It is now next to impossible to spend bitcoins legally if your american

[Robert Paulson]

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

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.

so now anyone who is taxable by the IRS and wants to buy something with bitcoin must check if he owes capital gains to the IRS.
land of the "free" indeed...

[1713905837]

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[Robert Paulson]

no one in their right mind is going to be using bitcoin as money when for every payment they must keep track of what the exchange rate was when they obtained bitcoins compared to the exchange rate now.
and then if its higher write it down to report later to the IRS as capital gains.

[RodeoX]

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

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.

so now anyone who is taxable by the IRS and wants to buy something with bitcoin must check if he owes capital gains to the IRS.
land of the "free" indeed...

Can you name me any transaction that would not be taxable? All commerce is taxable.

Your calculation is not quite complete. The only way you would owe $1 on your coffee is if you had realized a huge profit. You owe a percentage of your profits. Lets say it's 20% (it could be less or possibly more). So if you bought a bitcoin for $1 and then it rose in value to $5; you owe $1 in tax on the gains. That is still a 300% gain after taxes. I would definitely enjoy drinking that cup of coffee.

[cottoneyeJoe]

Next to impossible? Hardly...

A pain in the ass and outright theft, sure. But anyone residing in the US obviously accepts their tax burden, right?

I wish it were the case that residence mattered. The truth is that US is possibly the ONLY country that taxes it's citizens even when they live and earn all of their income abroad. Renouncing your citizenship costs ~$400 and even then does not release you from any unmet tax obligations or risk of audit from time during your citizenship.

Worse still, Americans abroad are increasingly being denied foreign bank accounts because of new reporting requirements that the US imposes on banks who accept US citizens as customers.

http://aaro.org/denied-bank-accounts

[counter]

  I don't care to discuss what they expect me to do as they make themselves exempt from taxes.  And when I say they I"m talking about the obscenely wealthy that pay little to no tax and try to push tighter tax laws on me the "little guy".  

[smooth]

https://bitcointalk.org/index.php?topic=531135

[Robert Paulson]

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

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.

so now anyone who is taxable by the IRS and wants to buy something with bitcoin must check if he owes capital gains to the IRS.
land of the "free" indeed...

Can you name me any transaction that would not be taxable? All commerce is taxable.

Your calculation is not quite complete. The only way you would owe $1 on your coffee is if you had realized a huge profit. You owe a percentage of your profits. Lets say it's 20% (it could be less or possibly more). So if you bought a bitcoin for $1 and then it rose in value to $5; you owe $1 in tax on the gains. That is still a 300% gain after taxes. I would definitely enjoy drinking that cup of coffee.

the amount of taxes needed to be paid is not the point.
its not reasonable to expect people to start looking up what the exchange rate was when they received their bitcoins just so they could buy a cup of coffee without breaking the law.

[IrishFutbol]

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

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.

so now anyone who is taxable by the IRS and wants to buy something with bitcoin must check if he owes capital gains to the IRS.
land of the "free" indeed...

Can you name me any transaction that would not be taxable? All commerce is taxable.

Your calculation is not quite complete. The only way you would owe $1 on your coffee is if you had realized a huge profit. You owe a percentage of your profits. Lets say it's 20% (it could be less or possibly more). So if you bought a bitcoin for $1 and then it rose in value to $5; you owe $1 in tax on the gains. That is still a 300% gain after taxes. I would definitely enjoy drinking that cup of coffee.

the amount of taxes needed to be paid is not the point.
its not reasonable to expect people to start looking up what the exchange rate was when they received their bitcoins just so they could buy a cup of coffee without breaking the law.

So BTC investors should be treated differently than other investors because of laziness?

[Beliathon]

A pain in the ass and outright theft, sure. But anyone residing in the US obviously accepts their tax burden, right?

Wrong.

[Robert Paulson]

https://bitcointalk.org/index.php?topic=531135

there is no way the IRS will allow people to avoid paying taxes using this trick.
if this really catches up i am sure they will clarify that the determining exchange rate for tax purposes is the median of all inputs or something of that sort.

[Robert Paulson]

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

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.

so now anyone who is taxable by the IRS and wants to buy something with bitcoin must check if he owes capital gains to the IRS.
land of the "free" indeed...

Can you name me any transaction that would not be taxable? All commerce is taxable.

Your calculation is not quite complete. The only way you would owe $1 on your coffee is if you had realized a huge profit. You owe a percentage of your profits. Lets say it's 20% (it could be less or possibly more). So if you bought a bitcoin for $1 and then it rose in value to $5; you owe $1 in tax on the gains. That is still a 300% gain after taxes. I would definitely enjoy drinking that cup of coffee.

the amount of taxes needed to be paid is not the point.
its not reasonable to expect people to start looking up what the exchange rate was when they received their bitcoins just so they could buy a cup of coffee without breaking the law.

So BTC investors should be treated differently than other investors because of laziness?

BTC investors should be treated the same as foreign currency investors.

[amspir]

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

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.

so now anyone who is taxable by the IRS and wants to buy something with bitcoin must check if he owes capital gains to the IRS.
land of the "free" indeed...

Pragmatically, there's not much to worry about if you are just buying coffee.  If you convert large amounts of bitcoin between fiat, then you would have to document this on your tax returns to match what your bank is reporting to the IRS.   i.e. you buy a 1 btc now at $600 then sell it later for $1200.   If you spend bitcoins in commerce, the merchant isn't required to report to the IRS unless it's over $600 a year.   It may be a hassle to comply with the law, but I suspect you might have a computer to help you with that.

[IrishFutbol]

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

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.

so now anyone who is taxable by the IRS and wants to buy something with bitcoin must check if he owes capital gains to the IRS.
land of the "free" indeed...

Can you name me any transaction that would not be taxable? All commerce is taxable.

Your calculation is not quite complete. The only way you would owe $1 on your coffee is if you had realized a huge profit. You owe a percentage of your profits. Lets say it's 20% (it could be less or possibly more). So if you bought a bitcoin for $1 and then it rose in value to $5; you owe $1 in tax on the gains. That is still a 300% gain after taxes. I would definitely enjoy drinking that cup of coffee.

the amount of taxes needed to be paid is not the point.
its not reasonable to expect people to start looking up what the exchange rate was when they received their bitcoins just so they could buy a cup of coffee without breaking the law.

So BTC investors should be treated differently than other investors because of laziness?

BTC investors should be treated the same as foreign currency investors.

Currently, the majority of BTC owners are investors.  If it becomes mainstream, then maybe change it, but for now the classification is correct.

[durrrr]

is there anyway for them to keep track of how much u originally bought the bitcoin for? i mean theres no way to prove if u bought for .01$ or 1200$ ? right?

[smooth]

https://bitcointalk.org/index.php?topic=531135

there is no way the IRS will allow people to avoid paying taxes using this trick.

It's not a trick and it doesn't "avoid" taxes as the post explains. You will still pay the same taxes, just not in the form of every $1 transaction being a taxable event.

if this really catches up i am sure they will clarify that the determining exchange rate for tax purposes is the median of all inputs or something of that sort.

So now you are arguing on the basis of what you think the IRS will do in the future, and you expect anyone to pay the slightest attention to your baseless speculation? Good luck with that.

Identifying lots on capital gains transactions has been done for decades in amounts totaling billions or more likely trillions of dollars (by institutional investors). Closing this non-loophope doesn't appear to be a high priority for the IRS.

Moreover, even if buying a cup of coffee became a taxable event, who cares? This is not 1970. We have this these things called computers, smartphones, etc. They are good at bookkeeping.

This thread is pointless.

[tins]

is there anyway for them to keep track of how much u originally bought the bitcoin for? i mean theres no way to prove if u bought for .01$ or 1200$ ? right?

That's what I was thinking. Say the IRS says anything about spending btc, then the person just says they bought in at $1200 and writes off the loss on their taxes.

[Robert Paulson]

https://bitcointalk.org/index.php?topic=531135

there is no way the IRS will allow people to avoid paying taxes using this trick.

It's not a trick and it doesn't "avoid" taxes as the post explains. You will still pay the same taxes, just not in the form of every $1 transaction being a taxable event.

if this really catches up i am sure they will clarify that the determining exchange rate for tax purposes is the median of all inputs or something of that sort.

So now you are arguing on the basis of what you think the IRS will do in the future, and you expect anyone to pay the slightest attention to your baseless speculation? Good luck with that.

Identifying lots on capital gains transactions has been done for decades in amounts totaling billions or more likely trillions of dollars (by institutional investors). Closing this non-loophope doesn't appear to be a high priority for the IRS.

Moreover, even if buying a cup of coffee became a taxable event, who cares? This is not 1970. We have this these things called computers, smartphones, etc. They are good at bookkeeping.

This thread is pointless.

no this thread is not pointless.
i don't have to keep track of any capital gains when i use fiat currency why should i do so with bitcoin.
this is a clear attempt by the government to make bitcoin unattractive to use as money.

[Peter R]

https://bitcointalk.org/index.php?topic=531135

there is no way the IRS will allow people to avoid paying taxes using this trick.
if this really catches up i am sure they will clarify that the determining exchange rate for tax purposes is the median of all inputs or something of that sort.

This is neither a trick nor a method to avoid paying taxes.  You would report the same amount of capital gains taxes either way, but this has the potential to significantly simplify accounting for all parties involved. 

[Bonio]

So would I be right in suggesting if you lost money with MTGOX it is tax deductable as a loss? Surely it has to work both ways?

[Robert Paulson]

https://bitcointalk.org/index.php?topic=531135

there is no way the IRS will allow people to avoid paying taxes using this trick.
if this really catches up i am sure they will clarify that the determining exchange rate for tax purposes is the median of all inputs or something of that sort.

This is neither a trick nor a method to avoid paying taxes.  You would report the same amount of capital gains taxes either way, but this has the potential to significantly simplify accounting for all parties involved. 

this requires that my wallet actually has enough bitcoins obtained when the exchange rate was lower.
the mere fact that people need to worry about the issue of reporting capital tax gains when buying things in a store is going to push people out of using bitcoin as money.

[Beliathon]

Notice the only discussion of renouncing US citizenship is listed under the "travel" section of the government.
http://travel.state.gov/content/travel/english/legal-considerations/us-citizenship-laws-policies.html

That's because, up till now if you reside in US-government occupied territory (including entire continental USA), you have no choice!

"You live on this land, you obey our rules, you give us our cut, or we treat you as an enemy of the state."

Sound familiar? Yeah, that's right - it's the logic of the fucking mafia! "we own this property. You live here, we own you".

Cryptocurrency is eroding this neofuedalist bullshit, and exposing the lie - the injustice of wealth extracted at the point of a gun.

In the near future, as the costs of being a citizen pile on, and the benefits dwindle, I expect many current residents of the USA will be renouncing their citizenship.

As we rob nation-states such as the USA of their power, this paradigm will shift toward respecting the natural rights of individuals, and away from the tyranny of central authority.

[IrishFutbol]

is there anyway for them to keep track of how much u originally bought the bitcoin for? i mean theres no way to prove if u bought for .01$ or 1200$ ? right?

That's what I was thinking. Say the IRS says anything about spending btc, then the person just says they bought in at $1200 and writes off the loss on their taxes.

Were you audited, you would have to prove that you bought it at $1,200.  Otherwise, the best case scenario for you will be if they assume you got it for free and don't hit you with a tax penalty.

[MashRinx]

So would I be right in suggesting if you lost money with MTGOX it is tax deductable as a loss? Surely it has to work both ways?

Yes, I would think so.  The difference between your cost basis and the current value (zero for those lost coins - unless the "Magical MtCoin Coin Finding Fairies" (TM) keep finding them, that is...) would be considered a Capital Loss from the way I understand it.

[LMGTFY]

no this thread is not pointless.
i don't have to keep track of any capital gains when i use fiat currency why should i do so with bitcoin.
this is a clear attempt by the government to make bitcoin unattractive to use as money.

Are you sure? I'm not familiar with US tax laws, but in the UK I'm fairly certain I need to keep track of any capital gains I make (or lose) when I trade fiat.

[IrishFutbol]

So would I be right in suggesting if you lost money with MTGOX it is tax deductable as a loss? Surely it has to work both ways?

Mt. Gox probably qualifies as a casualty loss since it was a theft.  So you'd just deduct the entire amount (assuming nothing gets paid out).

[Peter R]

...the mere fact that people need to worry about the issue of reporting capital tax gains when buying things in a store is going to push people out of using bitcoin as money.

The point of ZGL is to help eliminate that worry.

…the mere fact that any transaction could be a ZGL transaction and that it is impossible to tell from blockchain data alone means something too.  

[Robert Paulson]

no this thread is not pointless.
i don't have to keep track of any capital gains when i use fiat currency why should i do so with bitcoin.
this is a clear attempt by the government to make bitcoin unattractive to use as money.

Are you sure? I'm not familiar with US tax laws, but in the UK I'm fairly certain I need to keep track of any capital gains I make (or lose) when I trade fiat.

when you buy coffee with USD you don't need to check if the dollar index was higher or lower when you obtained the USD.
but as of this new legislation you do have to do this with bitcoin.

[LMGTFY]

no this thread is not pointless.
i don't have to keep track of any capital gains when i use fiat currency why should i do so with bitcoin.
this is a clear attempt by the government to make bitcoin unattractive to use as money.

Are you sure? I'm not familiar with US tax laws, but in the UK I'm fairly certain I need to keep track of any capital gains I make (or lose) when I trade fiat.

when you buy coffee with USD you don't need to check if the dollar index was higher or lower when you obtained the USD.
but as of this new legislation you do have to do this with bitcoin.

Sorry, my mistake (I've been catching up in the meantime) - I hadn't realised the scenario was a coffee. I guess all I can do is echo the earlier "speak to a tax professional": I doubt HMRC would require reporting a coffee on my tax return, but I genuinely don't know - and the IRS may well be much stricter anyway. Personally, I wouldn't mention that hypothetical coffee to my accountant.

[Alley]

Why would I report gains on a cup of cofee?  I have a anonymous address.  The IRS has no way to know what im doing with my btc.

[Beliathon]

I have a anonymous address.  The IRS has no way to know what im doing with my btc.

Bingo. Smart crypto players keep a small percentage of their crypto wealth in a public (government visible) account, such as Coinbase, and the other 90-95% of their wealth in an anonymous blockchain address.

[Robert Paulson]

a cup of coffee is just a metaphor.
as of now you can't buy anything with bitcoin legally without first checking your capital gains status.
sure you may get away with it if the amounts spent are small, but as far as the law is concerned you are a criminal.

[prolixus]

You don't need to check anything before making a purchase with bitcoin. You just need to use a wallet that lets you export a csv of transactions and import those into your tax software the next year and let it compute the capital gains that you owe. If you exchanged an amount of bitcoin with a gain of $1 for a cup of coffee you don't need to send the IRS any paperwork or its $0.15 until April 15 the next year.

[hellscabane]

a cup of coffee is just a metaphor.
as of now you can't buy anything with bitcoin legally without first checking your capital gains status.
sure you may get away with it if the amounts spent are small, but as far as the law is concerned you are a criminal.

Bingo, that's the biggest problem. Sure many Americans may hate laws, but for the most part, most try to comply because the alternative can be quite difficult to deal with.

But then again, it's just "white collar" crime and it's much harder to be slapped with a felony for that. Of course, there's also garnishment...

[AnonyMint]

I have a anonymous address.  The IRS has no way to know what im doing with my btc.

Bingo. Smart crypto players keep a small percentage of their crypto wealth in a public (government visible) account, such as Coinbase, and the other 90-95% of their wealth in an anonymous blockchain address.

It is very unlikely they were successful at remaining anonymous from the NSA+GCHQ. However, they wouldn't know it. Later they will find out they were not anonymous when the handcuffs are applied to their wrists.

Tor, mixers, VPNs are honey pots.

[smooth]

a cup of coffee is just a metaphor.
as of now you can't buy anything with bitcoin legally without first checking your capital gains status.
sure you may get away with it if the amounts spent are small, but as far as the law is concerned you are a criminal.

That was always the case unless you thought you could buy for $100, sell it for $1000 and pay no taxes on the difference. Were you actually stupid enough to believe that?

This thread is still pointless, and the headline is absurd. Using a computer to track capital gains when that computer necessarily already has all of your bitcoin transactions recorded since you can't possibly engage in a bitcoin transaction without a computer is not even close to "next to impossible."

[BittBurger]

Why do so few people on this website know the difference between your and you're ?

-B-

[Beliathon]

Guess what: You also can't download movies and music "legally", but millions of Americans download hundreds of terrabytes of culture every single day, without any fear whatsoever.

Cryptocurrency liberates money in the same way that torrents liberated culture.

The governments are powerless against decentralization. Useless. And I personally hope no one bails their sorry asses out, because fuck those tyrants, liars, and slavers.

[IrishFutbol]

Why would I report gains on a cup of cofee?  I have a anonymous address.  The IRS has no way to know what im doing with my btc.

To paraphrase: Why would I report gains on my investments.  I have a Swiss bank account.  The IRS has no way to know what I'm doing with my money.

You're correct.  It will be very difficult for the IRS to ever link that to you.  However, should you want to buy something with your BTC or convert your BTC into fiat, and the IRS links your purchase / trade back to you, then discovers you've avoided paying taxes on your BTC trades, you're looking at a tax evasion charge.

[IrishFutbol]

Why do so few people on this website know the difference between your and you're ?

-B-

The world would be a simpler place if everyone would just use ur.

[Beliathon]

You're correct.  It will be very difficult for the IRS to ever link that to you.  However, should you want to buy something with your BTC or convert your BTC into fiat, and the IRS links your purchase / trade back to you, then discovers you've avoided paying taxes on your BTC trades, you're looking at a tax evasion charge.

Everyone keeps citing that we'd be evading taxes, while completely missing the fact that cryptocurrency makes enforcement of the tax laws 9999999 times more complex and difficult.

So the IRS is tracking Bitcoin transactions? Okay cool, there are like 60 other cryptocurrencies we can use in that case, and more are being created every single day.

Have fun expanding the size, scope, and budget of the IRS by a factor of 60.

The harsh reality is this:
Very soon the IRS will be more expensive to run than the amount of money they bring in for the government. They are being rendered obsolete, and will go the way of Blockbuster Video. Ditto the NSA.

[amspir]

a cup of coffee is just a metaphor.
as of now you can't buy anything with bitcoin legally without first checking your capital gains status.
sure you may get away with it if the amounts spent are small, but as far as the law is concerned you are a criminal.

I doubt the IRS will come after you for buying a cup of coffee with your unreported bitcoin capital gains, but I'm sure someone will develop a wallet that can track that easily for you.   Anyone having a device that can generate a bitcoin transaction probably has a device that can keep track of your bitcoin expenditures for tax time.  You certainly have the option of not keeping track, and in that case the IRS presents you with a tax bill representing the worst case scenario for you on reported transactions.  When you don't pay your tax bill, that's when you become a criminal.

[hellscabane]

Guess what: You also can't download movies and music "legally", but millions of Americans download hundreds of terrabytes of culture every single day, without any fear whatsoever.

Cryptocurrency liberates money in the same way that torrents liberated culture.

The governments are powerless against decentralization. Useless. And I personally hope no one bails their sorry asses out, because fuck those tyrants, liars, and slavers.

This is very true. But part of me feels like the federal government doesn't particularly care about this realm as much as it may be perceived (after all, foreign piracy is just as pervasive). But something tells me that the federal government won't be so laissez-faire about taxes.

[Robert Paulson]

a cup of coffee is just a metaphor.
as of now you can't buy anything with bitcoin legally without first checking your capital gains status.
sure you may get away with it if the amounts spent are small, but as far as the law is concerned you are a criminal.

That was always the case unless you thought you could buy for $100, sell it for $1000 and pay no taxes on the difference. Were you actually stupid enough to believe that?

This thread is still pointless, and the headline is absurd. Using a computer to track capital gains when that computer necessarily already has all of your bitcoin transactions recorded since you can't possibly engage in a bitcoin transaction without a computer is not even close to "next to impossible."

there is no software today that imports your bitcoin transactions (from every wallet software in existence might i add),
checks what the exchange rate was when you obtained the bitcoins, checks what the rate was when you used them and calculates your capital gains.
so right now you must do this manually otherwise you risk breaking the law.

this thread is not pointless at all, it highlights how the government starts to unfairly mount bureaucratic burdens on the usage of bitcoin while their fiat currency is exempt from it.

[TheButterZone]

It has actually been impossible to be an American and be innocent of committing many of millions of victimless crimes, for decades.

Tyrants gonna tyrant.

[smooth]

there is no software today

Apparently false.

https://bitcointaxes.info/

I'm sure that doesn't do every single thing that needs to be done, but not bad for day IRS+1.

You are making a mountain out of a mole hill. Stop.

[Beliathon]

But something tells me that the federal government won't be so laissez-faire about taxes.

You don't understand what I'm saying to you. Cryptocurrency liberates the people from the currency-monopoly, and thus the authority, of the nation-state.

Credit scores are being rendered irrelevant! If you divest from the dollar into crypto, your debts are rendered irrelevant too, as over time they are eroded into only a tiny fraction of your wealth!

Think about it. Let's say I've got 60,000$ of student debt. The law says I've got to pay back 60,000 DOLLARS... now if Bitcoins value continues to increase relative to the dollar year over year... eventually that very large sum of money will actually be a tiny fraction of the value it once represented in your life. This is financial liberation of the highest caliber!

[Robert Paulson]

You are making a mountain out of a mole hill.

I believe this to be true for 85% of the threads on this forum!

this is a big deal, this will hurt mass bitcoin adoption badly.
if a person has to choose between using fiat and bitcoin when buying something he will choose the easiest option.
most people won't bother using something that requires the hassle of reporting capital gains no matter how easy it is.

[smooth]

if a person has to choose between using fiat and bitcoin when buying something he will choose the easiest option.

This was already true in some cases, not in others. This changes things a little, but any use case that was compelling before (hint: that did not include coffee), is likely still compelling.

most people won't bother using something that requires the hassle of reporting capital gains no matter how easy it is.

Most people already don't use bitcoin. A lot will have to change before they do. As in years away. It is pointless to make grand predictions based on one little tax ruling in 2014.

[Beliathon]

Most people already don't use bitcoin. A lot will have to change before they do. As in years away.

I'd say we're looking at 3-5 years for massive global adoption, but we'll see.

[crocko]

Hey, I found something : https://www.youtube.com/watch?v=fvqkQvOWgeo

[Biodom]

It is not clear only to the most zealous devotees that IRS ruling basically puts a hard stop on bitcoin usage because it creates a reporting headache that 99% of the populace will have no inclination of pursuing. They would say-$$ are OK for now, thanks, but no thanks.

Bitcoin might still be reasonably attractive as a transmission protocol and a savings mechanism (similar to gold), but bitcoin usage in everyday transactions will disappear, together with small time mining in US. Large mines will be largely unaffected.

It was good while it lasted, but it is largely over. The funny thing is that greedy IRS basically killed the golden goose for USA few years down the pike.
Now, some other jurisdictions will benefit.

[Beliathon]

It is not clear only to the most zealous devotees that IRS ruling basically puts a hard stop on bitcoin usage because it creates a reporting headache that 99% of the populace will have no inclination of pursuing.

That's absolutely right. What you're missing is that the utility of this invention FAR outweighs the irritating but amusing threat of repercussions from the tax-man.

Remember, piracy is illegal. But the utility of torrent technology incentives breaking copyright law well enough that there are now millions of Americans breaking copyright law every day, 24/7.

Even marijuana's utility - which is strictly "entertainment" as a leisure activity for 99.99% of marijuana-users, is enough to get millions to openly flout the law.

We'll break the law to get some weed or download a free movie, but you don't think we'll break the law to get rich and liberate ourselves from bankster-enslavement?

Think again.

[PayWithPins]

This is nothing new.  You currently purchased the coffee with USD that you earned and was paid to you after tax was deducted.  You would have the same accounting and tax liability if you had purchased Euro in 2000 at .90 USD.  When you would go use them today and got 1.40 USD you had a capital gain of .50 USD.   Same works if you lose, you will be able to deduct a capital loss.  You will be able to pool the purchases and come up with a yearly weighted average to simplify.  Similar to buying shares over many months.

[Robert Paulson]

It is not clear only to the most zealous devotees that IRS ruling basically puts a hard stop on bitcoin usage because it creates a reporting headache that 99% of the populace will have no inclination of pursuing.

That's absolutely right. What you're missing is that the utility of this invention FAR outweighs the irritating but amusing threat of repercussions from the tax-man.

Remember, piracy is illegal. But the utility of torrent technology incentives breaking copyright law well enough that there are now millions of Americans breaking copyright law every day, 24/7.

Even marijuana's utility - which is strictly "entertainment" as a leisure activity for 99.99% of marijuana-users, is enough to get millions to openly flout the law.

We'll break the law to get some weed or download a free movie, but you don't think we'll break the law to get rich and liberate ourselves from bankster-enslavement?

Think again.

money is one of the most important things in the world.
and bitcoin is attempting to take away the ability to print money from some of the most powerful organizations in the world.
the war the banking elite will wage on bitcoin if it gets anywhere close to mainstream adoption will be of biblical proportions, unlike anything we have ever seen when fighting piracy or drugs.
this legislation is just the first step (and it is a major one) in the fight against honest and practical money.

[vpitcher07]

I don't wanna be that guy but i'm going to be that guy. I don't see bitcoin as a utility to purchase coffee with at a coffee shop. It's far more burdensome than paying in cash and is just flat out not effective. I think bitcoins' power comes in it's ability to change the eCommerce landscape and how we pay for goods online. I'm bullish long term on bitcoin, but saying it's going to replace cash for something like a cup of coffee is just not reasonable (with today's current tech).

[Klestin]

I don't wanna be that guy but i'm going to be that guy. I don't see bitcoin as a utility to purchase coffee with at a coffee shop. It's far more burdensome than paying in cash and is just flat out not effective.

Have you ever tried it? You scan a QR code and tap OK on the amount. Takes three seconds. Retailer sees funds posted in another five seconds. Walk out with your coffee. Creamer optional.

[r0ach]

I'm a firm believer that only weirdos drink coffee.

[bomb7]

What I don`t understand is, if 1 bitcoin = 1 bitcoin, and in my bitcoin wallet all my coins are lumped together, how do I know how much capital gains I have made on a PORTION of those bitcoins? I don`t know which bitcoin is which or when/where I bought each one, it`s not like they`re physical objects I can easily distinguish between. Do we average all of our fiat-to-bitcoin conversions to determine the starting basis?

Hopefully the IRS will change things in the future when Bitcoin`s price is more stable.

[smooth]

What I don`t understand is, if 1 bitcoin = 1 bitcoin, and in my bitcoin wallet all my coins are lumped together, how do I know how much capital gains I have made on a PORTION of those bitcoins? I don`t know which bitcoin is which or when/where I bought each one, it`s not like they`re physical objects I can easily distinguish between. Do we average all of our fiat-to-bitcoin conversions to determine the starting basis?

The default method is LIFO which means the earliest bitcoins you bought are the ones assumed to be sold (or spent). You can also identify specific bitcoins, and that may well be useful with the ZGL-coin technique, but from the IRS point of view that is optional.

With mutual funds you can use an average cost basis technique, and on the surface that would seem reasonable for bitcoin as well, further simplifying accounting (you need only track a single number). But the IRS has not stated this method is allowed for bitcoins.

EDIT: LIFO above is a typo. Correct default method is FIFO (first in first out).

[Alley]

What I don`t understand is, if 1 bitcoin = 1 bitcoin, and in my bitcoin wallet all my coins are lumped together, how do I know how much capital gains I have made on a PORTION of those bitcoins? I don`t know which bitcoin is which or when/where I bought each one, it`s not like they`re physical objects I can easily distinguish between. Do we average all of our fiat-to-bitcoin conversions to determine the starting basis?

Hopefully the IRS will change things in the future when Bitcoin`s price is more stable.

Thats a good point.  the more I think about this the more I think this is totally unenforceable and nobody is going to claim any gains from btc except a few people.  Call me a criminal all you want for tax evasion. 

[DeathAndTaxes]

its not reasonable to expect people to start looking up what the exchange rate was when they received their bitcoins just so they could buy a cup of coffee without breaking the law.

The same thing applies to a US tourist traveling overseas.  You take $100 and exchange it for 300 pesos (an example no idea what the exchange rate is) and by the time you spend those 300 pesos they are worth $102.81.  You "should" report that $2.81 as taxable income.

Does anyone do that?  Does the IRS try to round up every single $0.37 in taxes owed? No.  The reality is most people are not compliant with the tax code.  It is asinine in its complexity.  The average tax return has a half dozen errors or omissions.  Now if you buy some Bitcoins and later buy a $40M yatch with those Bitcoins he probably should consult with a CPA on the capital gain impact.

[DeathAndTaxes]

What I don`t understand is, if 1 bitcoin = 1 bitcoin, and in my bitcoin wallet all my coins are lumped together, how do I know how much capital gains I have made on a PORTION of those bitcoins? I don`t know which bitcoin is which or when/where I bought each one, it`s not like they`re physical objects I can easily distinguish between. Do we average all of our fiat-to-bitcoin conversions to determine the starting basis?

The default method is LIFO which means the earliest bitcoins you bought are the ones assumed to be sold (or spent). You can also identify specific bitcoins, and that may well be useful with the ZGL-coin technique, but from the IRS point of view that is optional.

With mutual funds you can use an average cost basis technique, and on the surface that would seem reasonable for bitcoin as well, further simplifying accounting (you need only track a single number). But the IRS has not stated this method is allowed for bitcoins.

Correct except it is FIFO (likely a typo).  First In - First Out.

[iambk]

That cup of coffee is going to have its price pegged to the dollar rather than BTC.  Perhaps you'll get a receipt when purchasing that cup of coffee that shows the USD/BTC exchange rate that was used for the transaction.

Anyway, no such thing as a free lunch, eh?

[Alley]

So will overstock have to report all transactions to the IRS?  Will I need to give my SSN to them?

[Joshuar]

Watch as Litecoin price skyrockets...

[DeathAndTaxes]

So will overstock have to report all transactions to the IRS?  Will I need to give my SSN to them?

No.

[gentlemand]

Watch as Litecoin price skyrockets...

You don't think the exact same principle applies to every coin?

[corebob]

Next to impossible? Hardly...

A pain in the ass and outright theft, sure. But anyone residing in the US obviously accepts their tax burden, right?

I wish it were the case that residence mattered. The truth is that US is possibly the ONLY country that taxes it's citizens even when they live and earn all of their income abroad. Renouncing your citizenship costs ~$400 and even then does not release you from any unmet tax obligations or risk of audit from time during your citizenship.

Worse still, Americans abroad are increasingly being denied foreign bank accounts because of new reporting requirements that the US imposes on banks who accept US citizens as customers.

http://aaro.org/denied-bank-accounts

It doesn't stop there.
All western countries are pumping huge piles of money into the US industry every year. US has become an extremely expensive financial octopus in the global economy. Its a redistribution of wealth that needs to stop.

[smooth]

What I don`t understand is, if 1 bitcoin = 1 bitcoin, and in my bitcoin wallet all my coins are lumped together, how do I know how much capital gains I have made on a PORTION of those bitcoins? I don`t know which bitcoin is which or when/where I bought each one, it`s not like they`re physical objects I can easily distinguish between. Do we average all of our fiat-to-bitcoin conversions to determine the starting basis?

The default method is LIFO which means the earliest bitcoins you bought are the ones assumed to be sold (or spent). You can also identify specific bitcoins, and that may well be useful with the ZGL-coin technique, but from the IRS point of view that is optional.

With mutual funds you can use an average cost basis technique, and on the surface that would seem reasonable for bitcoin as well, further simplifying accounting (you need only track a single number). But the IRS has not stated this method is allowed for bitcoins.

Correct except it is FIFO (likely a typo).  First In - First Out.

Yes typo. Text following is correct.

[hellscabane]

But something tells me that the federal government won't be so laissez-faire about taxes.

You don't understand what I'm saying to you. Cryptocurrency liberates the people from the currency-monopoly, and thus the authority, of the nation-state.

Credit scores are being rendered irrelevant! If you divest from the dollar into crypto, your debts are rendered irrelevant too, as over time they are eroded into only a tiny fraction of your wealth!

Think about it. Let's say I've got 60,000$ of student debt. The law says I've got to pay back 60,000 DOLLARS... now if Bitcoins value continues to increase relative to the dollar year over year... eventually that very large sum of money will actually be a tiny fraction of the value it once represented in your life. This is financial liberation of the highest caliber!

I didn't really see that kind of connection from your previous argument, but I do see debts divesting through crypto-currencies. Of course though, regarding the $60,000, you have to pay back those debts on a regular basis otherwise, well, repossession right? Of course, if you can get out of those other shackles that inherently turns to financial liberation, but that isn't inherently through bitcoins. The way you've implied your argument is that bitcoins is an means to an end of financial liberation. That's great and all, but in this short term how do you expect people to reconcile with or address the various government ties that already exist?

[johnyj]

It's more and more likely become a saving medium for pension fund, and that is always the biggest focus for bitcoin in its early days of adoption

[BigV]

If you are using bitcoin for coffee then you are not getting cash.  Tax laws are complex and there are no experts, just people who claim to be.

If you have a capital gain on bitcoin and invest those gains in something else it is a different set of rules than if you cash out and take a trip to Vegas.  Tax law is aimed at protecting the wealthy and punishing the stupid.  Don't be stupid.

[jonald_fyookball]

https://bitcointalk.org/index.php?topic=531135

there is no way the IRS will allow people to avoid paying taxes using this trick.
if this really catches up i am sure they will clarify that the determining exchange rate for tax purposes is the median of all inputs or something of that sort.

There is no trick involved. Quite the opposite, that method is using precision to achieve the most desirable ends.

Let's say I bought two plots of land, one in 2011 and one in early 2014. A family emergency comes up and I need some extra cash. I can choose to sell whichever plot of land I want, and I'm obviously going to choose to sell the one which results in the most favorable tax outcome for me at that point in time. There is nothing wrong with this kind of thing.

"Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes." - Learned Hand.  (Helvering v. Gregory, 69 F.2d 809, 810-11 (2d Cir. 1934).)

[Beliathon]

the war the banking elite will wage on bitcoin if it gets anywhere close to mainstream adoption will be of biblical proportions, unlike anything we have ever seen when fighting piracy or drugs.this legislation is just the first step (and it is a major one) in the fight against honest and practical money.

*laugh*

It doesn't matter if the war is of biblical, astronomical, inter-galactic, or inter-dimensional proportions. You can't beat technology or global decentralization with nation-state law. Never gonna happen.

[The_Gloomfrost]

I dunno about you guys but I'm going to continue mining my bitcoins and using my bitcoins and selling my bitcoins locally for cash without putting it on my tax return UNTIL I see some way for them to POSSIBLY track it in ANY way or a benefit to me for paying them.

The "you pay your taxes or you risk being found out and fined much more than what you would've had to pay" doesn't make sense to me here because the 'risk of being found out' IMO is 0% unless they waste millions trying to figure out how to track it, then enforce even heavier regulation on the few that actually have or use or want to use bitcoins.

Frankly it's not worth it at this time for any government, and by the time it is, it'll be too late.

Maybe in a few years I'll change my perspective...

[iambk]

I dunno about you guys but I'm going to continue mining my bitcoins and using my bitcoins and selling my bitcoins locally for cash without putting it on my tax return UNTIL I see some way for them to POSSIBLY track it in ANY way or a benefit to me for paying them.

The "you pay your taxes or you risk being found out and fined much more than what you would've had to pay" doesn't make sense to me here because the 'risk of being found out' IMO is 0% unless they waste millions trying to figure out how to track it, then enforce even heavier regulation on the few that actually have or use or want to use bitcoins.

Frankly it's not worth it at this time for any government, and by the time it is, it'll be too late.

Maybe in a few years I'll change my perspective...

If you get audited and they look at your bank accounts and assets will there be anything to show that you've purchased or mined or sold bitcoins?  Do you have a regular job or other significant source of income?  Do you have KYC forms at any of the exchanges where you traded?  If the IRS interviews your friends will any of them know you've invested or mined BTC?

I agree that risk of getting caught can be mitigated but for many people there might be a little denial if they think the risk is zero.  Maybe you've done an awesome job and the risk of getting caught is zero.

Regardless I do agree that most people won't be reporting BTC profits.

I however will be reporting BTC loss since I got goxxxed.

[Phinnaeus Gage]

Fuck me! It's now impossible for me to spend the dollars I earn due to capital gains tax on the barn wood I sell at a 500% (sometimes more) markup. If only there were a way for me to fudge the numbers.

[amspir]

Fuck me! It's now impossible for me to spend the dollars I earn due to capital gains tax on the barn wood I sell at a 500% (sometimes more) markup. If only there were a way for me to fudge the numbers.

You wouldn't be paying capital gains on your wood.   If you were legally paying your taxes, you'd be paying tax on the regular earned income from selling the wood - the price you paid for it and expenses, like any business that sells stuff.  Capital gains would be involved if the bitcoin you got for it rose in value before you traded/sold it.

[~Coinseeker~]

the war the banking elite will wage on bitcoin if it gets anywhere close to mainstream adoption will be of biblical proportions, unlike anything we have ever seen when fighting piracy or drugs.this legislation is just the first step (and it is a major one) in the fight against honest and practical money.

*laugh*

It doesn't matter if the war is of biblical, astronomical, inter-galactic, or inter-dimensional proportions. You can't beat technology or global decentralization with nation-state law. Never gonna happen.

Sure you can. I actually can't believe people still think like this. Bitcoin is useless if it's not used, therefore it would be worthless.  All they have to do is prevent banks and businesses from legally dealing with Bitcoin.  It's done.  Sure, the blockchain lives on, blah, blah, blah...but you can forget about mass adoption.  It's back to some basement internet token, used by a handful of hackers and gamers.  It's utility that Bitcoin needs, so Bitcoin needs to learn to play nice with others.

I'm sure as the digital currency space continues to evolve, the tax codes and regulations will evolve with it. Everything is not a tin-foil hat conspiracy.

[BitTrade]

Currently, the majority of BTC owners are investors.  If it becomes mainstream, then maybe change it, but for now the classification is correct.

The problem is, Bitcoin will never become mainstream and function as a currency if this regulation stands.  The chicken just ate the egg.

[amspir]

Currently, the majority of BTC owners are investors.  If it becomes mainstream, then maybe change it, but for now the classification is correct.

The problem is, Bitcoin will never become mainstream and function as a currency if this regulation stands.  The chicken just ate the egg.

If you keep your money in an interest-bearing account, the bank will send you a form that it files with the IRS showing the profits you made for the tax year.   For most people, this isn't a lot of money and they pay their taxes on it.

Since one of the mottos of bitcoin is "be your own bank",  it becomes your job to track your own capital gains for the IRS.   Software is available to do this, so you don't need to do it manually.   At the end of the tax year, it prints you a form showing your gains.   Keep the documentation in your records, report it on your tax return.  Boom. done.

Whats the big problem?

[boltactionz]

https://bitcointalk.org/index.php?topic=531135

there is no way the IRS will allow people to avoid paying taxes using this trick.

It's not a trick and it doesn't "avoid" taxes as the post explains. You will still pay the same taxes, just not in the form of every $1 transaction being a taxable event.

if this really catches up i am sure they will clarify that the determining exchange rate for tax purposes is the median of all inputs or something of that sort.

So now you are arguing on the basis of what you think the IRS will do in the future, and you expect anyone to pay the slightest attention to your baseless speculation? Good luck with that.

Identifying lots on capital gains transactions has been done for decades in amounts totaling billions or more likely trillions of dollars (by institutional investors). Closing this non-loophope doesn't appear to be a high priority for the IRS.

Moreover, even if buying a cup of coffee became a taxable event, who cares? This is not 1970. We have this these things called computers, smartphones, etc. They are good at bookkeeping.

This thread is pointless.

no this thread is not pointless.
i don't have to keep track of any capital gains when i use fiat currency why should i do so with bitcoin.
this is a clear attempt by the government to make bitcoin unattractive to use as money.

That's what YOU think. But if you've ever used multiple currencies you'd know that yes, you DO have to keep track.

Consider the American who lives and works in Australia. (S)he is paid in AUD. Buys a house using those AUDs and then sells it years later, again for AUD.  Mr. IRSMan expects everything marked to USD for tax calculation purposes. It's actually possible to end up owing taxes on the LOSS of the sale of real estate under this situation...so you'd better be keeping track of exchange rates.

But doesn't this sucky ruling come with a silver lining? I mean, if Bitcoin is property, doesn't that mean that it's no longer a currency therefore exchanges no longer need a money service bureau license? And doesn't that mean that US Treasury owes Mt Gox their Dwolla account back? As well as any other exchanges whose funds they've stolen for not registering?

And isn't this treatment like the way gold is treated?

[BitTrade]

Currently, the majority of BTC owners are investors.  If it becomes mainstream, then maybe change it, but for now the classification is correct.

The problem is, Bitcoin will never become mainstream and function as a currency if this regulation stands.  The chicken just ate the egg.

If you keep your money in an interest-bearing account, the bank will send you a form that it files with the IRS showing the profits you made for the tax year.   For most people, this isn't a lot of money and they pay their taxes on it.

Since one of the mottos of bitcoin is "be your own bank",  it becomes your job to track your own capital gains for the IRS.   Software is available to do this, so you don't need to do it manually.   At the end of the tax year, it prints you a form showing your gains.   Keep the documentation in your records, report it on your tax return.  Boom. done.

Whats the big problem?

Everything bolded.  And the fact that accepting Bitcoin now becomes extremely burdensome for businesses, forcing them to implement a completely new accounting mechanism just to accept Bitcoin.

[2dogs]

Currently, the majority of BTC owners are investors.  If it becomes mainstream, then maybe change it, but for now the classification is correct.

The problem is, Bitcoin will never become mainstream and function as a currency if this regulation stands.  The chicken just ate the egg.

^^^This.

The IRS regulation has clearly divided the BTC community:  comply vs non-compliance ("the purists")

Another example of "social engineering" to discourage the adoption of BTC.

Remind me again - what was the original intent of Satoshi's whitepaper?

[amspir]

Everything bolded.  And the fact that accepting Bitcoin now becomes more burdensome for businesses, forcing them to implement a completely new accounting mechanism just to accept Bitcoin.

Would you rather that a bank or your stock broker do that for you?   The accounting software needed is not going to be a big deal, it involves inputting all the wallet address you own that either hold funds or were used during the tax year.  Is it really a burden beyond the normal records that a business has to keep for tax purposes? (i.e. your banking account checkbook register)

[prolixus]

Currently, the majority of BTC owners are investors.  If it becomes mainstream, then maybe change it, but for now the classification is correct.

The problem is, Bitcoin will never become mainstream and function as a currency if this regulation stands.  The chicken just ate the egg.

If you keep your money in an interest-bearing account, the bank will send you a form that it files with the IRS showing the profits you made for the tax year.   For most people, this isn't a lot of money and they pay their taxes on it.

Since one of the mottos of bitcoin is "be your own bank",  it becomes your job to track your own capital gains for the IRS.   Software is available to do this, so you don't need to do it manually.   At the end of the tax year, it prints you a form showing your gains.   Keep the documentation in your records, report it on your tax return.  Boom. done.

Whats the big problem?

Everything bolded.  And the fact that accepting Bitcoin now becomes extremely burdensome for businesses, forcing them to implement a completely new accounting mechanism just to accept Bitcoin.

Incorrect, the guidance means that they keep using the exact same accounting mechanism they were already using and that is completely standard for tracking gains/losses of capital assets.

[romang]

Currently, the majority of BTC owners are investors.  If it becomes mainstream, then maybe change it, but for now the classification is correct.

The problem is, Bitcoin will never become mainstream and function as a currency if this regulation stands.  The chicken just ate the egg.

The USA wants this to fail so badly.

[alex_bronco]

Currently, the majority of BTC owners are investors.  If it becomes mainstream, then maybe change it, but for now the classification is correct.

The problem is, Bitcoin will never become mainstream and function as a currency if this regulation stands.  The chicken just ate the egg.

The USA wants this to fail so badly.

The USA taxes everything, so by this logic they want everything to fail so badly.

Maybe you are right.

As for me I would be ok with taxes in case if the US Government would use it appropriately , but, unfortunately, they didn't

[Imerman2]

the war the banking elite will wage on bitcoin if it gets anywhere close to mainstream adoption will be of biblical proportions, unlike anything we have ever seen when fighting piracy or drugs.this legislation is just the first step (and it is a major one) in the fight against honest and practical money.

*laugh*

It doesn't matter if the war is of biblical, astronomical, inter-galactic, or inter-dimensional proportions. You can't beat technology or global decentralization with nation-state law. Never gonna happen.

Sure you can. I actually can't believe people still think like this. Bitcoin is useless if it's not used, therefore it would be worthless.  All they have to do is prevent banks and businesses from legally dealing with Bitcoin.  It's done.  Sure, the blockchain lives on, blah, blah, blah...but you can forget about mass adoption.  It's back to some basement internet token, used by a handful of hackers and gamers.  It's utility that Bitcoin needs, so Bitcoin needs to learn to play nice with others.

I'm sure as the digital currency space continues to evolve, the tax codes and regulations will evolve with it. Everything is not a tin-foil hat conspiracy.

Except Bitcoin's biggest market isn't the currently banked population.  It's the 6 billion people who lack access to modern banking, if the U.S. tries to block it then it just moves to where it is accepted.  Bitcoin will be a boom for third-world countries.  If it takes off in Africa then its game over, giving Africans access to transaction free money and all of them could already use it as cell phones are already common there and they could pay through mobile devices.  This may be a roadblock, but Bitcoin, although currently adopted in first world countries, will see its biggest take-off in the third-world.  It will continue to be traded like gold and silver in the first-world, but African governments can't stop it, and they won't try to.  This really doesn't matter, it's the U.S. gov't that needs to learn to play nice with Bitcoin, or it and the U.S. will be burned.

[amspir]

Except Bitcoin's biggest market isn't the currently banked population.  It's the 6 billion people who lack access to modern banking, if the U.S. tries to block it then it just moves to where it is accepted.  Bitcoin will be a boom for third-world countries.  If it takes off in Africa then its game over, giving Africans access to transaction free money and all of them could already use it as cell phones are already common there and they could pay through mobile devices.  This may be a roadblock, but Bitcoin, although currently adopted in first world countries, will see its biggest take-off in the third-world.  It will continue to be traded like gold and silver in the first-world, but African governments can't stop it, and they won't try to.  This really doesn't matter, it's the U.S. gov't that needs to learn to play nice with Bitcoin, or it and the U.S. will be burned.

I agree.  There's a lot of room for growth in the USA, since it's near impossible to open a bank account with bad credit.   I'd really like to see more bitcoin ATMs and all those Western Union agents/payday lender places start exchanging bitcoin.

[The_Gloomfrost]

I dunno about you guys but I'm going to continue mining my bitcoins and using my bitcoins and selling my bitcoins locally for cash without putting it on my tax return UNTIL I see some way for them to POSSIBLY track it in ANY way or a benefit to me for paying them.

The "you pay your taxes or you risk being found out and fined much more than what you would've had to pay" doesn't make sense to me here because the 'risk of being found out' IMO is 0% unless they waste millions trying to figure out how to track it, then enforce even heavier regulation on the few that actually have or use or want to use bitcoins.

Frankly it's not worth it at this time for any government, and by the time it is, it'll be too late.

Maybe in a few years I'll change my perspective...

If you get audited and they look at your bank accounts and assets will there be anything to show that you've purchased or mined or sold bitcoins?  Do you have a regular job or other significant source of income? 

Who says I am depositing the cash I make into my bank? Also, I might not even sell my BTC. Maybe I'll keep it an use it on goods and services, the availability of which are slowly growing around me. I don't make THAT much money for the IRS to come in and have a look inside my house for assets, like computers and miners.

Do you have KYC forms at any of the exchanges where you traded?  If the IRS interviews your friends will any of them know you've invested or mined BTC?

I agree that risk of getting caught can be mitigated but for many people there might be a little denial if they think the risk is zero.  Maybe you've done an awesome job and the risk of getting caught is zero.

Regardless I do agree that most people won't be reporting BTC profits.

I however will be reporting BTC loss since I got goxxxed.

No like I said I do not use exchanges - local only, as everyone else should who is buying/selling BTC. Friends? I HAVE NO FRIENDS. Lol joking - but yeah again I don't make THAT much for IRS to start questioning my friends and family. And hmm good point I should not be telling anyone I invest in or mine BTC, thanks!

Just curious - were you using GOX to trade or invest? I feel like exchanges should be for traders, investors should stay with local, semi-decentralized methods of getting into BTC. I heard it's property after all, if I sell used, is it taxable? xD

[counter]

hope I didn't overlook any replies to me in here I just want to add the I don't see how it is now illegal to spend bitcoin based on this news.  I feel that is sort of an outrageous assessment.  A pain in the rear sounds like a better read of the situation then illegal just my 2 cents. 

[digitalninja81]

hope I didn't overlook any replies to me in here I just want to add the I don't see how it is now illegal to spend bitcoin based on this news.  I feel that is sort of an outrageous assessment.  A pain in the rear sounds like a better read of the situation then illegal just my 2 cents. 

Me too! I can't see what' s the problem?
I mean I understand that's not cool the government is going to make us pay taxes for btc but we've already paid them ! Nothing new actually

[segeln]

Sign in a Petition:(US citizens only)
AMEND IRS NOTICE 2014-2Taxing virtual currency/bitcoin as property stifles new technology&creates untenable requirements
https://petitions.whitehouse.gov/petition/amend-irs-notice-2014-2taxing-virtual-currencybitcoin-property-stifles-new-technologycreates/z7WtKZGY

[amspir]

Sign in a Petition:(US citizens only)
AMEND IRS NOTICE 2014-2Taxing virtual currency/bitcoin as property stifles new technology&creates untenable requirements
https://petitions.whitehouse.gov/petition/amend-irs-notice-2014-2taxing-virtual-currencybitcoin-property-stifles-new-technologycreates/z7WtKZGY

I'm not sure what you are asking the government for, making gains from holding bitcoins was always taxable.   If you traded gold instead and made gains, you'd still be liable to pay taxes on those gains.

The IRS did bitcoin holders a favor by saying long term gains could be taxed at a lower capital gains rate when you hold it for more than a year.  Is that what you are complaining about, or are you complaining about having to pay taxes?  Everyone does that.

[berliston]

Don't you think there can be a loop that IRS can't just mention so this system would work with bugs

[cbeast]

Except Bitcoin's biggest market isn't the currently banked population.  It's the 6 billion people who lack access to modern banking, if the U.S. tries to block it then it just moves to where it is accepted.  Bitcoin will be a boom for third-world countries.  If it takes off in Africa then its game over, giving Africans access to transaction free money and all of them could already use it as cell phones are already common there and they could pay through mobile devices.  This may be a roadblock, but Bitcoin, although currently adopted in first world countries, will see its biggest take-off in the third-world.  It will continue to be traded like gold and silver in the first-world, but African governments can't stop it, and they won't try to.  This really doesn't matter, it's the U.S. gov't that needs to learn to play nice with Bitcoin, or it and the U.S. will be burned.

I agree.  There's a lot of room for growth in the USA, since it's near impossible to open a bank account with bad credit.   I'd really like to see more bitcoin ATMs and all those Western Union agents/payday lender places start exchanging bitcoin.

In fact, most "banked" people are deep in debt to them. The unbanked may prove more resourceful with bitcoin type financing.