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

[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.

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[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.