doing taxes 

[the founder]

I asked my accountant this:

"If my bitcoins increased in value how do i account for it."

You know what her reply was?  After asking WTF is a bitcoin?  Her answer was perhaps the most simple I have ever heard.

"The same way you would account for any coin increasing in value,  bit, gold or silver."

[Bees Brothers]

I explained bitcoin to my accountant yesterday...he was very interested. I told him to wait a couple weeks before he looks into it more, otherwise he will get sucked in and be late getting taxes in for all his clients.

He told us to count all our sales as a regular income, and then later when we cash out to deal with capitol gains at that point.

[DataPlumber]

I explained bitcoin to my accountant yesterday...he was very interested. I told him to wait a couple weeks before he looks into it more, otherwise he will get sucked in and be late getting taxes in for all his clients.

[DigitalDoom]

I explained bitcoin to my accountant yesterday...he was very interested. I told him to wait a couple weeks before he looks into it more, otherwise he will get sucked in and be late getting taxes in for all his clients.

He told us to count all our sales as a regular income, and then later when we cash out to deal with capitol gains at that point.

Everyone keeps talking about cashing out...I don't get it!

The only time you owe the IRS a dime is when you make money...meaning US DOLLARS!!!

If the whole idea of BTC is to create a new currency that's free market...why "cash out"? As soon as everyone cashes out, the government gains and BTC loses!

While the whole BTC theory and concept is great...the "cash out" mindset is what will ultimately keep it from ever succeeding. People just can't think outside of Dollars...at least not here in America!

[DigitalDoom]

If you are planning to cash out, and you have a good amount of BTC...it might be a good idea to look into setting up a business for selling off your BTC. You'll give away a whole lot less US Dollars if you can write off all of the expenses for getting and selling the BTC.

I'm no CPA and surely no lawyer, but even a simple minded moron like me knows that it's a bad idea to "cash out" millions of dollars in product for your own personal gain.

Of course, a simple minded moron like me also understands that it's not a good idea to "cash out" a growing currency for a dying one. 

[DigitalDoom]

Wait... So if I keep my BTC that I bought at say $4 and don't cash it into fiat it is not liable to CGT since it is not actually 'money'?

If that is the case, I can just buy items with BTC and sell them for fiat on fleabay?

You're still going to have to report the income you make on ebay.

No matter how you try to get around it...when you exchange BTC for gain of USD you will have taxes to pay. Other than some kind of illegal, money laundering scam there's just no way around paying taxes on the gains in your investments.

It's going to be hilarious when all the "get rich quick" BTC buyers are sitting in Federal prison for trying to get around paying the government with stupid (and Felonious) schemes

[Bees Brothers]

I explained bitcoin to my accountant yesterday...he was very interested. I told him to wait a couple weeks before he looks into it more, otherwise he will get sucked in and be late getting taxes in for all his clients.

He told us to count all our sales as a regular income, and then later when we cash out to deal with capitol gains at that point.

Everyone keeps talking about cashing out...I don't get it!

The only time you owe the IRS a dime is when you make money...meaning US DOLLARS!!!

If the whole idea of BTC is to create a new currency that's free market...why "cash out"? As soon as everyone cashes out, the government gains and BTC loses!

While the whole BTC theory and concept is great...the "cash out" mindset is what will ultimately keep it from ever succeeding. People just can't think outside of Dollars...at least not here in America!

While I have never "cashed out" bitcoin into USDs, I have bought lots of things with btc.  When things are bought with btc, the IRS thugs consider that "cashing out" even though they never touched USDs.

Also if some of those btc purchases are business expenses they can be used to lower your tax liability.

Talking to an CPA about hypothetical "cash outs" is not going to keep btc from succeeding, but allow you to stay in business another day to accumulate a little more btc.

[DigitalDoom]

I explained bitcoin to my accountant yesterday...he was very interested. I told him to wait a couple weeks before he looks into it more, otherwise he will get sucked in and be late getting taxes in for all his clients.

He told us to count all our sales as a regular income, and then later when we cash out to deal with capitol gains at that point.

Everyone keeps talking about cashing out...I don't get it!

The only time you owe the IRS a dime is when you make money...meaning US DOLLARS!!!

If the whole idea of BTC is to create a new currency that's free market...why "cash out"? As soon as everyone cashes out, the government gains and BTC loses!

While the whole BTC theory and concept is great...the "cash out" mindset is what will ultimately keep it from ever succeeding. People just can't think outside of Dollars...at least not here in America!

When things are bought with btc, the IRS thugs consider that "cashing out" even though they never touched USDs.

Ya....that's what I was trying to warn. Buying "stuff" with BTC and then selling that "stuff" for USD is exactly the same as "cashing out" in the eyes of the IRS.

For BTC to succeed people will have to get out of the "cashing out" thinking. It has to become a currency that can stand on it's own and that's impossible as long as people still think in USD...and they will always think in USD.

BTC can never be what many of these folks think it will be. No matter what it's spent on, everything has value in USD that can be measured by the Government.

Anything you legally buy has a paper trail that ultimately leads back to you. The only way to avoid the tax man is by spending BTC on items "under the radar"...illegal merchandise!

My point is...either plan to pay the taxes on your BTC, become an outlaw, or go to prison...those are the only options!

[Bees Brothers]

My point is...either plan to pay the taxes on your BTC, become an outlaw, or go to prison...those are the only options!

Some outlaws pay taxes and stay out of jail. 

[mgio]

Capital gains only apply when you *sell* bitcoins. Tell your friend that you're planning on spending them, and that there isn't an IRS dedicated to Bitcoins yet because we pay a network tax instead and don't have a seastead to start our libertarian government up proper.

you have misunderstood how realization of capital gains works in the united states and similar tax systems. while it is true that if you buy or mine bitcoins you probably don't owe tax until you 'sell' them in most cases, 'sell' in this context basically means 'dispose of'.  if you spend $1 to mine 1 coin and then use it to buy something worth $140, you have realized $139 in (capital) income at the time of your purchase.

the same would be true of stocks: if you bought GOOG at $400 in the past and trade it to someone for something worth $800 today, you have 'sold' it for $800 for tax purposes.

Stocks and currency are not the same. If you bought $100 of Euros and it appreciated and was worth $200 and then you spend them, you would owe no tax. As you as you consider bitcoins to be a foreign currency, you are ok.

Just buy gold with it directly.

[ajk]

pay your taxes and laugh in your friends face all the way to the fucking bank

if he is laughing at your fortune he is obviously jealous and therefore is not your friend

[allthingsluxury]

This is something my 'friend' said to me when discussing bitcoins, how do i(you) respond?

It is only a profit if you convert it to your local currency. This is the same theory as if you were to buy a stock share. I on the other hand have to pay taxes on every sale I make with my business. On a personal level you should only have to pay taxes if you cash out. Of course you should pay your taxes although, it is not a big deal as it is only capital gains tax and you only pay on the profit.

[johnyj]

Only poor people pay tax. Just look at those saving accounts in tax heaven country, 30 trillion USD, almost double the US government debt, I don't even understand where is the corresponding debt of those savings 

[GernMiester]

Bah, just hold your coins until you have millions of dollars worth in FIAT.. Cash out and don't pay a dime.
Leave as fast as fast can be for a nice tax haven country on a private plane with a few suitcases of whatever currency you fancy....

[Bitcoinm]

Just follow the tax laws of the country you are operating in; the "tax evasion" question is about income, not about Bitcoin.

[unk]

If you bought $100 of Euros and it appreciated and was worth $200 and then you spend them, you would owe no tax. As you as you consider bitcoins to be a foreign currency, you are ok.

Just buy gold with it directly.

there is an exemption for gains under $200, but otherwise this is an incorrect, ignorant statement. if you want to learn about this area of tax law, see

http://www.fenwick.com/FenwickDocuments/Outline-Taxation-of-Foreign-Currency-Transactions-and-Translation.pdf

for a start.

the united states tax code does not treat dollars as special. if you earn three gold coins for services rendered, you owe tax on the market value of the three gold coins at the time you received them. if you hold them and they then appreciate whilst you hold them, and you spend them on silver, you owe tax on the profit (the difference in value between the time you received them and the time you spent them on something else). this is true of any property, although different kinds of property can lead to different tax rates depending on the circumstances.

i have firsthand knowledge that at least one prominent bitcoiner has been reported to the united states IRS for tax year 2012 using their 'Form 3949-A'. i will personally be paying in excess of US $160,000 of bitcoin-related taxes for the 2013 tax year.