Will miners in USA be able to remain competitive due to huge tax burden?

[MiningSensei]

I expect that miners would navigate this pretty easily considering that freshly-mined Bitcoins are completely anonymous.  These also trade against other alts that are not regulated.  I expect a simple solution to be found by the time the tax is even implemented.

[1713555254]

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[cozk]

so if the IRS considers bitcoin property subject to property tax.. what if we host our wallets on servers located in other countries.. would we have to claim it then? so many questions..

I volunteer to store your coins in my wallet.

LMK

[iglasses]

I expect that miners would navigate this pretty easily considering that freshly-mined Bitcoins are completely anonymous.  These also trade against other alts that are not regulated.  I expect a simple solution to be found by the time the tax is even implemented.

The tax was implemented the very moment they made the ruling that BTC is property.  There isn't anything else that will happen.  They are done.

[MiningSensei]

wouldnt they just pay taxes after they cash in the bitcoins?

Yes, but if you don't sell your bitcoins then there is no fiat to produce a tax from.  They can't ask you for $ when you don't have any coming from the property. I think that the tax will actually promote holding bitcoin and using it to buy/pay for products and services.

[STT]

Its possible to cash out purely in products purchased, is that taxable also.    I would guess they'll just use random rules like this to confiscate and argue about it later, they are never wrong

[MiningSensei]

Its possible to cash out purely in products purchased, is that taxable also.    I would guess they'll just use random rules like this to confiscate and argue about it later, they are never wrong

Think of it as buying anything with anything other than money.  Gold, monopoly money, trading video games... They are all tax-free exchanges of property for products and services.  The only way to get a complete 360 tax on Bitcoin would be to declare it a currency unless they flip the rule books.

[precrime3]

I expect that miners would navigate this pretty easily considering that freshly-mined Bitcoins are completely anonymous.  These also trade against other alts that are not regulated.  I expect a simple solution to be found by the time the tax is even implemented.

Alts are "technically" regulated as it is consider like BTC (forgot the terminology, something along the lines of "alike gains")

[iglasses]

wouldnt they just pay taxes after they cash in the bitcoins?

Yes, but if you don't sell your bitcoins then there is no fiat to produce a tax from.  They can't ask you for $ when you don't have any coming from the property. I think that the tax will actually promote holding bitcoin and using it to buy/pay for products and services.

This is incorrect.  You are liable for the tax the moment you mine the coin.

[precrime3]

Above post is correct. Disclaimer: None of this is legal advice, just go to H&R block or something regarding "schedule C CPA" and self-employment taxes.

[MinorError]

wouldnt they just pay taxes after they cash in the bitcoins?

Yes, but if you don't sell your bitcoins then there is no fiat to produce a tax from.  They can't ask you for $ when you don't have any coming from the property. I think that the tax will actually promote holding bitcoin and using it to buy/pay for products and services.

This is incorrect.  You are liable for the tax the moment you mine the coin.

Spot on. The moment the coin hits your wallet, it is regarded as a form of taxable income.

[J_Dubbs]

wouldnt they just pay taxes after they cash in the bitcoins?

Yes, but if you don't sell your bitcoins then there is no fiat to produce a tax from.  They can't ask you for $ when you don't have any coming from the property. I think that the tax will actually promote holding bitcoin and using it to buy/pay for products and services.

This is incorrect.  You are liable for the tax the moment you mine the coin.

Spot on. The moment the coin hits your wallet, it is regarded as a form of taxable income.

I'll tell ya one thing... I feel like a fool handing off my Bitcoin info to my CPA. This stuff is messy when you are mining, buying, and spending bitcoin on mining equipment. Leaves you with income, capital gains/losses, and equipment expenses. Just the complexity of mining X amount of BTC, buying Y amount, and then spending Z- the cost basis gets blurry and it's just a freaking impossible mess. The more you mine and spend the messier to gets, and the accountants won't be doing this for free when it's complicated. Seriously enjoy mining, love it, but considering retirement in 2014. Buying and selling is easy to account for, but adding in a mining operation with reinvested revenues and the enjoyment, and profitability, get sucked out completely.

[iglasses]

Buying and selling is easy to account for, but adding in a mining operation with reinvested revenues and the enjoyment, and profitability, get sucked out completely.


This is precisely the purpose of the ruling...the collecting of whatever revenue they get from people who attempt to comply is a bonus.  They simply want to kill it by discouraging people from having anything to do with it out of fear of not being able to comply.
The sad thing is that it might actually work.

[precrime3]

Buying and selling is easy to account for, but adding in a mining operation with reinvested revenues and the enjoyment, and profitability, get sucked out completely.


This is precisely the purpose of the ruling...the collecting of whatever revenue they get from people who attempt to comply is a bonus.  They simply want to kill it by discouraging people from having anything to do with it out of fear of not being able to comply.
The sad thing is that it might actually work.

This is just burdening BTC mainstream adoption, and the viability of using BTC as something for everyday transactions. I think that the rulings aren't a bother if they're used for big purchase.... What's the actual viability of IRS trying to enforce this?

[iglasses]

I don't think straight enforcement is the issue.  It's a scare tactic.  If Joe Blow citizen sees even one story in the news about a person who was mining bitcoin being arrested for tax evasion because in the course of a nasty divorce or < insert random reason why one human being would want to make another human being's life miserable > other event someone decides to drop a dime on somebody they know who mines then Joe Blow is way less likely to want to participate.  Also, when Joe Blow tries to start a conversation about bitcoin at a family function or xmas party instead of getting...
Conversation A.
Joe Blow: Hey you should check out this bitcoin thing.  I bought two coins and am mining making a small profit.  I even booked a hotel room with it last week!
Joe Blow's cousin Avvy: Wow that's pretty cool!  I saw something about that in the news but didn't understand what it was.  How did you get started?  Do I need a lot of money to try it out?

You get...
Conversation B.
Joe Blow: Hey you should check out this bitcoin thing.  I bought two coins and am mining making a small profit.  I even booked a hotel room with it last week!
Joe Blow's cousin Avvy: Bitcoin!  Are you crazy!  That's a scam and the IRS is TARGETING people who try to use it to hide money.  I even saw something about it on the news last week.  Are you trying to get me thrown in Jail?  You better not be doing that shit at the lake house next month, I don't want the IRS taking my house away because you're a fucking criminal!  Why don't you just pay your taxes like the rest of us you asshole!  Hey Minerva get the car!  We are leaving before this dick gets us all thrown in jail for money laundering!

[gsupp]

Joe Blow: Hey you should check out this bitcoin thing.  I bought two coins and am mining making a small profit.  I even booked a hotel room with it last week!
Joe Blow's cousin Avvy: Bitcoin!  Are you crazy!  That's a scam and the IRS is TARGETING people who try to use it to hide money.  I even saw something about it on the news last week.  Are you trying to get me thrown in Jail?  You better not be doing that shit at the lake house next month, I don't want the IRS taking my house away because you're a fucking criminal!  Why don't you just pay your taxes like the rest of us you asshole!  Hey Minerva get the car!  We are leaving before this dick gets us all thrown in jail for money laundering!

+1

It's not logical, but this is how most people will perceive it.

[curt.rowland]

I think the plan in the U.S. is to destroy Bitcoin by legitimizing it (enter the IRS). That way they don't have to look all totalitarian by banning it like other countries.

[precrime3]

I think the plan in the U.S. is to destroy Bitcoin by legitimizing it (enter the IRS). That way they don't have to look all totalitarian by banning it like other countries.

Interesting theory, it sure seems to be working

[likeBTC]

I think the plan in the U.S. is to destroy Bitcoin by legitimizing it (enter the IRS). That way they don't have to look all totalitarian by banning it like other countries.

Who is banning it? The countries that are banning, usually are the ones nobody here cares about.
See this list http://en.wikipedia.org/wiki/Legality_of_Bitcoins_by_country, cannot say how accurate this is though. Are you concerned about the reds here?

[XScrypt]

I'm not sure what people are complaining about. I'm actually surprised it took them this long to address it.

It comes down to this: You can't make free money. If you make above a certain limit, then it has to be either income or property. In either case, you get taxed. Now that there has been a ruling this should allow more businesses to work with bitcoin without worrying about what kind of tax or legal rigmarole they would get in for doing so. This should also put a dent in big mining operations (at least in the US) since now they actually have to pay taxes on what they make.

Also, before claiming something is a "huge tax burden" it's usually a good idea to actually take a look at the tax schedules. Unless you've got your own datacenter running in your house you probably won't be paying much, if anything once all deductions and depreciation are taken into account. In fact, it may end up as an additional tax write-off.

[notbatman]

Tax laws in the year 2014.