Does a tree fall in the forest if...

[eb3full]

Let's say I'm making a 10 BTC purchase. I have some USD and buy 20 BTC when it's at $89. The BTC price goes up to $116. I then make the 10BTC purchase and sell the other 10BTC at $116.

This means I started out with $1780 and ended up with $1160. Or, if I didn't make the purchase and sold my BTC, I could have ended up with $2320.

So, did I spend $620 (1780 - 1160) on the purchase or did I spend $1160 (2320 - 1160)?

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[bg002h]

Sounds like you just create a taxable event, but don't have anything left to cover your tax obligation.

[eb3full]

I know this sounds like a tax question but it's more of a "how much USD do I need to earn to recover the costs of purchasing this".

[bg002h]

If I understand it correctly, you bought and sold 10 BTC simultaneously at $116. Hence, you did nothing other than realize a profit (taxable event just about anywhere). I guess I'm not clear on your purchases and sells.

You would pay tax on the 10 btc x (116-89)

[bg002h]

Let's say I'm making a 10 BTC purchase. I have some USD and buy 20 BTC when it's at $89. The BTC price goes up to $116. I then make the 10BTC purchase and sell the other 10BTC at $116.

This means I started out with $1780 and ended up with $1160. Or, if I didn't make the purchase and sold my BTC, I could have ended up with $2320.

So, did I spend $620 (1780 - 1160) on the purchase or did I spend $1160 (2320 - 1160)?

I think I understand you now. Leys sau you took all the cash from your pocket and spent $1780 on 20 coins($89/coin), waited, and then sold 10 coins at $116/coin and put that money in your pocket. You're wondering how much money is in your pocket now compared to when you started, right?

You have $1160 in your pocket now.  You used to have $620 more than that in your pocket. Equivalently, you could look at it as having bought 10 Bitcoins at $62.

The 20% capital gains would be on 270 bucks, or a whopping $54 tax bill.

[farlack]

Your question makes no sense its sort of in a riddle.. but here we go

First in, first out. That's how they want their money.

Though you only pay taxes on income.

Removing the rest of the coins..

Sold 10 coin = 1160 for a profit of 270
Bought 10 coin = 1160 for a total profit of 0


A total loss if your exchange fees are 0.2% of -4.64


You owe nothing.

[drakahn]

you spent $1160 on the purchase and it cost you $890 to spend that $1160

[Jobe7]

It does seem like a riddle

Here's my answer (if I understand the OP properly) ..

Your bank has in it - $1780

1) You brought 20 btc @ $89 for a total of $1780

Your bank now has - $0

2) You cash out 10 btc @ $116 for a total of $1160

Your bank now has - $1160

You have a 'loss' of $620

You have made $0 profit, according to your statements you have made a loss
(you could've brought wow gold and sold some back for all anyone knows)

3) You pay $0 tax.

Your net started off at - $1780
Your net at the end of accounting is - $1160 (and 10 btc, which are not recognized, you can try stating it..)

$620 would be expenditure/loss
(exchange rates don't come into it from this PoV)

That's how I'd write it up in the UK anyway

[johnyj]

The other 10 btc were spent, which is just a spending of $890 (purchase price)
So you start with $1780, spent $890, earned $270 through capital gain, end up with $1160

Tax for capital gain $270 has to be paid

If you always spend bitcoin to buy things, you don't need to pay any tax, since there will be no capital gain

This has a very interesting indication: People will have motivation to spend the coin directly to purchase things instead of exchange it (paying capital gain tax), which also means the merchant can expect a higher sale price if paid in bitcoin (since the consumer are willing to  pay more due to saved tax cost)

[Jobe7]

The other 10 btc were spent, which is just a spending of $890 (purchase price)
So you start with $1780, spent $890, earned $270 through capital gain, end up with $1160

Tax for capital gain $270 has to be paid

If you always spend bitcoin to buy things, you don't need to pay any tax, since there will be no capital gain

This has a very interesting indication: People will have motivation to spend the coin directly to purchase things instead of exchange it (paying capital gain tax), which also means the merchant can expect a higher sale price if paid in bitcoin (since the consumer are willing to  pay more due to saved tax cost)

Well .. ye .....

The whole POINT of Bitcoin is to spend it AS Bitcoin ... not to use it as a speculative/profit toy ...

(well, maybe not the whole point, but a very significant point)