MatTheCat
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December 28, 2013, 03:28:00 AM |
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Show me a man who pays taxes on his Bitcoins and I will show you a fkn loser.
Keep your pennies gentlemen. You will put them to far more positive and productive use than your governments will.
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BittBurger
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December 28, 2013, 03:57:17 AM |
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As far as I understand it, Coinbase does not kick out a 1099 to the IRS.
Do what you will with that information.
Secondly, even ebay has a policy that they don't report until you've filled two requirements:
1) You have done over $20,000 in business, and 2) You have over 200 transactions within a calendar year.
Its not or. Its and.
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Dafar
Legendary
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Activity: 1330
Merit: 1000
dafar consulting
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December 28, 2013, 03:57:52 AM |
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Is there any way to avoid paying taxes?
Can I just open a new bank account outside the US and transfer my BTC there?
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traderCJ
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December 28, 2013, 04:07:03 AM |
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Do bitcoin profits count for taxes if you only have usd on an exchange but haven't withdrawn? Bitcoin is very risky - I could make another trade tomorrow and lose it all or the exchanges could shut down and run away with the funds, get seized, or get hacked, and I could lose everything that way. This type of exchange risk isn't there in the stock market. The money I have on exchange is like imaginary cloud money goxbux disneydollars etc that could all be lost - I don't see it as real money that I've actually made yet. So I don't think taxes should need to be paid anyway until you actually withdraw USD back to a bank. What do you guys think?
In fact I lost money from BitFloor - can I deduct that?
All good questions. It would be much easier for everyone involved if the gov't just taxed fiat leaving the exchange. I wonder how on Earth people pay their taxes on automated trading algos? What a nightmare. Also, what's to stop someone from saying: - I lost my Bitcoin private keys, thus I have 100% losses. - Those Bitcoins are not mine, I day traded them for a friend. - The dollars on Bitstamp (for instance) aren't really dollars. They are (potential) claims against money in Bitstamp's bank account. I think the bottom line is the IRS needs to make compliance easier in order to encourage compliance.
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BobGriffin3
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Merit: 0
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December 28, 2013, 04:07:52 AM |
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Yes I plan on selling in early 2014 to fund 2013/2014 Roth IRA contribs.
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TERA
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December 28, 2013, 04:09:15 AM |
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If I withdraw btc into cold storage, and they are just in the cloud, then there are no assets in any account in my name. In that case, does the government still consider the btc to belong to me, and that I hold any assets? Also, does the government yet consider Btc a thing or a legitimate asset/currency? Does the gov give btc a value? Where does the value come from?
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traderCJ
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December 28, 2013, 04:14:04 AM |
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If I withdraw btc into cold storage, and they are just in the cloud, then there are no assets in any account in my name. In that case, does the government still consider the btc to belong to me, and that I hold any assets? Also, does the government yet consider Btc a thing or a legitimate asset/currency? Does the gov give btc a value? Where does the value come from?
The real question is, how does the IRS handle people losing their private keys? In my opinion, it is no different than precious art lost in a house fire. Total loss. In that case, what's stopping people from telling the IRS that they lost their keys whenever they get audited? It is a claim which cannot be refuted. In that situation, I can't see the IRS being able to collect taxes on anything but fiat transfers back into one's bank account.
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btcprice (OP)
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December 28, 2013, 04:24:36 AM |
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Do bitcoin profits count for taxes if you only have usd on an exchange but haven't withdrawn? Bitcoin is very risky - I could make another trade tomorrow and lose it all or the exchanges could shut down and run away with the funds, get seized, or get hacked, and I could lose everything that way. This type of exchange risk isn't there in the stock market. The money I have on exchange is like imaginary cloud money goxbux disneydollars etc that could all be lost - I don't see it as real money that I've actually made yet. So I don't think taxes should need to be paid anyway until you actually withdraw USD back to a bank. What do you guys think?
In fact I lost money from BitFloor - can I deduct that?
Many people think this but it is wrong per US law. Any transactions are considered taxable, it doesn't matter if you withdrawal the funds or not. Poker players on Stars or Tilt asked many of the same questions who were in a very similar situation. Think of it as day trading. You add funds to ETrade. You buy and sell Tesla stock. You make money on some trades, you lose some. You never withdrawal funds. You still owe taxes on all the trades. Now of course how does the IRS track offshore trading platforms...that should be the next question...ie, they can't. The US tax system is mainly based on the honor system. Until you get audited of course! I think you're right. However, in my case and in the case of many others, we made just a few transactions and held for a good part after that. So the few times I bought in low and made money and then lost because I kept buying and the price went down, I am about even on completed transactions. However, the early purchases I have kept and haven't cashed out so they are not yet realized gains since I have not transacted them after first buying them.
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btcprice (OP)
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December 28, 2013, 04:28:19 AM |
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Do bitcoin profits count for taxes if you only have usd on an exchange but haven't withdrawn? Bitcoin is very risky - I could make another trade tomorrow and lose it all or the exchanges could shut down and run away with the funds, get seized, or get hacked, and I could lose everything that way. This type of exchange risk isn't there in the stock market. The money I have on exchange is like imaginary cloud money goxbux disneydollars etc that could all be lost - I don't see it as real money that I've actually made yet. So I don't think taxes should need to be paid anyway until you actually withdraw USD back to a bank. What do you guys think?
In fact I lost money from BitFloor - can I deduct that?
All good questions. It would be much easier for everyone involved if the gov't just taxed fiat leaving the exchange. I wonder how on Earth people pay their taxes on automated trading algos? What a nightmare. Also, what's to stop someone from saying: - I lost my Bitcoin private keys, thus I have 100% losses. - Those Bitcoins are not mine, I day traded them for a friend. - The dollars on Bitstamp (for instance) aren't really dollars. They are (potential) claims against money in Bitstamp's bank account. I think the bottom line is the IRS needs to make compliance easier in order to encourage compliance. If it's true that coinbase.com and the exchanges don't report a 1099 to the IRS then the IRS won't know for the most part. The part that gets tricky is when you buy a Lambo or other extravagant items. In my case, I want to buy a house for the interest benefit. I have to show a certain amount of equity in order to qualify for a loan. As far as losing private keys, you could certainly make the same point that a gambler makes when he says he may have won over $10,000 at one sitting (gets reported to the IRS) but then lost it at the tables the next couple days and thus owes nothing on the previous day's winnings.
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DPoS
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December 28, 2013, 04:52:22 AM |
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some may claim their miner's as 'cost basis' as well... they didn't just appear in your wallet without expenditure. Electricity as well. Maybe even maintenance/administration costs too. All those USBees can be a nice tax write off in this manner
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bitcon
Legendary
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Activity: 2212
Merit: 1008
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December 28, 2013, 05:05:31 AM |
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if you wait until 2014 youre just delaying the tax until next year.
if you have to pay taxes on capital gains shouldnt the IRS have to pay me for capital losses if i lose my investment?
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btcprice (OP)
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December 28, 2013, 05:34:12 AM |
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if you wait until 2014 youre just delaying the tax until next year.
if you have to pay taxes on capital gains shouldnt the IRS have to pay me for capital losses if i lose my investment?
If I wait until 2014 to sell I can deduct the cost of mortgage interest when I buy a house after the first. If I were to sell them today I wouldn't have that deduction and would have to pay on the entire profit.
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kwoody
Sr. Member
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Activity: 454
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Technology and Women. Amazing.
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December 28, 2013, 06:56:13 AM |
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It's funny how the taxman is always there to collect when you win, but never around to help when you lose.
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medialab101
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December 28, 2013, 07:07:31 AM |
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A lot of bitcoiners and altcoiners made a lot of money this year with the runup. If they cash out their profit before the end of the calendar year they (theoretically) have to pay taxes on their gains.
I'm guessing a lot of people are waiting until after the 1st of the year to sell their coins in order to cash out and realize a profit. Cashing out after the 1st of the year allows them one whole year to find tax havens such as mortgage interest and Roth IRAs.
Will people be selling a lot after the 1st of the year?
There will be no major cash out, US citizens only hold a small part of the BTC in circulation And you forget that holders are greedy, we are all waiting for the next bubble aren't we Although I agree, I still think there is going to be a ~10% cash-out. Why? Because I've considered doing the same thing myself. Depends on the price really.
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notme
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December 28, 2013, 07:11:39 AM |
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If anything, I'll cash out a bit before the first since at the end of the year I can calculate how much I can cash out and still keep my income low enough to have 0% on long term capital gains. Ah, the joys of being back in school and living on a graduate teaching assistant's mesely pay. I finish my masters in May though, so I don't know what taxes will be like for 2014.
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Romyen
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Activity: 61
Merit: 10
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December 28, 2013, 07:40:18 AM |
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Several posts in this thread assume that trading bitcoins on an exchange is a taxable event for U.S. persons. I believe that is true only if at some point they are coverted to fiat or used to purchase a physical commodity or service. Suppose you bought bitcoins on an exchange using a fiat currency. Your basis is whatever you paid for the bitcoins. If you trade those bitcoins for another virtual commodity such as litecoins without ever converting to a fiat currency or anything physical, then I believe it is not yet taxable, and your basis remains at whatever you paid for the bitcoins. That is my interpretation of the U.S. GAO report on virtual currencies: http://www.gao.gov/products/GAO-13-516 . I am not a tax accountant. If I am wrong about any of this, please correct me.
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ChanceCoats123
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December 28, 2013, 08:51:20 AM |
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If anything, I'll cash out a bit before the first since at the end of the year I can calculate how much I can cash out and still keep my income low enough to have 0% on long term capital gains. Ah, the joys of being back in school and living on a graduate teaching assistant's mesely pay. I finish my masters in May though, so I don't know what taxes will be like for 2014.
If you're going to go early and anticipate the sell off, don't you think other people might anticipate your anticipation and sell earlier than that? And what about the people who anticipate the anticipation of the anticipation and sell off even before that sell off??? We might as well all sell off now to avoid those issues.
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Dalmar
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December 28, 2013, 12:20:33 PM |
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In the previous years the price went up sharply in January. So why didn't this happen (at a large scale) in the previous years and will happen now? I don't see the reason.
Bitcoin was a silly stoner/hacker's coin back then.
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skivrmt
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December 28, 2013, 01:15:13 PM |
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Several posts in this thread assume that trading bitcoins on an exchange is a taxable event for U.S. persons. I believe that is true only if at some point they are coverted to fiat or used to purchase a physical commodity or service. Suppose you bought bitcoins on an exchange using a fiat currency. Your basis is whatever you paid for the bitcoins. If you trade those bitcoins for another virtual commodity such as litecoins without ever converting to a fiat currency or anything physical, then I believe it is not yet taxable, and your basis remains at whatever you paid for the bitcoins. That is my interpretation of the U.S. GAO report on virtual currencies: http://www.gao.gov/products/GAO-13-516 . I am not a tax accountant. If I am wrong about any of this, please correct me. That's an interesting link. I think it is describing more of using virtual currency to buy or trade for something "real", like a product or service which may or may taxable. Yeah, Uncle Sam is so helpful sometimes! I don't think it specifically addresses trading a virtual currency for a profit, or loss. But again, just because sometimes doesn't get converted to fiat, doesn't mean its taxable. I'm not saying trading coins is or isn't, I'm not an accountant, but I'd be careful if one day you ever get audited!!
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wachtwoord
Legendary
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Activity: 2324
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December 28, 2013, 01:27:00 PM |
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In the previous years the price went up sharply in January. So why didn't this happen (at a large scale) in the previous years and will happen now? I don't see the reason.
Bitcoin was a silly stoner/hacker's coin back then. There were plenty of people who had millions of Dollars in Bitcoin even at those prices. I can understand this is hard to gather if you just came around though
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