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

[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.

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[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.