New IRS rules for BTC as related to US Tax payers

[h@shKraker]

Welp, finally a little stable news from the US GubMint -> http://www.usatoday.com/story/money/business/2014/03/25/irs-says-bitcoin-is-property/6873569/ .  I'd say this is fairly good news as it provides legitimate taxation guidelines for US Citizens and partially legitimizes the BTC economic velocity.  What you folks think?

H@shKraker

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[bitcasino]

I hate taxes ...

[h@shKraker]

Yea, I hate taxes too BUT this does remove a measure of uncertainty (and thus some risk).  All in all I think it's a good thing to have some regulatory risk/uncertainty removed from the picture.

H@shKraker

[MinorError]

I don't see how this is good news. I am not trying to troll here, I was just talking to people the other day and telling them my arguments for Bitcoin being around for a very very long time. I was really excited about Bitcoin.

But this is a deathblow. How will businesses keep track of what a coin was worth when they exchanged a good or service for said bitcoin? This Bloomberg article puts it perfectly

"Today’s IRS guidance will provide certainty for Bitcoin investors, along with income-tax liability that wasn’t specified before. Purchasing a $2 cup of coffee with Bitcoins bought for $1 would trigger $1 in capital gains for the coffee drinker and $2 of gross income for the coffee shop. "

http://www.bloomberg.com/news/2014-03-25/bitcoin-is-property-not-currency-in-tax-system-irs-says.html

I am no economics major, but can someone please explain to me how this is a positive bit of news? I was hoping Bitcoin would be handled as a currency, or at least a foreign currency...this pretty much means any business trying to adopt bitcoin will have to think long and hard about the implications.

[h@shKraker]

Ahhhh .... another way to ask your question is "Why do we need CPAs?" .... oh yea .... this is why we need CPAs.

H@shKraker

[precrime3]

What does this mean regarding minor miner? How am I supposed to file self-employment taxes?

[Alley]

This seems impossible to enforce for the consumer.  If I buy $700 worth of stuff on Overstock in BTC that I paid $500 for how is the IRS going to track this or even know?  Am I just on the honor system to report it?  Good luck with that...

[MinorError]

This seems impossible to enforce for the consumer.  If I buy $700 worth of stuff on Overstock in BTC that I paid $500 for how is the IRS going to track this or even know?  Am I just on the honor system to report it?  Good luck with that...

It will be very tough to enforce for the consumer, but it will be just as hard for a business like Overstock (that needs to keep diligent records) to remain above board on the tax code if they are accepting bitcoins as payment. Not only that, but it makes accepting bitcoins a major liability for any business that does numerous transactions and doesn't want the IRS crawling through their books. This seems to be the US government saying, fuck bitcoins, without having to say fuck bitcoins. I would not be surprised if you see the few major company's that do accept bitcoins stop doing so in the coming weeks. I hope I'm wrong, but that's the way I see it.

[bobdutica]

A lot of companies that are starting to accept Bitcoins use services like BitPay, where the Bitcoins received are immediately converted to fiat currency and put into the account of the business. The merchant has no problem under this scenario. From the merchant's perspective, he is being paid his local currency. This would not deter merchants at all.

[h@shKraker]

I, on the other hand, see this removal of uncertainty as a significant positive for businesses to accepts BTC as payment.  You see, now where codification for its use and existence.  It's only a matter of time until quickbooks integrates with bitpay integrates with TurboTax.  You see, they want to take as much revenue as they can and now that there codification there's no reason to not allow service providers to accept payment (in whatever fiat) for providing small business accounting integrations.  Simple as pie really now that the IRS is going to include rules in the tax code..

H@shKraker

[MinorError]

I like the way you guys are seeing things. I guess it's just the pessimist in me being negative Nancy...I really hope you're right. On a more selfish note, how should I, as a small time miner, keep track of my daily payouts? I'm open to any and all suggestions.

[h@shKraker]

If you wanna do it REALLY right take a look at http://www.ifrs.org/Use-around-the-world/Education/Recent-publications/Documents/Module30_Version_2011_09.pdf and to a lesser extent http://www.pwc.com/en_us/us/ifrs-tax-issues/assets/currency-gains-losses-ifrs.pdf .  These PDFs are IFRS based BUT the methods and practices apply almost exactly the same for GAAP based accounting.

H@shKraker

[cvax]

For miners... just do it as a business and always post an operating loss. So easy. Buy more equipment lol.

[philipma1957]

I like the way you guys are seeing things. I guess it's just the pessimist in me being negative Nancy...I really hope you're right. On a more selfish note, how should I, as a small time miner, keep track of my daily payouts? I'm open to any and all suggestions.

look at blockchain info.  it will tell you  what the transaction was worth in usd at the time you made it.


   This is really good news and or complete death of alt coins.    Nothing in between.   Hoping it is good news.  I have an accounting degree and I did my 2012 taxes based on just about exactly the rules they picked today.   Pretty much the only correct method to do them.  The business articles that mention this as a blow to miners are written for people that have no training in finance/accounting/tax law.  All necessary evils in a civilized world.

 If all those that believed mining was going to be under the radar from the tax man are a big factor in mining this will be a big blow against mining and coins.  I am more of it is a sellout and partnership with the 'man' so to speak.  That should be good for price. But we shall see.

[Wesly]

I don't see how this is good news. I am not trying to troll here, I was just talking to people the other day and telling them my arguments for Bitcoin being around for a very very long time. I was really excited about Bitcoin.

But this is a deathblow. How will businesses keep track of what a coin was worth when they exchanged a good or service for said bitcoin? This Bloomberg article puts it perfectly

"Today’s IRS guidance will provide certainty for Bitcoin investors, along with income-tax liability that wasn’t specified before. Purchasing a $2 cup of coffee with Bitcoins bought for $1 would trigger $1 in capital gains for the coffee drinker and $2 of gross income for the coffee shop. "

http://www.bloomberg.com/news/2014-03-25/bitcoin-is-property-not-currency-in-tax-system-irs-says.html

I am no economics major, but can someone please explain to me how this is a positive bit of news? I was hoping Bitcoin would be handled as a currency, or at least a foreign currency...this pretty much means any business trying to adopt bitcoin will have to think long and hard about the implications.

I am no economics major either, but just common sense tells me how is it different if the customer is paying the coffee shop $2 cash or credit card payment for the same cup of coffee?  The coffee shop point-of-sale system still record it as a $2 income if it is paid via Bitcoin.

[htcfox]

will this rule drive investors out of US？it rises the cost of a trade with bitcoin，not a good idea at all

[elvizzzzzzz]

I am not a US taxpayer, and just speculating that it could happen to me.

If bitcoin is property, then presumably I paid for electricity and hardware in order
to obtain the goods, in a manner similar to the process of barter?

And that should be offset against the current value of the coins I mine? Otherwise
there would be no point in mining. IANAL BTW. 

[SportsBet]

I hate taxes ...

I feel you on this, however I feel that many more merchants (some of them big preferably) would adopt BTC. This piece of news would encourage some that up till now were on the fence.

[MinorError]

I don't see how this is good news. I am not trying to troll here, I was just talking to people the other day and telling them my arguments for Bitcoin being around for a very very long time. I was really excited about Bitcoin.

But this is a deathblow. How will businesses keep track of what a coin was worth when they exchanged a good or service for said bitcoin? This Bloomberg article puts it perfectly

"Today’s IRS guidance will provide certainty for Bitcoin investors, along with income-tax liability that wasn’t specified before. Purchasing a $2 cup of coffee with Bitcoins bought for $1 would trigger $1 in capital gains for the coffee drinker and $2 of gross income for the coffee shop. "

http://www.bloomberg.com/news/2014-03-25/bitcoin-is-property-not-currency-in-tax-system-irs-says.html

I am no economics major, but can someone please explain to me how this is a positive bit of news? I was hoping Bitcoin would be handled as a currency, or at least a foreign currency...this pretty much means any business trying to adopt bitcoin will have to think long and hard about the implications.

I am no economics major either, but just common sense tells me how is it different if the customer is paying the coffee shop $2 cash or credit card payment for the same cup of coffee?  The coffee shop point-of-sale system still record it as a $2 income if it is paid via Bitcoin.

It's completely different because cash and credit are valued as currency and not subject to capital gains. So this is no different than going into a store and paying with $2 worth of google stock. It holds serious and very confusing repercussions for both the merchant and the consumer. Also, it renders bitcoin as a currency useless. The only reason you buy stock is that so you can someday trade that stock in for fiat currency, preferably at a profit. You don't buy stock so that you can trade it for goods and services.

Also, as a consumer, if you have 2 bitcoins in your wallet one day (let's say for simplicity sake you bought the. For $1 each) and then you go buy a cup of coffee for $2,  but at the time of your purchase, your bitcoins doubled in value and are now worth $4 so you only need to spend one of them. Now in the eyes the government you just PROFITED $1. For now at least, it is completely not feasible for any consumer to keep track of this. And you can say yes it's impossible to keep track of AND enforce....but the tax manwillnot give a fuck if they audit you. "You didn't keep diligent records on your bitcoin purchases and expenditures....fuck you, pay me."

[Gotone]

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