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Author Topic: US taxes are owed whenever trading crypto  (Read 3104 times)
bitcoinrocks
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December 17, 2013, 01:04:03 AM
 #1

I just read the following Forbes article and it sounds like a "taxable event" has occurred in the US whenever any cryptocoin is traded for any other cryptocoin (even the same type of cryptocoin):

http://www.forbes.com/sites/cameronkeng/2013/12/16/bitcoin-is-not-anonymous-is-always-taxable/

I also didn't like the section on Foreign Bank Account Reporting:

"Bitcoins are everywhere and possibly nowhere.  The problem with bitcoins is that it could be argued by the IRS that it is a value held overseas.  The burden of proof is placed upon the taxpayer (AKA you).   Unless you’re able to prove that your “bitcoins” are within the United States, then you may be required to file FBARs.  The FBAR rules requires any United States person with at least one financial account outside the United States and has over $10,000 dollars in aggregate value overseas at any time to file.  The penalties can be the greater of $100,000 dollars or 50% of the value underreported."
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btcprice
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December 17, 2013, 01:16:21 AM
 #2

I just read the following Forbes article and it sounds like a "taxable event" has occurred in the US whenever any cryptocoin is traded for any other cryptocoin (even the same type of cryptocoin):

http://www.forbes.com/sites/cameronkeng/2013/12/16/bitcoin-is-not-anonymous-is-always-taxable/

I also didn't like the section on Foreign Bank Account Reporting:

"Bitcoins are everywhere and possibly nowhere.  The problem with bitcoins is that it could be argued by the IRS that it is a value held overseas.  The burden of proof is placed upon the taxpayer (AKA you).   Unless you’re able to prove that your “bitcoins” are within the United States, then you may be required to file FBARs."

If you buy drachma with US dollars and then buy lira with your drachma are each of these considered "bartering" and thus a taxable event? I realize bitcoin isn't a currency in the US but wouldn't it fall under the same rules that currency traders are held to?
TheFootMan
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December 17, 2013, 01:18:26 AM
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I just read the following Forbes article and it sounds like a "taxable event" has occurred in the US whenever any cryptocoin is traded for any other cryptocoin (even the same type of cryptocoin):

http://www.forbes.com/sites/cameronkeng/2013/12/16/bitcoin-is-not-anonymous-is-always-taxable/

I also didn't like the section on Foreign Bank Account Reporting:

"Bitcoins are everywhere and possibly nowhere.  The problem with bitcoins is that it could be argued by the IRS that it is a value held overseas.  The burden of proof is placed upon the taxpayer (AKA you).   Unless you’re able to prove that your “bitcoins” are within the United States, then you may be required to file FBARs.  The FBAR rules requires any United States person with at least one financial account outside the United States and has over $10,000 dollars in aggregate value overseas at any time to file.  The penalties can be the greater of $100,000 dollars or 50% of the value underreported."

Oh dear god, I'm sure every american breaks at least 10 laws every day of the week, and if someone in a power position do not like you, they will crush you no matter what. I'm starting to understand why people want to disappear and start living in very remote places.
bitcoinrocks
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December 17, 2013, 01:24:27 AM
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Quote
If you buy drachma with US dollars and then buy lira with your drachma are each of these considered "bartering" and thus a taxable event? I realize bitcoin isn't a currency in the US but wouldn't it fall under the same rules that currency traders are held to?

I think you kind of answered your own question.  In the US, Bitcoin is considered an asset as opposed to a currency.
7Priest7
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December 17, 2013, 01:25:54 AM
 #5

I'm sure every american breaks at least 10 laws every day of the week,

American freedom is a joke, we have more laws than liberties.
I'm sure my ancestors who fought for our Independence would be appalled if alive today.
EnderHf
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December 17, 2013, 01:36:28 AM
 #6

I'm sure every american breaks at least 10 laws every day of the week,

American freedom is a joke, we have more laws than liberties.
I'm sure my ancestors who fought for our Independence would be appalled if alive today.
Its true but if we don't have that many laws there would be people taking advantage of other people and that would suck no body would trust other people

tclo
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December 17, 2013, 01:37:40 AM
 #7

I just read the following Forbes article and it sounds like a "taxable event" has occurred in the US whenever any cryptocoin is traded for any other cryptocoin (even the same type of cryptocoin):

http://www.forbes.com/sites/cameronkeng/2013/12/16/bitcoin-is-not-anonymous-is-always-taxable/

I also didn't like the section on Foreign Bank Account Reporting:

"Bitcoins are everywhere and possibly nowhere.  The problem with bitcoins is that it could be argued by the IRS that it is a value held overseas.  The burden of proof is placed upon the taxpayer (AKA you).   Unless you’re able to prove that your “bitcoins” are within the United States, then you may be required to file FBARs.  The FBAR rules requires any United States person with at least one financial account outside the United States and has over $10,000 dollars in aggregate value overseas at any time to file.  The penalties can be the greater of $100,000 dollars or 50% of the value underreported."

Oh dear god, I'm sure every american breaks at least 10 laws every day of the week, and if someone in a power position do not like you, they will crush you no matter what. I'm starting to understand why people want to disappear and start living in very remote places.

Moer like 10 times a day and yes you are absolutely correct.
justusranvier
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December 17, 2013, 01:39:34 AM
 #8

The FBAR rules requires any United States person with at least one financial account outside the United States and has over $10,000 dollars in aggregate value overseas at any time to file.  The penalties can be the greater of $100,000 dollars or 50% of the value underreported."
What constitutes a "financial account" of Bitcoins?

A single address?
7Priest7
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December 17, 2013, 01:42:38 AM
 #9

American freedom is a joke, we have more laws than liberties.
I'm sure my ancestors who fought for our Independence would be appalled if alive today.
Its true but if we don't have that many laws there would be people taking advantage of other people and that would suck no body would trust other people

This brings the question, How much is true freedom worth to the average person?

Freedom to me, is absolute, no laws whatsoever, the risks are worth the reward, to me.

On the main subject, bitcoin taxing will not happen.
Most online sales are sheltered from tax for the same reason cryptocurrencies are.
Too hard to establish the appropriate tax rate.
Trafficlearn
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December 17, 2013, 01:43:25 AM
 #10

The IRS doesnt give 2 shits about your bitcoins....as long as you are paying them what they want....they leave you be....when you cause waves and try to cheat....thats when the fun begins....

~TESLACOINS ~      http://www.teslacoins.com  Teslacoins! Renewable energy mining!  COMING SOON!
taltamir
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December 17, 2013, 01:45:39 AM
 #11

I'm sure every american breaks at least 10 laws every day of the week,

American freedom is a joke, we have more laws than liberties.
I'm sure my ancestors who fought for our Independence would be appalled if alive today.
Its true but if we don't have that many laws there would be people taking advantage of other people and that would suck no body would trust other people
Nonsense, we could stop that with a tiny miniscule fraction of the laws we have.
Peter R
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December 17, 2013, 01:48:43 AM
 #12

I quite enjoyed that read.  It was another example of Bitcoin as "Schrödinger's coin."  The article was completely true and completely false at the same time.  

P.S.  How does one determine fair market value for "hugs"?

Run Bitcoin Unlimited (www.bitcoinunlimited.info)
dmartig
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December 17, 2013, 01:58:04 AM
 #13

as far as i know the irs has made no determination on bitcoin and how it should be taxed. can someone post something directly from the irs that states unequivocally whether it should be taxed as income, an asset , ie capital gain etc.?
franky1
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December 17, 2013, 01:59:56 AM
 #14

you only pay taxes when converting it back to FIAT!!!! and that only if you have made profit above your tax free allowance. atleast read a book once in a while, or even contact the IRS instead of believing the chinese whispers of media sourced waffle

why are so many people trying to create fud to make bitcoin seem impractical and costly. it must be those bankers and gold hoarders at it again..

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Don't take any information given on this forum on face value. Please do your own due diligence & respect what is written here as both opinion & information gleaned from experience. If you wish to seek legal FACTUAL advice, then seek the guidance of a LEGAL specialist.
7Priest7
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December 17, 2013, 02:05:38 AM
 #15

The Forbes author is a idiot.

Quote from: Page 2 of Forbes article in OP
An example, Bob starts with 1 bitcoin and makes a million day trades in 2013.  Bob is a bitcoin stud and turns 1 bitcoin into 1,000 bitcoins.  Bob earned 999 bitcoins or $999,000 dollars (assuming each bitcoin is worth $1,000 dollars).  Bob owes $381.314 dollars in federal income taxes, not including state and local taxes.  Thus, Bob needs to cash out enough bitcoins (about 381 bitcoins) to pay his taxes.

According to the idiot bob needs $381,000USD worth of BTC to pay $381.314 in taxes.

Either the author used a period where he intended a comma or his math is awful.
This author clearly is a inept fool and should not be taken seriously.
bitbouillion
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December 17, 2013, 03:37:51 AM
 #16

The FBAR rules requires any United States person with at least one financial account outside the United States and has over $10,000 dollars in aggregate value overseas at any time to file.  The penalties can be the greater of $100,000 dollars or 50% of the value underreported."
What constitutes a "financial account" of Bitcoins?

A single address?

If I have my bitcoins in 3,748 different addresses, I am happy to fill out 3,748  pages in form "TD F 90-22.1" and mail them to the treasury.  I hope bitcoin-qt will have such a feature built in, so I need only to hit the print button, feed the printer with a decent pile of paper and make some nice heavy packages for the mailman Grin

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beetcoin
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December 17, 2013, 03:48:25 AM
 #17

The IRS doesnt give 2 shits about your bitcoins....as long as you are paying them what they want....they leave you be....when you cause waves and try to cheat....thats when the fun begins....

that or when government decides it wants to control whether we can or can't use bitcoins.. the IRS will come after you.
TheFootMan
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December 17, 2013, 04:37:59 AM
 #18

This brings the question, How much is true freedom worth to the average person?

Freedom to me, is absolute, no laws whatsoever, the risks are worth the reward, to me.

Sometimes i fantasize about living somewhere were there's no police and no state, and I have to protect myself and my family, somehow I still think it's good I can call the police if something really bad happens, and I also think it's good that an ambulance will arrive (hopefully) if I get into a car crash.

But living in a really remote area, with a livestock, growing my own land and being self sufficient (creating energy out of a river), that sounds somewhat romantic too, but I'm sure it wouldn't be that easy..
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December 17, 2013, 11:26:35 PM
 #19

The IRS doesnt give 2 shits about your bitcoins....as long as you are paying them what they want....they leave you be....when you cause waves and try to cheat....thats when the fun begins....

+1
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December 18, 2013, 01:56:35 AM
 #20

"Bitcoins are everywhere and possibly nowhere.

This was something I've been thinking a lot about. Is the value with the private key or in the block chain? Is the block chain simply the ledger? Or is it more akin to the The Island Of Stone Money (Yap).
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