Will people be selling after the 1st of the year for tax benefits?

[Dalmar]

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

There was some ''smart money'' in it, but nowhere near the amount of corporate/semi-corporate money that is currently in BTC. So, you can't really say what is going to happen.

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[wachtwoord]

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

There was some ''smart money'' in it, but nowhere near the amount of corporate/semi-corporate money that is currently in BTC. So, you can't really say what is going to happen.

I was around on the forums. There was also plenty of 'dumb' money in

[Dalmar]

I was around on the forums. There was also plenty of 'dumb' money in

I was talking about those who dumped +50k USD on bitcoin back then, not your average lucky nerd/stoner.

[wachtwoord]

I was around on the forums. There was also plenty of 'dumb' money in

I was talking about those who dumped +50k USD on bitcoin back then, not your average lucky nerd/stoner.

I'm talking about those that did it the other way around

[skivrmt]

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

There was some ''smart money'' in it, but nowhere near the amount of corporate/semi-corporate money that is currently in BTC. So, you can't really say what is going to happen.

I think this is exactly correct.  We cant compare last year to this year.  There was barely any press about it, no trusts being set up, not much if any mainstream acceptance yet, and of course no corporate money with big time backers.  I dont think we'll see any changes from 2013 to 2014 simply because of taxes.

[proudhon]

Will somebody PM when it's time to sell a bunch of bitcoins next year.  I don't want to miss out.

[eldentyrell]

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.

My understanding of tax law in the US is that, for forex (and bitcoin), you pay taxes on a marked to market basis. You calculate dollars out (or dollar value of bitcoins) minus dollars in, and pay taxes on that. It does not matter whether you "cash out" or not -- the tax is the same.

Well, sorta.

The rules for gold and collectibles are mostly about the rate.  They don't want you using the 15-20% rate.

You recognize (report) the gain in value every year, but you don't owe the tax on that gain until you realize the gain (i.e. sell).

In fact I lost money from BitFloor - can I deduct that?

Very likely.  You should probably have a tax professional do it.

I presume we can deduct silk road loses?

There is a line-item for income (or loss) from illegal activities.  I shit you not.

if you have to pay taxes on capital gains shouldnt the IRS have to pay me for capital losses if i lose my investment?

They do, but they don't pay you in dollars; they pay you in tax credits you can carry forward into the future.

[wachtwoord]

I presume we can deduct silk road loses?

There is a line-item for income (or loss) from illegal activities.  I shit you not.

And I continue to be amazed.

[HELP.org]

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.

My understanding of tax law in the US is that, for forex (and bitcoin), you pay taxes on a marked to market basis. You calculate dollars out (or dollar value of bitcoins) minus dollars in, and pay taxes on that. It does not matter whether you "cash out" or not -- the tax is the same.

If you've been hodling since the beginning of the year and haven't done any day trading, you don't have any taxes since you haven't realized profits. I think the idea here is that some of these long term hodlers may be waiting for the beginning of the year to realize their profits so the income isn't factored into their 2013 taxes when they file them in April.

That's what I was thinking. Also another strategy is if you sold during the year and rebought. If the price drops significantly, you can resell and rebuy to offset capital losses, but with slippage that might not work at all.

No, when you rebuy there is no capital gain/loss until you sell again.  If you sold up high and rebought you still need to come up with the cash to pay your taxes on the gain you realized when you sold.   

[notme]

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. 

Where the fuck did I say anything about trying to front run some stupid theory about people cashing out simply because it is a new year?  I want the profits in 2013 taxes because I can be certain of their impact.

[wachtwoord]

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. 

Where the fuck did I say anything about trying to front run some stupid theory about people cashing out simply because it is a new year?  I want the profits in 2013 taxes because I can be certain of their impact.

Not everyone's reading skills are sufficiently up to par

[Raize]

My accountant has advised me that I should report these as "Other Income" for my Mining/Arbitrage/Trading LLC I set up in 2012, which basically means Bitcoins are taxed at the highest rate possible (akin to an increased salary). I might even have to pay more in Social Security tax, we still don't know.

Until we get clarity from the gov't on this, I'm going with my accountant and taking as legal of a route as possible. If cryptocurrencies do get taxed at lower rates, then I can always go back and file a claim for what they owe me. I do agree that these should be taxed at capital gains rates, but capital gains have very specific designations in the tax code (or so I'm told) and because the IRS is slacking off, we presently think that Bitcoins fall under Other Income at the present time. I don't think more familiar CPAs are going to be universal in their assessment of this, so take what I have to say here as you may. I'm just going the extra precautionary route though I'm definitely complaining every step of the way. Also, this $50k I made was a sale of only a small portion of my holdings, so this is kind of a "let's figure out what happens" sort of thing.

Also, because of the sharp contrast in my previous to my present bank account standings, I'm sure to get audited, so I imagine I'll have a lot to say to the IRS about this as well. This is partially the reason for why I was thinking of doing a blog, so I can complain about everything that happens and how unfairly I'm sure to get targeted. Maybe they'll surprise me and it'll be a cheery process or there won't be an audit at all. I find both unlikely.

TLDR; I'm going to be a shining beacon of the opposite that I want to be regarding taxes on cryptocurrencies. If the feds screw around with me, I'm leaving this god-forsaken bananapetrodollar republic and making sure they don't make another dime off of me and no one will be able to say I didn't try to work with them on this.

[Dafar]

What's stopping someone from opening up a bank acct in another country, transferring BTC to that country's local exchange and withdrawing to the bank? Or using an ATM anywhere around the world, then storing the fiat in a bank. Would coinbase report to the IRS how many bitcoins you bought and when? Please respond

[btcprice]

What's stopping someone from opening up a bank acct in another country, transferring BTC to that country's local exchange and withdrawing to the bank? Or using an ATM anywhere around the world, then storing the fiat in a bank. Would coinbase report to the IRS how many bitcoins you bought and when? Please respond

Most of us have already thought about this. In fact, back in 2011 when I first bought into bitcoin when the prices were going up I had that very thought. But getting a foreign bank account is difficult and I believe many countries have agreements with the US to report any balances if a person is suspected of illegal activity.

This happened in Switzerland recently. The Swiss have always had the utmost security when it came to banking matters until the US strong-armed the Swiss into releasing bank records on US citizens. Many Swiss banks now refuse to accept accounts from Americans.

Perhaps one could set up an account in the Cayman Islands. In fact, I do believe I will look into doing just that. Thanks for the inspiration.

[btcprice]

My accountant has advised me that I should report these as "Other Income" for my Mining/Arbitrage/Trading LLC I set up in 2012, which basically means Bitcoins are taxed at the highest rate possible (akin to an increased salary). I might even have to pay more in Social Security tax, we still don't know.

Until we get clarity from the gov't on this, I'm going with my accountant and taking as legal of a route as possible. If cryptocurrencies do get taxed at lower rates, then I can always go back and file a claim for what they owe me. I do agree that these should be taxed at capital gains rates, but capital gains have very specific designations in the tax code (or so I'm told) and because the IRS is slacking off, we presently think that Bitcoins fall under Other Income at the present time. I don't think more familiar CPAs are going to be universal in their assessment of this, so take what I have to say here as you may. I'm just going the extra precautionary route though I'm definitely complaining every step of the way. Also, this $50k I made was a sale of only a small portion of my holdings, so this is kind of a "let's figure out what happens" sort of thing.

Also, because of the sharp contrast in my previous to my present bank account standings, I'm sure to get audited, so I imagine I'll have a lot to say to the IRS about this as well. This is partially the reason for why I was thinking of doing a blog, so I can complain about everything that happens and how unfairly I'm sure to get targeted. Maybe they'll surprise me and it'll be a cheery process or there won't be an audit at all. I find both unlikely.

TLDR; I'm going to be a shining beacon of the opposite that I want to be regarding taxes on cryptocurrencies. If the feds screw around with me, I'm leaving this god-forsaken bananapetrodollar republic and making sure they don't make another dime off of me and no one will be able to say I didn't try to work with them on this.

I'm right behind you brother. If I get any sort of pushback by the IRS I will move out as well. I have friends in Thailand who say I can get a flat in a tower on the ocean for $1000/month. I'll just move into my friend's building and hang out with Thai supermodels.

What you say about talking to an accountant of course makes sense and I would suggest anyone who is going to spend any of their bitcoin loot to do the same. I plan to use mine for a down payment on a house. I want to diversify my investments from just bitcoin to bitcoin and real estate in case my bitcoin holdings drop because of some unforeseen news.

Yes, I will have to declare some of my gains in taxes but I hope to offset those with mortgage interest payments.

[HELP.org]

I sold ~$50k this year (Novemberish) to see what will happen with my taxes. I should know by April 15th if I'm going to continue to live in the US or not as I still own coin. If you guys want, I can start a blog about it or something. Right now I'm just doing as many home improvements and charity donations as I feasibly can.

Or if you could post in this thread. I think I will do the same.

The problem is how many accountants are well-versed in bitcoin, not to mention altcoin transactions? Would your local CPA know how the IRS considers these investment vehicles? Or am I going to have to find a bitcoin accountant online?

I'll try doing Google searches to find out.

I'd also like to find an accountant who understands bitcoin as mine is considering it currency trading ala Forex. I don't know if that is correct or not. I'd be happy to go to someone else who is an expert in this. There were a lot of losses and even more wins.

If names come up, please let us know. I'll also look....

See this link for some info:

http://www.bitcointax.info/

[btcprice]

I sold ~$50k this year (Novemberish) to see what will happen with my taxes. I should know by April 15th if I'm going to continue to live in the US or not as I still own coin. If you guys want, I can start a blog about it or something. Right now I'm just doing as many home improvements and charity donations as I feasibly can.

Or if you could post in this thread. I think I will do the same.

The problem is how many accountants are well-versed in bitcoin, not to mention altcoin transactions? Would your local CPA know how the IRS considers these investment vehicles? Or am I going to have to find a bitcoin accountant online?

I'll try doing Google searches to find out.

I'd also like to find an accountant who understands bitcoin as mine is considering it currency trading ala Forex. I don't know if that is correct or not. I'd be happy to go to someone else who is an expert in this. There were a lot of losses and even more wins.

If names come up, please let us know. I'll also look....

See this link for some info:

http://www.bitcointax.info/

Thanks for the link. I was going to post something similar in a little while to get another angle on the situation.

Well, it's midnight in Beijing right now. I don't know if the Chinese have the same tax write-offs that we do that would cause them to potentially sell in the New Year. It will be interesting to see.

[skivrmt]

I sold ~$50k this year (Novemberish) to see what will happen with my taxes. I should know by April 15th if I'm going to continue to live in the US or not as I still own coin. If you guys want, I can start a blog about it or something. Right now I'm just doing as many home improvements and charity donations as I feasibly can.

Or if you could post in this thread. I think I will do the same.

The problem is how many accountants are well-versed in bitcoin, not to mention altcoin transactions? Would your local CPA know how the IRS considers these investment vehicles? Or am I going to have to find a bitcoin accountant online?

I'll try doing Google searches to find out.

I'd also like to find an accountant who understands bitcoin as mine is considering it currency trading ala Forex. I don't know if that is correct or not. I'd be happy to go to someone else who is an expert in this. There were a lot of losses and even more wins.

If names come up, please let us know. I'll also look....

See this link for some info:

http://www.bitcointax.info/

Thanks for the link. I was going to post something similar in a little while to get another angle on the situation.

Well, it's midnight in Beijing right now. I don't know if the Chinese have the same tax write-offs that we do that would cause them to potentially sell in the New Year. It will be interesting to see.

Well after midnight ("Asia time") and the price is higher, not by much, but slight upward trend.

I think eventually there will be accountants who become very familiar with the tax codes for trading and selling bitcoin.  And by familiar, I mean there will become some sort of precedent that most will follow.  It happened with online poker.  Most CPA's didn't know how to calculate the gains or losses.  Then someone (a Mr Fox or someone) created a poker specific tax site and he became the go to guy for many professional poker players.

[the_sunship]

See this link for some info:

http://www.bitcointax.info/


perfect - thank you!

and a happy and prosperous 2014 to all!

[mskryxz]

quick question

if i bought and mined bitcoins but NEVER sold any,

do i need to declare anything during my taxes in 2014? do i need to let irs know that i hold bitcoins ? or can i be hush about it since i never made a recognized gain?