Planning your Bitcoin Withdrawals

[Syke]

Woo hoo I am RICH and never knew it.  I need to call my mom!

Well, I left out having a home paid off. If so, congrats!

That is incorrect.  Not sure how much simpler I can make it.  The 0% capital gains rate only applies to TOTAL INCOME (in all forms including capital gains) which would put you in the two lowest brackets.  

If you have $0 in wages and $1M in capital gains you are looking at as much as 53% short term capital gains rates.  Even long term rates are at least 20% + 3.8% (Obamacare bonus) + state rate.  IRS hasn't yet clarified on treating Bitcoins as other Forex transactions but if they do it would be >30% plus state for all tx long and short.

While you don't pay "regular income" tax rates on long term capital gains, ALL FORMS OF INCOME count towards the threshold for which bracket you will pay.  

Thanks for the clarification. You don't have to pay taxes on growth in value for capital assets until you cash them out, right? So go with $0 in wages, cash out $72K in capital gains each year, and leave the rest of the $10M in bitcoins untouched?

[1715280059]

1715280059

[tvbcof]

...
Woo hoo I am RICH and never knew it.  I need to call my mom!  Then again tvbcof post was about ULTRA WEALTHY I assume (and he confirmed with $500K tax post) he was talking about millionaires and billionaires.
...
That is incorrect.  Not sure how much simpler I can make it.  The 0% capital gains rate only applies to TOTAL INCOME (in all forms including capital gains) which would put you in the two lowest brackets.  

If you have $0 in wages and $1M in capital gains you are looking at as much as 53% short term capital gains rates.  Even long term rates are at least 20% + 3.8% (Obamacare bonus) + state rate.  IRS hasn't yet clarified on treating Bitcoins as other Forex transactions but if they do it would be >30% plus state for all tx long and short.

While you don't pay "regular income" tax rates on long term capital gains, ALL FORMS OF INCOME count towards the threshold for which bracket you will pay.  

Again, deferring to your expertise in the minutia, the whole short term/ long term thing has always struck me as a scam.  People of a certain level of wealth can easily sit on something of value for a few years.  How that justifies a 25% reduction in tax rate, I have no idea.

My understanding from my talks with my CPA is that anything I sell this year I should put 25% aside to pay taxes for 2013 (being unfortunate enough to have earned some money this year.)  If I wait until 2014, I can basically sell as much BTC as I wish without a liability as long as I am careful to avoid earning any money.  I may have understood this wrong, or not fully communicated that I might be considering raising enough money to put my even with what a pretty high income individual takes in.  It was also unclear what happens in 2015 and whether my inflow of $$$ in 2014 factors in.  We didn't look that far out.

If you care to correct my CPA, or my misunderstanding of my communications with her, I would appreciate it.  Note that she referenced a particular tax cut regulation which I think dated back to the Bush era and which was temporary but has been repeatedly extended.  And may have been or will be made permanent.  I didn't catch or forgot the name of it.

[ArticMine]

For Canadians here is a site to calculate estimate tax rates. http://www.ey.com/CA/en/Services/Tax/Tax-Calculators-2013-Personal-Tax For capital gains the best province / territory is either Alberta or Nunavut. The marginal rate for 1,000,000 CAD for capital gains ranges from 19.5% in Alberta to 25% in Nova Scotia. For 100,000 CAD it ranges from 17.5% in Nunavut to 22.86% in Quebec.

[DeathAndTaxes]

Thanks for the clarification. You don't have to pay taxes on growth in value for capital assets until you cash them out, right? So go with $0 in wages, cash out $72K in capital gains each year, and leave the rest of the $10M in bitcoins untouched?

Correct.  There is no wealth tax in the US yet (well not until you die).  This is not tax advice (always consult with a tax professional blah blah blah) but you probably could "cash out" more than $72K per year (assumming no other income source) as long as you did things to offset the income.  For example cashing out an extra $10K and donating it to charity or cashing out $10K and putting it into an IRA (traditional not Roth).   The key thing would be reducing your taxable income NOT tax credits.  A tax credit may reduce the taxes owed but if you go over the "magic line" then the capital gains rate will jump from 0% to 20% likely more than offseting the benefit of any tax credit.  An example would be taking out an extra $20K to put solar panels on your roof.  Sure you could get a $5K tax credit for that but you just bumped your taxable income into the $130K range and now you owe 20% on all of it. 

As long as your taxable income puts you in the bottom two brackets (or tax law changes as it often does) you could avoid any taxes potentially forever.

[DeathAndTaxes]

the whole short term/ long term thing has always struck me as a scam.  People of a certain level of wealth can easily sit on something of value for a few years.  How that justifies a 25% reduction in tax rate, I have no idea.

The goal was to have all capital gains at 0% for all income brackets.  The longs term gains at 0%/15%/20% depending on income and short term gains at normal income was the "compromise".  Simplified republicans wanted no capital gains tax on anything, the Dems wanted to keep it at regular income, and the complicated tax mess we have today is the compromise in the middle.  Personally I believe interest, dividends, and capital gains should be tax free but if you think the current situation is a scam you likely are going to lynch me so we will save that for another day (hint: you were already taxed on the income BEFORE you wisely invested it).

My understanding from my talks with my CPA is that anything I sell this year I should put 25% aside to pay taxes for 2013 (being unfortunate enough to have earned some money this year.)  If I wait until 2014, I can basically sell as much BTC as I wish without a liability as long as I am careful to avoid earning any money.  I may have understood this wrong, or not fully communicated that I might be considering raising enough money to put my even with what a pretty high income individual takes in.  It was also unclear what happens in 2015 and whether my inflow of $$$ in 2014 factors in.  We didn't look that far out.

I think you should clarify with your CPA.  I doubt he is incorrect however you may have misunderstood the limitations.   If your gains are long term (>365 days) and your taxable income (from all sources) puts you in the bottom two brackets then there would be no capital gains tax (the tax rate would be 0%).  However there is no scenario (in 2013, 2014, 2015 or future) in which you can have an unlimited capital gains (say millions of USD) and have no tax liability.

Make sure you keep accurate and detailed records of your Bitcoin trades.  The burden of proof if on you.  If the IRS audits you (generally the chance of audit rises with income) and you can't PROVE your gains are long term the IRS will reclassify them as short term and you will owe the (possibly substantial) difference in tax liability, plus penalties, interest and possibly (if they believe you did it intentionally) penalties.

Note this post should not be considered tax or legal advice and is intended as educational only.

[tvbcof]

the whole short term/ long term thing has always struck me as a scam.  People of a certain level of wealth can easily sit on something of value for a few years.  How that justifies a 25% reduction in tax rate, I have no idea.

The goal was to have all capital gains at 0% for all income brackets.  The longs at 0% for low and reduced for high with longs at normal income was the "compromise".  Personally I believe interest, dividends, and capital gains should be tax free but if you think the current situation is a scam you likely are going to lynch me so we will save that for another day (hint: you were already taxed on the income BEFORE you wisely invested it).

I've puttered around with PM's for a long time, and the chain of logic you propose does not escape me.

Being a lib, my justification for being double-taxed is that, in theory at least, I live in an environment which made my speculation possible and lucrative because it is somewhat held together by the taxes I pay.

On a more practical level, I cannot enjoy the fruits of my wisdom/luck with a pitchfork up my ass.

Stepping it down a degree, I also cannot enjoy life as much when I have to walk over indigent people in the streets, nor can I (or will I) take it upon myself to right the various wrongs that bother me.  Again, there is much room for debate about how efficiently our government participates in such an effort.  I don't think it is zero, but I do think they could do better.  Especially if we could get money out of politics.  But we are going in the opposite direction fast.

I appreciate your input on the other items which I've snipped.

[BitchicksHusband]

Key word in the two lowest tax brackets.  I doubt most people would consider the two lowest tax brackets as "rich".

But "rich" people can drop themselves down into the lowest tax brackets. For example, if bitcoins go up high enough, I'll pay off my mortgage, have no other debt, and be able to reduce my regularly needed income to much lower levels and stay down in the bottom tax brackets while living very comfortably.

How are you going to pay off your mortgage?  By selling $200K worth of BTC?  That is going to put you above the first two tax brackets.  

Can someone live on $38K in taxable income.  Sure.  People live on a lot less.  It is hardly what I would consider rich.  If you are living on more than that well you are going to pay capital gains taxes.  

Not really interested in debating anymore.  tvbcof wants to believe the "rich" pay nothing in capital gains taxes well maybe someday he will be "rich" and find out that isn't the case.   It will be far worse if in the future IRS decides to classify Bitcoin capital gains as Forex capital gains (which logically makes sense) as the rates will go even higher (60/40 rule).

IANATA, but my understanding is that your capital gains don't count toward your salary.  You could pull out a million dollars worth of BTC and it's fine as long as you held it for a year and your other income is below 34K/38K whatever it is.

(Actually, $69K joint as pointed out here:

https://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States#History_of_capital_gains_tax_in_the_U.S.)

Everything I read says that long-term gains are capital gains and not ordinary income, which means that they don't count toward the $34K/$38K/$69K.

[DeathAndTaxes]

Key word in the two lowest tax brackets.  I doubt most people would consider the two lowest tax brackets as "rich".

But "rich" people can drop themselves down into the lowest tax brackets. For example, if bitcoins go up high enough, I'll pay off my mortgage, have no other debt, and be able to reduce my regularly needed income to much lower levels and stay down in the bottom tax brackets while living very comfortably.

How are you going to pay off your mortgage?  By selling $200K worth of BTC?  That is going to put you above the first two tax brackets.  

Can someone live on $38K in taxable income.  Sure.  People live on a lot less.  It is hardly what I would consider rich.  If you are living on more than that well you are going to pay capital gains taxes.  

Not really interested in debating anymore.  tvbcof wants to believe the "rich" pay nothing in capital gains taxes well maybe someday he will be "rich" and find out that isn't the case.   It will be far worse if in the future IRS decides to classify Bitcoin capital gains as Forex capital gains (which logically makes sense) as the rates will go even higher (60/40 rule).

IANATA, but my understanding is that your capital gains don't count toward your salary.  You could pull out a million dollars worth of BTC and it's fine as long as you held it for a year and your other income is below 34K/38K whatever it is.

(Actually, $69K joint as pointed out here:

https://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States#History_of_capital_gains_tax_in_the_U.S.)

Everything I read says that long-term gains are capital gains and not ordinary income, which means that they don't count toward the $34K/$38K/$69K.

The bolded pertion is incorrect. Trust me I know for painful personal experience (>$100K tax bill).  The simple version is they are taxed at their own rate but ALL INCOME counts towards the taxable income number (and in this case WHICH capital gains rate will apply).  For the simple version take a look at line 22 of Form 1040.  It is total income.  Note it is a sum of lines 7 to 21.  Line 13 is Capital gains.

Total Income (see line 22) = Wages + Capital Gains + Business Income + etc
Taxable Income (see line 43) = Total Income - Deductions - Exemptions
Taxes (see line 44) = Taxable Income * Rates <- the different types of revenue are computed at their own rate but that doesn't change the fact that all income from all sources in all forms is part of taxable income.

The complicated version (only follow if you enjoy tax hell).
It really only makes sense if you have a copy of "Schedule D", "Form 1040", and "Capital Gains Tax Computation Worksheet" in front of you.  You can google those terms and get copies of the forms.  
It begins in the "Schedule D".  Gains are separated into long term and short term capital gains but the total capital gains is computed in line 16.
The total capital gain (line 16) from Schedule D is transferred to the "Form 1040" under line 13.  You can see this both in Schedule D instruction for line 16 AND the fact that line 13 on 1040 is labeled "capital gains".

So on form 1040 the total capital gain is copied to line 13.  You will notice that line 22 is total income.  It is the sum of lines 7 to 21 (wages, capital gains, dividends, business income, etc).  On the next page deductions, and exemptions are subtracted from total income to finally end up at "taxable income" (line 43).  Line 44 is taxes.  If you only have regular income you can just look that up but if you have long term capital gains you need to use the ultra fun "Capital Gains Tax Computation Worksheet".  

So on the "Capital Gains Tax Computation Worksheet" for those following along in the home game, you will see you it starts with your taxable income (which includes all forms of income including capital gains) on line 1.  On line 8 the max of the 15% bracket is computed, and subtracted on line 11.  So if you have more income than the max of the 15% bracket line 11 will be positive.  The rest (lines 12 to 19) is computed using a combination of the capital gains rate for >15% bracket or regular income rate.

Capital gains are calculated at the capital gains RATE however they are included in taxable income for the determination of what that rate is.  At one time for long term it was 0% or 15% but it is now 0%/15%/20% plus a bonus (on a completely different form 3.8% to pay for ObamaCare) and then you can add states taxes to that as well as MOST states simply use federal taxable income (line 43) to determine state taxable income.  Worse for 2013 onward is short term gains are regular income PLUS the 3.8% bonus ObamaCare tax so you end up paying more than regular income.

[Elwar]

When you look at the ultra-rich they tend to live internationally. I do not plan on cashing out of Bitcoin, I already have cash...it is called Bitcoin.

I like the idea that when I want to cash out, I will not need to.

[BitchicksHusband]

Key word in the two lowest tax brackets.  I doubt most people would consider the two lowest tax brackets as "rich".

But "rich" people can drop themselves down into the lowest tax brackets. For example, if bitcoins go up high enough, I'll pay off my mortgage, have no other debt, and be able to reduce my regularly needed income to much lower levels and stay down in the bottom tax brackets while living very comfortably.

How are you going to pay off your mortgage?  By selling $200K worth of BTC?  That is going to put you above the first two tax brackets.  

Can someone live on $38K in taxable income.  Sure.  People live on a lot less.  It is hardly what I would consider rich.  If you are living on more than that well you are going to pay capital gains taxes.  

Not really interested in debating anymore.  tvbcof wants to believe the "rich" pay nothing in capital gains taxes well maybe someday he will be "rich" and find out that isn't the case.   It will be far worse if in the future IRS decides to classify Bitcoin capital gains as Forex capital gains (which logically makes sense) as the rates will go even higher (60/40 rule).

IANATA, but my understanding is that your capital gains don't count toward your salary.  You could pull out a million dollars worth of BTC and it's fine as long as you held it for a year and your other income is below 34K/38K whatever it is.

(Actually, $69K joint as pointed out here:

https://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States#History_of_capital_gains_tax_in_the_U.S.)

Everything I read says that long-term gains are capital gains and not ordinary income, which means that they don't count toward the $34K/$38K/$69K.

The bolded pertion is incorrect. Trust me I know for painful personal experience (>$100K tax bill).  The simple version is they are taxed at their own rate but ALL INCOME counts towards the taxable income number (and in this case WHICH capital gains rate will apply).  For the simple version take a look at line 22 of Form 1040.  It is total income.  Note it is a sum of lines 7 to 21.  Line 13 is Capital gains.

Total Income (see line 22) = Wages + Capital Gains + Business Income + etc
Taxable Income (see line 43) = Total Income - Deductions - Exemptions
Taxes (see line 44) = Taxable Income * Rates <- the different types of revenue are computed at their own rate but that doesn't change the fact that all income from all sources in all forms is part of taxable income.

The complicated version (only follow if you enjoy tax hell).
It really only makes sense if you have a copy of "Schedule D", "Form 1040", and "Capital Gains Tax Computation Worksheet" in front of you.  You can google those terms and get copies of the forms.  
It begins in the "Schedule D".  Gains are separated into long term and short term capital gains but the total capital gains is computed in line 16.
The total capital gain (line 16) from Schedule D is transferred to the "Form 1040" under line 13.  You can see this both in Schedule D instruction for line 16 AND the fact that line 13 on 1040 is labeled "capital gains".

So on form 1040 the total capital gain is copied to line 13.  You will notice that line 22 is total income.  It is the sum of lines 7 to 21 (wages, capital gains, dividends, business income, etc).  On the next page deductions, and exemptions are subtracted from total income to finally end up at "taxable income" (line 43).  Line 44 is taxes.  If you only have regular income you can just look that up but if you have long term capital gains you need to use the ultra fun "Capital Gains Tax Computation Worksheet".  

So on the "Capital Gains Tax Computation Worksheet" for those following along in the home game, you will see you it starts with your taxable income (which includes all forms of income including capital gains) on line 1.  On line 8 the max of the 15% bracket is computed, and subtracted on line 11.  So if you have more income than the max of the 15% bracket line 11 will be positive.  The rest (lines 12 to 19) is computed using a combination of the capital gains rate for >15% bracket or regular income rate.

Capital gains are calculated at the capital gains RATE however they are included in taxable income for the determination of what that rate is.  At one time for long term it was 0% or 15% but it is now 0%/15%/20% plus a bonus (on a completely different form 3.8% to pay for ObamaCare) and then you can add states taxes to that as well as MOST states simply use federal taxable income (line 43) to determine state taxable income.  Worse for 2013 onward is short term gains are regular income PLUS the 3.8% bonus ObamaCare tax so you end up paying more than regular income.

I know you are not my tax professional, but are you a tax professional or just a guy who got burned?  And was your capital gains you got burned on less than or more than 1 year old? 

Everything I read says that only short-term capital gains are considered income.  Not long-term.  So your bolded portion only includes short-term in my view.  Obviously, it's TurboTax's view that I will go with (or another tax professional, if I am really rich), but I don't see how your bolded line changes that.

Again, I am not your tax professional (I'm not even a tax professional), and you should get advice from someone who is.  I got this advice from someone on this board who IS a tax professional in a tax thread.

[DeathAndTaxes]

I know you are not my tax professional, but are you a tax professional or just a guy who got burned?  And was your capital gains you got burned on less than or more than 1 year old?

Just a guy who got burned, having to write a giant check to the IRS when you were totally not expecting is a motivator to do some self research.  It was a long term gain and I naively thought that meant 0%.  It didn't.  I found out when the IRS sent me a "friendly" letter advising me I was delinquent and demanding payment in full.

Ironically I actually did work for H&R block when I was 19 (and learned absolutely nothing useful "tax pro" school is about 3 weeks long so "tax pro" doesn't mean a whole lot).  Use a CPA is you want a real professional.

Everything I read says that only short-term capital gains are considered income.  Not long-term.  

Well I gave you the exact forms and line numbers.  You could pretend and fill out the forms yourself using $1M in long term gain and $0 in wages and see what you get.  Hint it won't be taxes = $0.00.  It should take you all of 5 minutes.  The answer is right there in black and white.

[Roy Badami]

@DT:  Sorry, I can't resist....

Are you as much of an expert on Death as you are on Taxes?

:-)

Sorry LOL

roy

[mgio]

Once again "nice living" =/= rich.  Please try to stay on topic.  The claim made was the "rich" pay little to nothing in capital gains taxes.  That is a false statement.  Poinring out that the middle class has a low capital gains tax is "proving" to me something I never disputed.


Also not sure what you mean by "beyond that you get 0% long-term capital tax rate"?  If you are "beyond that" (as in more income?) you would be in the next tax bracket and thus would pay MORE not zero in capital gains taxes.

You don't seem to get it.

Here are two scenarios:

You make $100k a year, you have 1 million in bitcoins.

You keep your job, you gradually sell off your bitcoins paying 15% long term capital gains (plus 5% state, for me, at least) every time.

OR

You quit your job.

Your income is now 0.

You sell ALL your $1 million in bitcoins. You are now RICH! You pay 0% in taxes on it!

The next year you get another job making $100k.

You've just paid 0% on your $1 million bitcoin investment.

In scenario 1, you get roughly $800k plus $100k salary every year.

In scenario 2, you get the full $1 million and your only penalty is you skip your $100k salary one year.

Now imagine that instead of $1 million in bitcoins, you had $10 million. Or $20 million. Can you see now how the "rich" don't work and pay 0 taxes?

[DeathAndTaxes]

I don't seem to get it.

You make $100k a year, you have 1 million in bitcoins.
...
You quit your job.
Your wages (not income) is now 0.  However taxable income is all income not just wages so it was just stupid to quit your job.
You sell ALL your $1 million in bitcoins. You are now RICH! You pay 25% to 50% in taxes on it!
The next year you get another job making $100k.
You've just paid a shit ton of taxes* on your $1 million bitcoin investment and quit your job for no reason!

FYPFY.

Can you see now how the "rich" don't work and pay 0 taxes?

In imaginary land yes but in the United State no.

Income from all sources (INCLUDING CAPITAL GAINS, DIVIDENDS, BUSINESS INCOME, WAGES, ETC) count towards your taxable income.  If that combined number is the cutoff for 15% bracket (~$73K) you don't get to avoid capital gains tax.

If you don't believe me take a look at a 1040 form.  Here is a link.
See line 13. What does it say?
See line 22. Does line 22 include line 13?
See line 43. What is that line.   If line 22 (and thus line 13) a part of line 43?

If you still don't believe me or the IRS forms maybe an "expert" will convince you I am not crazy.

How much capital gains tax will I owe?
If you are in a lower income tax bracket, you may not owe any tax on your long-term capital gain.

For taxpayers in the 10% or 15% ordinary tax rate bracket, the capital gains rate is zero. You are in one of these brackets if your taxable income after deductions, but including the capital gains, is less than $35,350 ($70,700 if you file jointly).

Taxpayers whose taxable income is above those limits pay 25% to 35% on their highest taxable dollars of ordinary income. Their capital gains rate is 15%.

Example: Say you bought ABC stock on March 1, 2010, for $10,000. On May 1, 2012, you sold all the stock for $20,000 (after selling expenses). You have a $10,000 capital gain ($20,000 – 10,000 = $10,000). If you are in the 25% tax bracket, you pay $1,500 in capital gains tax ($10,000 X 15% = $1,500). This amount is in addition to your tax on your ordinary income.

If you would be in the 10% or 15% ordinary income tax rate bracket except for the capital gains this year, you may have some capital gains taxed at 0% and some taxed at 15%.

http://blog.taxact.com/long-term-capital-gains-tax/



* Yes "shit ton" is a standard unit of taxation used by the IRS

[zedicus]

Nice thread op!

Ive been trying to find a strategy...  


When you come to a point where your investment has been made back 3,4,5 fold.. You find yourself in a predicament where you find yourself considering if you should get your initial investment out and play with the free money or let it all ride!

A good strategy and discipline as well as a tax plan for good measure is important. Ive been trying to up my financial literacy in general but I seriously need to up my game on taxes and capital gains.

Anyway .. just wanted to say i appreciate the dialog regardless of your stance or position.



 

[DeathAndTaxes]

@DT:  Sorry, I can't resist....

Are you as much of an expert on Death as you are on Taxes?

Not yet.  Someday I probably will but I doubt I will be able to tell you about it.

[SheHadMANHands]

Bitcoin is either going to $100k-$1m , or ~$0.  Are you trying to take down a monster pot or make a few bucks?  What is your risk tolerance?  I guess these are the only real questions.

If your risk tolerance isn't pretty high, you probably shouldn't be investing in Bitcoin.  Unless you're investing a pretty small percentage of your worth, in which case "cashing out" a few % of your btc as we go up shouldn't even be a question raised.

[DeathAndTaxes]

Bitcoin is either going to $100k-$1m , or ~$0.  Are you trying to take down a monster pot or make a few bucks?  What is your risk tolerance?  I guess these are the only real questions.

If your risk tolerance isn't pretty high, you probably shouldn't be investing in Bitcoin.  Unless you're investing a pretty small percentage of your worth, in which case "cashing out" a few % of your btc as we go up shouldn't even be a question raised.

Depends on how much up is up.

Say someone has a net worth of $100K and they invested a small portion say 5% or $5K into BTC back when it was $1 so 5000 BTC which today are worth 1.25M.  Lets say the rest of this persons net worth is roughly over the prior 3 years so their new Bitcoin fueled net worth is $1.35M of which 92% is tied up in Bitcoins.  

I agree with you that Bitcoin is either going big (but honestly $1M doesn't make sense even under a single world currency scenario) or nothing.  Now lets consider a 20% sell, or $250K liquidated (possibly over weeks or months) as a hedge.  The investor now has the same $1.35M net worth today but it is more balanced with $1M in BTC and $350K in non-Bitcoin wealth.  Under a Bitcoins go to zero scenario he is much better off ($350K vs $100K). Under a Bitcoin goes to the moon scenario he isn't "as rich" but say $10K per BTC he "only" has $40M in wealth not $50M.  Oh noes the humanity.  If only he had more wealth then he could have bought the extra large yatch.

Most people could probably accept that compromise (and all hedges are a compromise).  Worst case scenario I end up with $250K, best case scenario I am super wealthy vs worst case scenario I end up with nothing and best case scenario I am even MORE super wealthy.

[sgbett]

Nice thread op!

Ive been trying to find a strategy...  


When you come to a point where your investment has been made back 3,4,5 fold.. You find yourself in a predicament where you find yourself considering if you should get your initial investment out and play with the free money or let it all ride!

A good strategy and discipline as well as a tax plan for good measure is important. Ive been trying to up my financial literacy in general but I seriously need to up my game on taxes and capital gains.

Anyway .. just wanted to say i appreciate the dialog regardless of your stance or position.

Ahh Zedicus! You are back, and with an entirely different posting manner? Did you start or stop the meds

So last time we spoke you were going crazy about market manipulation, buying selling etc I'm fascinated  to know what you did in the interim. You seemed very agitated at the time. See I had a spreadsheet very similar to the one above all the way back then, and then some, and I'd been following it. So when the bottom dropped out the market All I had to do was wait, and do nothing, without fear. I think at the time that was referred to as 'being chicken'
 
So now here we are back at the ATH and back on schedule... my next sell order is in at $311. I kind of suspected we would come back, but the measured selling prior to the crash meant that neither could I be too upset if we didn't. What made me chuckle at the time was the fervour with which you pursued the idea that the correction was a grand conspiracy theory. Now I guess you have had chance to reflect - and given your much calmer posting manner - id be interested to hear your take on things.

Not hating, I respect your passion. I just felt that, having been through the run up from 1 to 32 and back down again, you were a little misguided with the whole conspiracy thing. If anything I think the recent correction was pretty tame compared to last time. Maybe its a head an shoulders forming eh, and we still have to go back and re-test $32.

Now wouldn't that be a thing!

[tvbcof]

...
I agree with you that Bitcoin is either going big (but honestly $1M doesn't make sense even under a single world currency scenario) or nothing.  Now lets consider a 20% sell, or $250K liquidated (possibly over weeks or months) as a hedge.  The investor now has the same $1.35M net worth today but it is more balanced with $1M in BTC and $350K in non-Bitcoin wealth.  Under a Bitcoins go to zero scenario he is much better off ($350K vs $100K). Under a Bitcoin goes to the moon scenario he isn't "as rich" but say $10K per BTC he "only" has $40M in wealth not $50M.  Oh noes the humanity.  If only he had more wealth then he could have bought the extra large yatch.

Most people could probably accept that compromise (and all hedges are a compromise).  Worst case scenario I end up with $250K, best case scenario I am super wealthy vs worst case scenario I end up with nothing and best case scenario I am even MORE super wealthy.

FWIW, this is exactly (with some fuzz in the numbers and percentages) the idea for wealth/risk management that appears most logical to me at this time.  It is for that reason that I took the time (and money) to visit with my CPA to come up with a rational plan.

It will be interesting to find out if there is a notable sell-off right after the start 2014 from people thinking like me.  I almost decided to not produce the post as it might induce others to compete with me in such a strategy.  In the end I figured it probably would not amount to much, and in a month and 3/4 Bitcoin will be much more a Chinese thing than it is now anyway.