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Author Topic: Bitcoin is doomed. Thanks IRS!!! You Ass hats!  (Read 19161 times)
crypto2k
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March 27, 2014, 08:43:48 PM
 #81

It's not illegal. That's good news.

Remember, the IRS only taxes Americans. There are 248 nations.

But the USA is the richest nation on the planet...by quite some way. This will have a negative effect on Bitcoin.


no the usa is not the richest country .. unle4ss u consider trillions in debt as rich .. or maybe u consider a dollar that is backed by debt is really money ?? or maybe you think that printing 80 billion a month for over a year makes the usa the richest country in the world ??

the only real money in this world is gold and silver. who has the gold and silver has the money. the dollar is now on it's deathbed. the fed started to taper not because our economy is better, but instead because the fed has 4 trillion of junk they bought from the big banks on their books with the free money they printed. the fed is now insolvent and cannot continue to print free money and buy another 4 trillion in junk. if they do keep printing then the usa citizens will be left holding a valueless currency.

the usa will need a replacement currency because the days of the dollar reserve currency is coming to an end. maybe bitcoin is in the works instead of a gold backed currency because maybe the usa does not have any gold left to back a currency ?? we don't know the answer to this question yet. to restore confidence in money a gold back currency will be required.. unless they can come up with something else. russia and china both banned bitcoin because they have been buying gold in massive quantities along with all the other SCO countries. they are preparing for a gold backed reserve currency .

regarding this IRS ruling one must wonder why they announced it three weeks before april 15th tax deadline Huh the reason is to limit the time for miners to apply and obtain a business license. you have until april 15th to obtain a business license to be able to writeoff your mining hardware, electric, office space, internet, etc, that you use to mine. therefore maximizing the IRS's money grab for at least another year. if you are going to mine bitcoin then apply for your business license today .

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March 27, 2014, 09:51:32 PM
 #82


I agree with the first, both posters actually. But do not forget that the basis of the domination system is the fact that the subjects are those who give the masters power and resources, that is from where they get their dominance. Since the tracking of all transactions for tax purposes is so weird, costly, impractical and intrusive, people should and probably will just say no. Certainly, that's what I will do. Report my bitcoin holdings every year? No. Report all transactions? No. Report the net fiat value of coins sold for fiat? Possibly, but not buy in value, where I got them from, how much I have left. No. Not enough people will say yes to this, so the law will go to sleep. The masters have no say in this. They think they have, but they have no say.


Thanks for the thoughtful post Erdogan.  Indeed, the power always rests with the people.  

I disagree with one point: you said "they think they have a say in this," but I believe the IRS simply issued guidance reflecting their interpretation of the current laws.  

Who are "they" anyways?  And how are they different than us?


Correct, it is an opinion, but which mean a lot these unlawful days.

They? The government and their associates, banks, big firms, government owned businesses, half official organizations. They are a set of people. The difference from us, is that they think they are the masters, that they own us, that their power comes from god or the law, or whatever. They think they have the right to every value that is produced, change hands, move or is fixed within a certain geographical area. They leave a little for the producers for their sustenance. The rest is used on themselves and most of it is doled out to different people as payment for support. That is who they are. The rest of us basically wants to be left to peacefully do what we want.

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March 27, 2014, 10:26:28 PM
 #83

Gold has industrial value, so its value will remain until viable alternatives compete with those industrial applications.  Fiat and part of BTC value is created by the perception of people like you and me. A piece of paper has no intrinsic value or utility, however BTC goes beyond this and actually does have a very valuable function which is the blockchain.

2tights. I don't think thats necessarily true. Gold's industrial value is peanuts compared to its monetary value.

No monetary media needs to have an industrial value. In fact, it's an important property of any monetary medium that it works as well as possible as a token of exchange and as badly as possible for anything else (other wise it has a tendency to go out of circulation as gold jewellery, circuitry and teeth have done). The monetary medium derives its value from it's "role" in the economy, not from any sense of "intrinsic value" (which is a misnomer anyway - it's easily demonstrate-able that nothing has intrinsic value).

Gold was the "bitcoin" of the old physical world markets. It had certain characteristics of fungibility, resistance to counterfeiting, ilmited supply etc which made it function as a token of value. It was the fact that it was widely adopted in a monetary role that have it it's value - not the other way around.

Here's an example to illustrate. If you go to a kids funpark and buy a few of those plastic tokens for the rides, they'll cost you about 5 Eu / Dollars whatever each. On the other hand, if you buy them in a hardware shop, they'll cost about 1 cent each. So you're paying a markup of many thousands of percent for exactly the same plastic token that is in the monetary role. Nothing to do with "intrinsic value" of plastic tokens.

Gold is exactly the same - it doesn't not have any intrinsic value. It's just that people make a deeply rooted association with gold and value historically, so the word 'intrinsic' gets used to reflect that.

We now live in an electronic trading environment, however and you can't "hold" gold electronically so a new monetary medium is required, hence the emergence of cryptocurrencies.

When you look at it analytically in this way, they actually have more justification for a high valuation than gold does.


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March 27, 2014, 10:36:55 PM
 #84

Bitcoin makes taxes more... consentual. Are they going to freeze your BTC if you don't pay? They may imprison you, but they still won't get your precious cyber coins!
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March 27, 2014, 10:49:48 PM
 #85

Bitcoin makes taxes more... consentual. Are they going to freeze your BTC if you don't pay? They may imprison you, but they still won't get your precious cyber coins!

I think that depends on where you store your bitcoins.   I'm still scratching my head wondering why Silk Road mastermind Ross Ulbricht would keep his personal wallet of $80 million USD worth of btc on the same same laptop on which he used to administer silk road, only a password dictionary attack away from seizure.

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March 28, 2014, 01:44:34 AM
 #86

If anyone thinks this is the killing blow for Bitcoin, they should just get out now, because they don't understand the project in the slightest.

For some reason I don't think satoshi had "regulation" and "taxation" in mind.  Bitcoin was about undermining government monopolies over the world's currency.  We have failed miserably thus far.  
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March 28, 2014, 04:17:48 AM
 #87

I'm not happy with this ruling as it seems to be doing alot of confusing for newer users and those looking to get into bitcoin...  But I think in other ways it's a good thing it's just a matter of how you look at the big picture IMO.
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March 28, 2014, 05:13:14 AM
 #88

On the IRS guidance: Am I wrong in understanding the IRS guidance as their interpretation of existing laws?  No laws were actually changed, correct?  To me it seems the guidance was fair: presently bitcoin is more like property than like currency; if you disagree I believe the courts would have the final say.

Correct.   However,  the courts will only have a say if you treat it as something else, AND it causes you to figure a lower tax,  AND the  IRS rejects your treatment.  Treatment as 'property'  is generally going to be more favorable for the taxpayer than treatment as currency.

This guidance is in greater disparity with people who were/are holding that their Bitcoins are NEITHER their Property,  NOR currency.

In other words: Folks who pose that  Bitcoins are the same as game currency (Such as World of Warcraft Gold), that,   there is therefore no taxable value from obtaining bitcoins  through mining,  playing video games, or whatever,  since this digital association of hypothetical future value to be spendable  by a private key  (Something you know, not something you have),  according to consensus of the Bitcoin network is not a "Thing".

That is... the person who mines a Bitcoin doesn't become an "owner" of anything, or obtain any 'lawful exclusive right'  to anything of value.

Thus no taxable value for bitcoins obtained in trade.


Such treatment would  result in taxable income  only when Bitcoins are "exchanged" for property assets with real value,  or services/goods are obtained.

Much in the same way that earning Warcraft gold while playing World of Warcraft is not taxable,  but any sale of Gold for cash is taxable.


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But the bigger point I want to make is that as bitcoin grows, it may naturally evolve to become more like currency than like property, and at this point would not the IRS guidance less accurately reflect the existing law

If you want to be safe,  you should probably   use the least tax-preferential treatment,  as it is the Revenue Code that you need to follow.   The IRS is just providing a service  to assist taxpayers by providing guidance  on their intended interpretation of the law.

The IRS have the right to change their mind,  at any time with regards to their guidance,  if they see it maximizes tax revenue, they may do so  by updating guidance  or  rejecting the standard guidance on a case-by-case basis.


Also, following the IRS guidance doesn't absolve you for underpayment --- if it turns out their guidance was wrong,  and   some less-tax-preferential treatment was correct:   the taxpayer may be subject to paying more including underpayment penalties.

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The same theme applies to the guidance on mining. From my discussions with various community members, I think the general feeling is that hashers are paid for the services they provide to a mining pool whereas miners create bitcoins based on their own initiatives and the acceptance of their efforts by their peers.

No...  with A mining pool it is still their own initiative.

Mining pools are essentially informal revenue-sharing arrangements;  where people conducting mining combine their computational power,  so they collectively have a better chance of finding a block -----  when one of the miners in the pool does find a valid block,   the reward revenue is redistributed  among the active miners' peers  based on a formula they agreed upon,   which included each miner providing numerous  "intermediary"  hashes  that met a slightly lower difficulty bar,   in order to prove that they were actively mining.


If this is income,  and potential self-employment income, then... of course... the same is true of solo-mining.









BTC: 1FbuJxZCeJUqrP7EpUkgMKWAmAA1M8gUBd
LTC: LbvomgbwKnqk47mWzALCDEoV8ydjxYYYpF
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March 28, 2014, 10:59:11 AM
 #89

"The price at which a particular Bitcoin was acquired (and this is traceable) determines the capital gains on that particular Bitcoin when spent. "

Except not every bitcoin needs to be obtained through an exchange or with dollars.

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March 28, 2014, 11:23:06 AM
 #90

It never ceases to amaze me that a currency, whose primary strength is its independence from government and central banks, is used by so many people who live and die by what the governments and central banks say about it.

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March 28, 2014, 11:24:09 AM
 #91

o but wait... i can't... i first need to check what the freakin exchange rate was when i got my bitcoins compare it to today's and then write down to report my capital gains to the IRS...

Writing it down because your bitcoin wallet is broken?  Keeping a record because it's impossible to consult the blockchain later?

If you're smart enough to transact bitcoins, I really don't get how you could be too stupid to run your wallet through a TurboTax-Bitcoin app at tax time.


or i can pay with fiat and not have to consult with anything.

Bullshit. You've already paid taxes on that fiat or you will come tax day.


I think his point is that people won't bother, they'll just put a hand in their pocket as they always have and buy the coffee with cash.
Anything that complicates a bitcoin transaction in any way reduces the likelihood of normal people or businesses adopting it.

Why would that cafe even bother with bitcoin and add something else to their paperwork when everyone already has a simple and trusted way to pay them?

Not everyone is into crypto, the majority have no idea what the fuck it is yet, they just want something to buy that coffee with and anything new needs to be an improvement on what they know. They don't give a shit about economics or governments or the future...they elected the morons who run our countries.

I'm wondering who's going to be splashing out on thousands in mining gear when the returns aren't there anymore. Most rigs won't break even at the rate we have now. People with 10k rigs on order must be gutted.
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March 28, 2014, 11:27:59 AM
 #92


I can be corrected on this one, in case I misunderstood something, but the entire discussion in here seems to miss one point:

The IRS decision (guidance?) applies to capital *gains*, i.e. the difference in value per unit at time of buying said unit vs. selling it. Correct so far?

If, at some point in the future, BTC/USD more or less stabilizes, the problem disappears (or at least become negligible, except for very large amounts traded).


tl;dr This decision might hurt current speculative value, but it doesn't really harm BTC functionality assuming a more stable exchange rate in the future.

Not sure which Bitcoin wallet to use? I suggest to take a look at Electrum.
Electrum is an open-source lightweight client: user friendly, fast, and one of the safest ways to store, send or receive bitcoins.
For executables (Windows, OSX, Linux, Android), source code and documentation, see the Electrum homepage.
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March 28, 2014, 11:31:19 AM
 #93

Everybody please relax.

BTC has been subject to capital gains in the UK from the beginning. It hasn't had the slightest effect on BTC adoption here.

"There is only one thing that is seriously morally wrong with the world, and that is politics. By 'politics' I mean all that, and only what, involves the State." Jan Lester "Escape from Leviathan"
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March 28, 2014, 11:53:18 AM
 #94

I also hate him very much USA government does not recognize the BTC the money even if the IRS or receiving but its property tax

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March 28, 2014, 11:59:26 AM
 #95

Of course, IRS never changes its mind.

Relax, and just prepare to pay the capital gains tax if you need to. Consult a professional and find ways to minimize it and gain deductions.

For Fuck's Sake, don't flip your shit everytime 'THE MAN' makes an announcement. Adapt. Adjust. Improve.
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March 28, 2014, 12:31:57 PM
 #96

Actually I think this is very positive, since it defined digital property first time in human history. Bitcoin is the first non-duplicatable digital property, and since it is half anonymous and can move oversea in seconds, the taxation need a whole new set of rules, or simply becomes impractical

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March 28, 2014, 01:09:05 PM
 #97

But the USA is the richest nation on the planet...by quite some way. This will have a negative effect on Bitcoin.

America is the greatest country in the history of the world.. not Tongue
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita
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March 28, 2014, 01:10:44 PM
 #98

It's not illegal. That's good news.

Remember, the IRS only taxes Americans. There are 248 nations.

But the USA is the richest nation on the planet...by quite some way. This will have a negative effect on Bitcoin.

I nearly spat out my coffee!
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March 28, 2014, 01:16:55 PM
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Actually I think this is very positive, since it defined digital property first time in human history. Bitcoin is the first non-duplicatable digital property, and since it is half anonymous and can move oversea in seconds, the taxation need a whole new set of rules, or simply becomes impractical

There's an analogy about a half-watertight submarine in there somewhere.

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March 28, 2014, 02:22:22 PM
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Gold has industrial value, so its value will remain until viable alternatives compete with those industrial applications.  Fiat and part of BTC value is created by the perception of people like you and me. A piece of paper has no intrinsic value or utility, however BTC goes beyond this and actually does have a very valuable function which is the blockchain.

2tights. I don't think thats necessarily true. Gold's industrial value is peanuts compared to its monetary value.

No monetary media needs to have an industrial value. In fact, it's an important property of any monetary medium that it works as well as possible as a token of exchange and as badly as possible for anything else (other wise it has a tendency to go out of circulation as gold jewellery, circuitry and teeth have done). The monetary medium derives its value from it's "role" in the economy, not from any sense of "intrinsic value" (which is a misnomer anyway - it's easily demonstrate-able that nothing has intrinsic value).

Gold was the "bitcoin" of the old physical world markets. It had certain characteristics of fungibility, resistance to counterfeiting, ilmited supply etc which made it function as a token of value. It was the fact that it was widely adopted in a monetary role that have it it's value - not the other way around.

Here's an example to illustrate. If you go to a kids funpark and buy a few of those plastic tokens for the rides, they'll cost you about 5 Eu / Dollars whatever each. On the other hand, if you buy them in a hardware shop, they'll cost about 1 cent each. So you're paying a markup of many thousands of percent for exactly the same plastic token that is in the monetary role. Nothing to do with "intrinsic value" of plastic tokens.

Gold is exactly the same - it doesn't not have any intrinsic value. It's just that people make a deeply rooted association with gold and value historically, so the word 'intrinsic' gets used to reflect that.

We now live in an electronic trading environment, however and you can't "hold" gold electronically so a new monetary medium is required, hence the emergence of cryptocurrencies.

When you look at it analytically in this way, they actually have more justification for a high valuation than gold does.




unfortunately this what you said is all wrong .. people do hold electronic and paper gold all the time.. if you go to say monex and you tell them you want to buy gold at their exchange and have them store that gold for you in their vault then they will supposedly buy gold for u and store it in their vault for you .. whether they actually ever buy the gold is dabatable but they will issue you a certificate saying that they bought the gold and that you own it .. problem is if you do not hold the physical metal in your hand then you don't really own any gold even if your certificate says you do .. paper or electronic digits is not gold. if monex were to go belly up well you will never see that gold your certificate says you own . now lets go look at the GLD markets. that is all paper gold being traded. the price of gold is manipulated by people who trade in paper gold. the central banks mostly manipulate the price of gold using this paper system where one ounce of physical gold can control like 100000 ounces of paper gold. that is all fakelands and is not real gold.
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