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becoin
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October 26, 2011, 07:58:59 PM
 #121

There is only one legal tender in the United States and that is Federal Reserve Notes.
So, if there is only one legal tender all other tenders are illegal. And here we go back to square one - nothing can compete with the US dollar. This is the law! All the rest is just a simulation of a free market and free society...

Nothing can
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be used as current money in order to limit reliance on, and to compete with the circulating coinage of the United States.

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October 26, 2011, 08:00:13 PM
 #122

There is only one legal tender in the United States and that is Federal Reserve Notes.
So, if there is only one legal tender all other tenders are illegal. And here we go back to square one - nothing can compete with the US dollar. This is the law! All the rest is just a simulation of a free market and free society...

Nothing can
Quote
be used as current money in order to limit reliance on, and to compete with the circulating coinage of the United States.

That isn't the definition of legal tender.

You are wrong.
You are a troll.
You are on ignore.
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October 26, 2011, 08:02:30 PM
 #123

Good thing I live in Belgium; there is no capital gains tax here Smiley (we have plenty of others tho)
Question for US citizens; since you have to pay taxes on profits you make on capital gains, can you deduct losses you make from your income tax?

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October 26, 2011, 08:05:07 PM
 #124

Good thing I live in Belgium; there is no capital gains tax here Smiley (we have plenty of others tho)
Question for US citizens; since you have to pay taxes on profits you make on capital gains, can you deduct losses you make from your income tax?
Yes, but there are limits to how much you can deduct in a given year.

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October 26, 2011, 08:06:34 PM
 #125

Surely you only owe taxes if you turn it into usd ?

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October 26, 2011, 08:08:58 PM
 #126

Good thing I live in Belgium; there is no capital gains tax here Smiley (we have plenty of others tho)
Question for US citizens; since you have to pay taxes on profits you make on capital gains, can you deduct losses you make from your income tax?

Yes.  You can deduct losses up to your gains and then apply up to $3K more towards normal income.  Any excess rolls over to next year.

So it may take a while to get full benefit.  Yes our tax code is complicated beyond all stupidity.  It is more complicated that I explained because you technically have dividends, short term capital gains, long term capital gains, and regular income.  There are lots of worksheets for figuring out what can go against what.  Also sometimes you need to try and predict the future.  

Last year I had $2800 in excess short term capital losses and some long term capital gains.  Now using a crap ton of worksheets I could apply that short term capital loss against the long term capital gain BUT technically that is suboptimal as short term capital gains are taxed higher rate than long term capital losses.  The govt gave me the option to offset $420 in long term capital gains taxes but if I had short term capital gains it would be worth closer to $700.  So I gambled and rolled the short term capital loss forward and paid full taxes on long term capital gains betting that I will eventually (before they change the tax code) have a short term capital gain that I can apply the short term capital loss against.

Yes our taxcode is that stupid.  That is like 0.1% of our taxcode.  Nobody knows how it works anymore.  I gave up years ago trying to file manually and trust that TaxCut software does it right and I don't get audited.  
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October 26, 2011, 08:11:54 PM
 #127

Good thing I live in Belgium; there is no capital gains tax here Smiley (we have plenty of others tho)
Question for US citizens; since you have to pay taxes on profits you make on capital gains, can you deduct losses you make from your income tax?

yes you can.

You have to understand that our tax code is the largest document ever created by humans.

If printed in 10 font,  it would reach from here to the moon, literally.

There are federal taxes, state taxes, local taxes,  sales taxes, import taxes, export taxes, federal wage taxes, state wage taxes,  employee "right to work" taxes,  there are social security taxes,  taxes on airline travel... the list goes on for as far as the eye can see.

Each subset of each of those taxes have their own special code themselves,  often incompatible.

For state taxes in Pennsylvania:  

Everything is 6 percent unless it's a house,  that's 1%,  but if it's clothing it's 0,  if it's food it's 0,  unless it's branded a vanity clothing item, such as a coat, that's taxable at 6%,  renovating your house is 6% on material, but 0 on labor but buying the home is 1% as noted before,  Food is zero unless it's bubble gum,  that's 6%   Gas is taxed not only a federal,  but state, local, county and city level as well.   Each dollar spent on gas,  almost 60 cents of it goes to taxes,  not one taxing authority,  but roughly a dozen of them each with their own rate.  diesel fuel is taxed differently than unleaded gas,  unless it's for an offroad 4 wheeler or boat, then it's taxed differently than normal diesel which is taxed differently than regular gas.

I tried to load the US tax code (someone typed it up, literally)  in text about 10 years ago,  the 450 meg text file crashed my machine back then.


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October 26, 2011, 08:12:36 PM
 #128

Surely you only owe taxes if you turn it into usd ?

No.  In the US you owe income taxes on all compensation you receive regardless of the format.

For example your employer could pay you a small amount of actual cash salary and pay $80,000 in benefits (a car lease, house rental, paid vacation each year, $10,000 worth of groceries, $5,000 worth of clothing, etc).  You aren't converting any of that into cash.  You are simply receiving non-cash compensation.

It doesn't matter.  If your employer compensated you with $80,000 worth of X (regardless of what X is) then you have income of $80K and owe taxes as if it was $80K in cash.

Bitcoin wouldn't change the legality of that.  Bitcoin might make enforcement of that more difficult but taxes would still be due exactly the same as if your employer paid you in groceries or gold.
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October 26, 2011, 08:20:02 PM
 #129

Surely you only owe taxes if you turn it into usd ?

No.  In the US you owe income taxes on all compensation you receive regardless of the format.
I think he was talking about capital gains...if he buys a bitcoin, he doesn't owe capital gains until he later sells it for USD.  If he spends it, he's still owes tax as a barter transaction (basically a wash either way).

All this tax talk has me thinking about the Beatles song:
http://www.youtube.com/watch?v=ZqK97av7I3s

(gasteve on IRC) Does your website accept cash? https://bitpay.com
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October 26, 2011, 08:22:40 PM
 #130

So is anyone here going to try and get a tax reduction for his bitcoin trade losses?

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October 26, 2011, 08:24:26 PM
 #131

Surely you only owe taxes if you turn it into usd ?

No.  In the US you owe income taxes on all compensation you receive regardless of the format.
I think he was talking about capital gains...if he buys a bitcoin, he doesn't owe capital gains until he later sells it for USD.  If he spends it, he's still owes tax as a barter transaction (basically a wash either way).


Yeah if that was what he intended then sorry for the confusion.  Well I am more sorry our tax code sucks so hard.

Compensation - taxed are owed @ point of compensation.
Investment - taxes are owed @ the point of divestment.
Interest/Dividends - taxes are owed @ the point of payment.

In all three of those it doesn't matter what form it is in.  While you file at the end of the year trust me taxes are due at the time of the event.  Got into some "fun times" with IRS over some stock options over not paying taxes early enough.  No it wasn't I didn't pay enough I paid the right amount I just didn't pay it early enough in the year.

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October 26, 2011, 08:38:25 PM
 #132

In all three of those it doesn't matter what form it is in.  While you file at the end of the year trust me taxes are due at the time of the event.  Got into some "fun times" with IRS over some stock options over not paying taxes early enough.  No it wasn't I didn't pay enough I paid the right amount I just didn't pay it early enough in the year.
I think this is a common mistake.  A lot of people assume that just because you file once per year that you only have to pay taxes on an annual basis.  But the IRS requires that you pay estimated taxes quarterly if you have enough income that isn't subject to withholding.

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October 26, 2011, 08:49:36 PM
 #133

er... so about these bank account being frozen. any updates?

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October 26, 2011, 08:58:56 PM
 #134

So is anyone here going to try and get a tax reduction for his bitcoin trade losses?

  Allinvain had made some mention about wanting to write off his lose. His was related to 'theft' which requires a bit more work on his end to prove the loss, but its a loss none the less. I am not sure he reported back after being advised to consult a qualified legal professional reguarding such a matter. With my limited knowledge on taxes and such, I would sure try. As long as your accounting of sells/buys is good and you can match it up with bank statements, then why not? That is not to say I am confident the IRS would accept it.

If you're not excited by the idea of being an early adopter 'now', then you should come back in three or four years and either tell us "Told you it'd never work!" or join what should, by then, be a much more stable and easier-to-use system. - GA
It is being worked on by smart people. -DamienBlack
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October 26, 2011, 08:59:39 PM
 #135

Yes our taxcode is that stupid.  

Im taking bets ours is even worse. Want an example? Years ago I worked for a company that was preparing an IPO. I was offered a generous amount of stock options. On those stock options, I would have had to pay taxes. Fair enough, but not on the profits, not on the difference between the option price and the market value or even book value of the shares, but on the face value of those options.

Not sure Im using the right terminology, but to clarify; assume I was awarded options to buy stock at $5 while the stock was valued at $15 by the VCs and might IPO for $30. Every option I got was taxed as a benefit of... $5.

That might sound good, but it would be $5 even if the company was valued at $6 and IPO'd for $7. Or $4.  I would still be taxed as if I received a $5 benefit per option that was worth $1 or could even be worthless (as it turned out)! I double and triple checked this with our accountant as I couldnt believe such stupidity, but I can only conclude whoever wrote that law didnt understand the first thing about stock options!

So I asked 10x less stock options at a corresponding lower face value, but I couldnt get our French mothercompany to understand that lol. Cant even blame them. Anyway, then the internet bubble burst and the IPO never happened. I still paid my taxes on it!

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October 26, 2011, 09:04:49 PM
 #136

So is anyone here going to try and get a tax reduction for his bitcoin trade losses?
With my limited knowledge on taxes and such, I would sure try. As long as your accounting of sells/buys is good and you can match it up with bank statements, then why not? That is not to say I am confident the IRS would accept it.

I think the only risk is the IRS sees it not as an investment but as gambling which has different tax implications.  If it is a large amount getting a tax attorney advice may be worth it.  If nothing else it provides denability and means the IRS will likely consider it an accidental claim not a fraudulent one which can be the difference between just paying the taxes or paying the taxes plus penalties plus interest.

If it is a small amount well you can always bet on the fact that less than 1% of all returns are audited.  Grin
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October 26, 2011, 09:14:41 PM
 #137

So is anyone here going to try and get a tax reduction for his bitcoin trade losses?
With my limited knowledge on taxes and such, I would sure try. As long as your accounting of sells/buys is good and you can match it up with bank statements, then why not? That is not to say I am confident the IRS would accept it.

I think the only risk is the IRS sees it not as an investment but as gambling which has different tax implications.  If it is a large amount getting a tax attorney advice may be worth it.  If nothing else it provides denability and means the IRS will likely consider it an accidental claim not a fraudulent one which can be the difference between just paying the taxes or paying the taxes plus penalties plus interest.

If it is a small amount well you can always bet on the fact that less than 1% of all returns are audited.  Grin

  lol, so true. We(mostly my wife, I'm the grunt number puncher when she needs it) have filed ~100 small biz returns a year, for going on 7 years now, with not one single audit. And some of them, I'll tell you. We do what our clients ask, within 'legal reason' of course, but some of these people and their 'accounting' practices and odd claims. I'd expect a 10% audit rate on a lot of them.  Wink  She's a CPA, etc, not real up on all that and we have a full time tax attorney that advises on some of the more concerning ones to ensure we are within the tax guildines. Still....

If you're not excited by the idea of being an early adopter 'now', then you should come back in three or four years and either tell us "Told you it'd never work!" or join what should, by then, be a much more stable and easier-to-use system. - GA
It is being worked on by smart people. -DamienBlack
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October 27, 2011, 04:12:13 PM
 #138

@DeathAndTaxes: I always understood it that there was a certain amount of money you could make per year that didn't have to be taxed. If bitcoin is a currency btw, then I think it would be the same rule as just converting USD to CND or something. You didn't "make money", you just pay capital gains taxes when you sell it back (not sure about taxes on exchanging currencies).

I don't personally think of bitcoin as a currency yet though so if I were filing I'd file it the same way I would buying and selling coins on eBay.

I would never file taxes on bitcoins! I would tell them "prove it"!


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October 27, 2011, 04:53:35 PM
 #139

I would never file taxes on bitcoins! I would tell them "prove it"!

Do you do the same with cash? It's essentially the same situation. It's actually harder to "prove" transactions with cash.
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October 27, 2011, 07:44:22 PM
 #140

I would never file taxes on bitcoins! I would tell them "prove it"!
Seems with every transaction and just any action within the network is tracked and listed on blockexplorer.  Is it not just a matter of tying you to the address' used?

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