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

[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?

[1714756938]

1714756938

[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.