notig (OP)
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January 05, 2014, 03:17:19 AM |
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capital gains essentially makes it so that if the dollar loses value you still have to pay because if you are holding something that doesn't lose value (bitcoin) while the dollar does... then as soon as you try to 'use' bitcoin you are charged with the difference.
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Spendulus
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January 05, 2014, 03:25:42 AM |
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capital gains essentially makes it so that if the dollar loses value you still have to pay because if you are holding something that doesn't lose value (bitcoin) while the dollar does... then as soon as you try to 'use' bitcoin you are charged with the difference.
yeah. you need to hold the coin > 1 year then it's long term gain, now something like 15-18 percent which is not too bad.
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notig (OP)
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January 05, 2014, 03:27:22 AM Last edit: January 05, 2014, 04:01:00 AM by notig |
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what if you buy coins and then buy more coins and then later you sell coins a year after you bought the first batch and the amount of coins you sell are less than the amount you initially bought. can you then prove that the coins you sold where from the first coins you bought and therefore longer than 1 year?
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Spendulus
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January 05, 2014, 03:56:01 AM |
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what if you buy coins and then buy more coins and then later you sell coins a year after you bought the first batch and the coins you sell are less than the amount you initially bought. can you then prove that the coins you sold where from the first coins you bought and therefore longer than 1 year?
Hahahaha....that's a good question. Pick LIFO or FIFO, first in first out/last in last out, stick to that method for accounting. But really it's not any different than a grain silo operator that's got one thing in that silo - say wheat - and he bought it at different times and different prices.
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GnB
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January 05, 2014, 04:10:17 AM |
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What the hell are you smoking? who's going to tax you for spending btc?
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notig (OP)
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January 05, 2014, 04:49:02 AM |
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What the hell are you smoking? who's going to tax you for spending btc?
you mean a capital gains tax when spending it? Well it's true. I don't know if it will be enforceable though. But it is still bullshit
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Hawker
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January 05, 2014, 01:40:16 PM |
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What the hell are you smoking? who's going to tax you for spending btc?
you mean a capital gains tax when spending it? Well it's true. I don't know if it will be enforceable though. But it is still bullshitSadly, the problem here is that you don't know what capital tax is so your entire post is bullshit. You pay CGT on realized gains. Spending the Bitcoin means the gains are not realised so not liable to CGT.
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Hawker
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January 05, 2014, 06:32:38 PM |
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Spending the Bitcoin means the gains are not realised so not liable to CGT.
Whoa... This is entirely wrong in my jurisdiction. Please understand that this is a global forum before making such blanket statements. What's your jurisdiction? I don't believe there is any jurisdiction in the world that charges CGT if the gain is not realised.
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notig (OP)
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January 05, 2014, 06:49:06 PM |
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#2: When do my gains become taxable? Your gains are taxable in the year that they are realized. Realization occurs when you exchange bitcoins for any type of other property; such as cash, merchandise, or services. This includes everything from haircuts to yachts. Essentially, any transaction involving the exchange or sale of bitcoins is a realization event and triggers taxable gain. Because I've seen a lot of misinformation on this point, I want to make myself perfectly clear. If you own bitcoins that have appreciated in value, you cannot use them to purchase a goods or services tax free. Such a purchase is an accession to wealth, and is therefore taxable. This is no different than if you had sold the bitcoins for cash and used the proceeds to purchase the goods or services directly. Yet, one would be taxable while the other would not? The IRS would never tolerate such a blatant loophole, and neither would the courts. In fact, we already have a long line of IRS rulings and Supreme Court cases rejecting identical arguments made for other types of assets. The outcome for bitcoins will be the same. http://www.reddit.com/r/Bitcoin/comments/1uccfz/i_am_a_tax_attorney_here_are_my_answers_to_the/
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notig (OP)
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January 05, 2014, 07:53:21 PM |
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the only good news really is that while you still pay a cost because of inflation at least it's not a compounded cost. And maybe it will be mostly unenforceable except for large purchases (like a house)
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notig (OP)
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January 05, 2014, 08:02:03 PM |
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capital gains essentially makes it so that if the dollar loses value you still have to pay because if you are holding something that doesn't lose value (bitcoin) while the dollar does... then as soon as you try to 'use' bitcoin you are charged with the difference.
It depends on your overall tax situation. There are tax brackets with 0% long term capital gains (in the US). true but the gains count towards your income. I think you have to make under something like 32k a year. but it also means you have to hold btc for longer than a year before you spend it
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countryfree
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January 06, 2014, 10:47:47 PM |
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How about moving to a country where is no capital gains tax? Just an idea...
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I used to be a citizen and a taxpayer. Those days are long gone.
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Hawker
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January 06, 2014, 11:38:28 PM |
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Spending the Bitcoin means the gains are not realised so not liable to CGT.
Whoa... This is entirely wrong in my jurisdiction. Please understand that this is a global forum before making such blanket statements. What's your jurisdiction? I don't believe there is any jurisdiction in the world that charges CGT if the gain is not realised. The USA. Everything I have read says that purchasing items directly with Bitcoin is most certainly realizing your gain and subject to capital gains tax. Do not take this as tax advice, consult a professional. http://www.bitcointax.info/Are you suggesting that I can purchase a 3 million dollar home and as long as I pay with Bitcoin (lets say I obtained them in 2010) that I do not need to pay capital gains on those coins? That's what I understand when you say, "Spending the Bitcoin means the gains are not realized so not liable to CGT". That's basically saying that items used in barter are not subject to capital gains tax. I seriously doubt such a huge loophole exists. Um - thats exactly what I am saying. Forget bitcoin and pretend that you have $1 million in copper futures which you paid $100k. You trade them for a rental unit that would have sold for $1 million. My understanding is that no CGT is payable. Unless the US treats bitcoin as a currency, it will be treated as a commodity and thus the same rules apply. Feel free to tell me I am wrong. I've read your www.bitcointax.info link and it leads to http://www.law.cornell.edu/uscode/text/26/988 which seems to say the same thing as me but you may know better.
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nobbynobbynoob
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January 06, 2014, 11:45:57 PM |
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How about moving to a country where is no capital gains tax? Just an idea...
Yes, that's totally legal (assuming you can get into that country!). AIUI, several British dependencies don't levy CGT (IANAL so I could be wrong), for example. Bear in mind the US are a totalitarian state and their "IRS" claims the right to tax US citizens anyplace on earth. So if you're American, whether by birth, descent or naturalization, you must either: - Pay Uncle Sam his dues so he can kill more innocents! - Renounce your US citizenship - Ignore the IRS (best stay away from the US though!)
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btc4ever
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January 07, 2014, 08:03:32 AM |
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demonstrate just a little income, and receive all sorts of payments, housing, medicine, and other benefits from Uncle Sam.
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Psst!! Wanna make bitcoin unstoppable? Why the Only Real Way to Buy Bitcoins Is on the Streets. Avoid banks and centralized exchanges. Buy/Sell coins locally. Meet other bitcoiners and develop your network. Try localbitcoins.com or find or start a buttonwood / satoshi square in your area. Pass it on!
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Hawker
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January 07, 2014, 01:48:42 PM |
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Um - thats exactly what I am saying. Forget bitcoin and pretend that you have $1 million in copper futures which you paid $100k. You trade them for a rental unit that would have sold for $1 million. My understanding is that no CGT is payable. Unless the US treats bitcoin as a currency, it will be treated as a commodity and thus the same rules apply. Feel free to tell me I am wrong. I've read your www.bitcointax.info link and it leads to http://www.law.cornell.edu/uscode/text/26/988 which seems to say the same thing as me but you may know better. Interesting. Firstly, I don't believe it, because it's too good to be true. I simply don't believe that the IRS is going to let someone avoid capital gains taxes simply because they've skipped the "cash out for fiat" part of the equation. It just sounds silly. That and you are the first person who is telling me otherwise. Here is some possible relevant reading: http://www.irs.gov/publications/p17/ch14.htmlSpecifically see sections titled "What is a sale or trade?" and "Nontaxable trades". Finally see the section titled "Capital or Ordinary Gain or Loss" where it states: "Generally, a sale or trade of a capital asset (defined next) results in a capital gain or loss." Capital asset is defined next as: "For the most part, everything you own and use for personal purposes, pleasure, or investment is a capital asset." They go on to give examples of "capital assets" and examples of "non-capital assets". The entire question hinges on how the IRS defines Bitcoin and I'd guess that they (will) define it as a "capital asset". Trust me, I would very much love to be wrong on this. This is the second time you have directed me to links that say the opposite of what you say. Instead of posting links why not jsut take a moment to think about it? The tax man does not want to charge you CGT in Bitcoin - he wants to charge you in Dollars. http://www.irs.gov/publications/p17/ch14.html is packed with examples and definitions all of what relate to Dollars. Until you convert your Bitcoin to Dollars, you don't have a capital gain and therefore can't be charged CGT.
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countryfree
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January 07, 2014, 07:02:21 PM |
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How about moving to a country where is no capital gains tax? Just an idea...
Yes, that's totally legal (assuming you can get into that country!). AIUI, several British dependencies don't levy CGT (IANAL so I could be wrong), for example. Bear in mind the US are a totalitarian state and their "IRS" claims the right to tax US citizens anyplace on earth. So if you're American, whether by birth, descent or naturalization, you must either: - Pay Uncle Sam his dues so he can kill more innocents! - Renounce your US citizenship - Ignore the IRS (best stay away from the US though!) I'm not American, and I travel a lot, so I'm not paying any CGT or income tax to anyone. Frankly, that's the only way to live.
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I used to be a citizen and a taxpayer. Those days are long gone.
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