Dear BTC Talk Community:
I have been involved in BTC/Cryptos and BTC/Crypto Law for the past 3 years and was also on a speaker panel at Inside Bitcoin convention in Las Vegas. I have been an attorney here in Las Vegas for 25 years.
It is tax time so I have had some opinions about cryptos and taxes. It is my legal opinion that Bitcoin earnings only become taxable when they are converted to fiat. However there is a variation I would like to discuss.
If I have Bitcoin, and I make profit (for example) trading Bitcoin, and I then use those earnings to purchase goods or services from a vendor or service provider that/who accepts Bitcoin.....are the earnings that I made on the BTC that I spent for those goods/services taxable? I'd like some opinions please.
It is my opinion that they would be taxable at the time I spent them as it would be the equivalent to converting to fiat.
What about converting to a pay card? gold? Interesting isn't it?
I'm very much looking forward to the diversity of opinions. Please keep in mind that I believe in paying my taxes and reporting my income and am not here to advise on how to get out of paying taxes, but rather to help us all understand when there is a taxable event, and how to legally minimize the taxes I am responsible to pay.
Thank you BTCTALK community.
George D. Greenberg, Esq
www.attorneybitcoin.comThis is indeed a very intriguing topic out here and I have within me two sides, one side of me says since Bitcoins is neither a currency nor is it accepted as one why should I pay taxes, second side says we should pay tax as normal Fiat usage. However after considering a lot, I decided not to pay any taxes, as I do not purchase Bitcoins I earn them online and I convert for a value of digital currency and I don't see any reason to pay taxes. We are already over taxed in life and last thing need is to pay taxes on Bitcoins. I do pay taxes on all my income, but don't agree that one should pay tax.
A very interesting analysis. So to describe it in another fashion; If I build chairs and then sell them and make a profit, do I need to pay taxes on my profit? My profit would be income so I think yes. What if I build chairs and take one of those chairs and trade it for a server? Let's say the server is the same value as the chair. Have I made a profit? I don't think so, therefore logic tells me I would not need to pay taxes on that transaction. Everyone seems to forget that you report your income but then AT THE END OF THE YEAR, YOU TAKE ALL PROFIT, AND ITEMIZE AND DEDUCT ALL COSTS AND EXPENSES THAT WENT INTO ACHIEVING THAT PROFIT. As to the chair example; the cost of wood, tools, electricity, the rental for the structure that they are built in, utilities, phones, computers, insurance, transportation, any employees or independent contractors used, book keeper, certified public accountant, attorney, shipping costs, continuing education, and so on and so forth. These things are all deducted in one way or another from the total profit as business expenses as well as whatever personal exemptions you claim such as dependents, and then only what is left is what is subject to income taxes.
This same analysis holds true if you are conducting any business related to crypto currencies. Play it safe but play it smart. Then you won't have to look over your shoulder for years.
George D. Greenberg, Esq.
www.attorneybitcoin.com 
