Bitcoin is doomed. Thanks IRS!!! You Ass hats!

[Hqen2000]

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.

This is actually great news for Bitcoin in a sense. For those who expected Bitcoin to continue to rally in price, and be a magic non-taxable currency you were crazy. This gives Bitcoin legitimacy that it didn't have prior. Yes, as a result the price will go down a bit, and mining will be lest cost effective. It's not the haven that most of you wanted it to be, but this also means that this has the potential to be a 'real' currency and 'mainstream' form of payment. What this means is that it can go from obscure to norm. Which means Bitcoin will experience legitimacy and continued growth. But most importantly this Bitcoin will most likely not die.

This reminds me of the housing market boom. Everyone really thought homes would continue to increase 20% a year exponentially? By now our homes would be millions of dollars. This is the type of correction that paves the road to sustainability.  

[kwukduck]

It seems this professor has no idea how bitcoin works...
The effects he talks about are what 'just doesn't work', not bitcoin.

That being said, feel free to continue panicking, my buy orders are slowly being filled. Tnx

[Dafar]

I feel like the IRS sat down with their bankster buddies and came out with a smart way to severely limit bitcoin's potential.

This is the end of bitcoin being used as a currency in America. I don't see how you guys are turning this into "good news". Bitcoin has been recognized and legitimized since the senate committee hearing in Nov 2013. This news just cripples bitcoin if anything.


I'm not going to sell because I don't think it's over per-say... but don't expect to see any kind of rally in 2014. This year has been shit for bitcoin, 2013 was amazing and you can't expect 2 in a row.

[Hqen2000]

I feel like the IRS sat down with their bankster buddies and came out with a smart way to severely limit bitcoin's potential.

This is the end of bitcoin being used as a currency in America. I don't see how you guys are turning this into "good news". Bitcoin has been recognized and legitimized since the senate committee hearing in Nov 2013. This news just cripples bitcoin if anything.

Recognizing its existence doesn't make something legit.

Sorry. For those of us living in the United States, taxable = legitimate.

Just ask Capone...

This is good for the Bitcoin as a whole LONG TERM, probably not good for most of you on here who have mostly speculated in the Bitcoin.

[seriouscoin]

OP you got it wrong.

Tax cant be avoided. So one way or the other, you're gonna have to pay tax on profits/income

In fact this new ruling is great for bitcoin because it would filter out day traders as day trading will no longer be desirable as before. Most investors will want to have a long term capital gain. So whoever is buying btc today, its more incentive for them to hold over a year. Tax on short term capital gain is up to 43% opposed to 23% for long term capital gain.


Overall the market will be calm and stable.

[Lauda]

See if you can get that in Germany.

I don't mind taxes.

[hello_good_sir]

Can you elaborate on this? How is it 0%?

If you hold coins for 2+ years they get taxed under the capital gains tax rates.  The rate you pay is based on your income plus your capital gains, 0% up to a certain amount, 15% after that, and 20% if you are rich.  Ok let me try to explain.

For a married couple the 0% capital gains rate goes up to $72k, less if you are single.  So let's say that your income is $50k.  You pay your income taxes based on that.  Now let's say that you sell some bitcoins for $40k that you bought for $10k.  So that means that you have a $30k capital gains (40 - 10).

So we start piling your capital gains on top of your income.  You take 22 of that 30 to go from $50k to $72k.  You pay 0% on those capital gains.  The remaining $8k is taxed at 15%.

Let's say that you have no income, just huge numbers of bitcoins.  Every year you spend/sell enough to make $72k and live on that.  0% tax rate.

I don't understand how taxes on foreign currencies work, but it seems like it is 23% if you keep good records and 35% if you don't.  Much worse than capital gains.

When you die all capital gains are zeroed out.  So let's say that I buy a bitcoin for $600 and die, leaving it to my son.  Now the bitcoin is worth $100000.  No capital gains on that.  If my son holds it for two years and then sells the coin at $101000 he has a capital gain of $1000, which is going to be taxed at 0%.

So basically capital gains taxes are 0% if you hold your coins long enough and if you don't make too much at your day job.  I think that this describes most people who hold coins now.  If not, there are legal ways to avoid taxes that become feasible when you start talking about big money.

[ebliever]

The IRS has issued its ruling. Now let it try to enforce it.

Seriously, as the cryptocurrency ecosystem continues to grow, there is no longer going to be a need to cash out BTC for fiat currency, in which case how are they ever going to know what kind of profits or holdings in bitcoin you have? Unless they go all police-state on us and make every bitcoin service under the sun obtain identity data on every account they have (such as when you buy a Gyft card), this is not going to do much to harm bitcoin.

Even if they did try to put such burdens on US businesses, they could just move overseas, and the overseas ones would fill the void. The internet knows no boundaries, so it's not like we'll care if Gyft shifts to the Barbados, for example, instead of wherever they are registered now. The IRS ruling will become a 99% ignored laughingstock because they won't be able to enforce it.

[seriouscoin]

I feel like the IRS sat down with their bankster buddies and came out with a smart way to severely limit bitcoin's potential.

This is the end of bitcoin being used as a currency in America. I don't see how you guys are turning this into "good news". Bitcoin has been recognized and legitimized since the senate committee hearing in Nov 2013. This news just cripples bitcoin if anything.

Recognizing its existence doesn't make something legit.

Sorry. For those of us living in the United States, taxable = legitimate.

Just ask Capone...

This is good for the Bitcoin as a whole LONG TERM, probably not good for most of you on here who have mostly speculated in the Bitcoin.

Yup because i believe most bitcoin speculators are for short term.

[2tights]

Having bitcoin classified as property rather than currency is the best possible scenario.  The capital gains tax rate is 0% for most people.  0%... hard to beat that.

that's totally false. I don't understand, help me understand.... I read on another story that the tax rate will be like 20 percent or something...

[Hqen2000]

The IRS has issued its ruling. Now let it try to enforce it.

Seriously, as the cryptocurrency ecosystem continues to grow, there is no longer going to be a need to cash out BTC for fiat currency, in which case how are they ever going to know what kind of profits or holdings in bitcoin you have? Unless they go all police-state on us and make every bitcoin service under the sun obtain identity data on every account they have (such as when you buy a Gyft card), this is not going to do much to harm bitcoin.

Even if they did try to put such burdens on US businesses, they could just move overseas, and the overseas ones would fill the void. The internet knows no boundaries, so it's not like we'll care if Gyft shifts to the Barbados, for example, instead of wherever they are registered now. The IRS ruling will become a 99% ignored laughingstock because they won't be able to enforce it.

This is accurate. The anonymous/untraceable nature of any cryptocurrency makes it easy to hide. But not everyone wants to break the law and risk going to jail. Anyone doing business in the #s that will make this taxable would mean that you are doing 100s of thousands of $USD in bitcoin. Which means you probably have more to lose (such as your money). Tax isn't THAT bad people.

If you want to break the law to make money there are also other options.

[moriartypants]

In my mind this article is a much more accurate assessment of the implications of the IRS ruling:

http://www.nasdaq.com/article/3-reasons-the-irs-bitcoin-ruling-is-good-for-bitcoin-cm339333

I pretty much agree with this.

As others are saying, it is kind of bad for speculators but good for bitcoin as a whole and thus good for speculators in the end.

It'll end up being better for speculators even if you pay the onerous taxes as the eventual price will be much higher.

Of course, if you're an American libertarian anti-government type planning to stick it to the man with your magical internet money financed solar powered ranch, that will be small consolation.

[Hqen2000]

I feel like the IRS sat down with their bankster buddies and came out with a smart way to severely limit bitcoin's potential.

This is the end of bitcoin being used as a currency in America. I don't see how you guys are turning this into "good news". Bitcoin has been recognized and legitimized since the senate committee hearing in Nov 2013. This news just cripples bitcoin if anything.

Recognizing its existence doesn't make something legit.

Sorry. For those of us living in the United States, taxable = legitimate.

Just ask Capone...

This is good for the Bitcoin as a whole LONG TERM, probably not good for most of you on here who have mostly speculated in the Bitcoin.

Yup because i believe most bitcoin speculators are for short term.

As the speculators go away and those looking for quick profits go away Bitcoin will experience more flat growth. Maybe use it to actually buy something rather than exchange for dollar. The point of a currency is to buy stuff with it, not to hold it hoping it will increase in value. Bitcoin is somewhat hybrid because there is a limited amount of them there isn't likely to be inflation as there is with paper currency (the us MINT's printers are on full tilt), so it's a good currency in general for long term.

Nobody wants to hold bitcoin long term because they don't have confidence that the price won't wildly fluctuate. This will help prevent that.

[Robert Paulson]

taxing bitcoin investments is justified.
forcing someone who buys a cup of coffee with bitcoin to check if the coins he used were obtained when the exchange rate was lower than today and then reporting it to the IRS IS NOT justified.
this will move people away from using bitcoin as money.

[Bit_Happy]

In fact now that people and businesses know how to treat cryptocurrencies they will finally take the step to move in on it.
Many potential buyers have been waiting on the sideline for more regulation and guidance. Offer them a bargain and it will all be bought up, trigger a new bullmarket.

Today's sell off is due to China not the IRS
OP is (probably) very wrong.

[2tights]

See if you can get that in Germany.

I don't mind taxes.

I don't mind paying taxes, either. That wasn't the point of my post. I saw somewhere the following analogy:

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

Today’s IRS guidance will provide certainty for Bitcoin investors, along with income-tax liability that wasn’t specified before. 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.

I am against paying unrealistic taxes.

[2tights]

In fact now that people and businesses know how to treat cryptocurrencies they will finally take the step to move in on it.
Many potential buyers have been waiting on the sideline for more regulation and guidance. Offer them a bargain and it will all be bought up, trigger a new bullmarket.

Today's sell off is due to China not the IRS
OP is (probably) very wrong.

Yes, I definitely hope that you are right and I am wrong. I'm simply following the argument here, I prefer your truth.

[Hqen2000]

taxing bitcoin investments is justified.
forcing someone who buys a cup of coffee with bitcoin to check if the coins he used were obtained when the exchange rate was lower than today and then reporting it to the IRS IS NOT justified.
this will move people away from using bitcoin as money.

Unless you buy $600 worth of coffee from the same entity, your example probably doesn't apply. But keep repeating it, by all means.

Consult a tax professional.

A capital gains tax (CGT) is a tax on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a cost amount that was lower than the amount realized on the sale.

[2tights]

The IRS has issued its ruling. Now let it try to enforce it.

Seriously, as the cryptocurrency ecosystem continues to grow, there is no longer going to be a need to cash out BTC for fiat currency, in which case how are they ever going to know what kind of profits or holdings in bitcoin you have? Unless they go all police-state on us and make every bitcoin service under the sun obtain identity data on every account they have (such as when you buy a Gyft card), this is not going to do much to harm bitcoin.

Even if they did try to put such burdens on US businesses, they could just move overseas, and the overseas ones would fill the void. The internet knows no boundaries, so it's not like we'll care if Gyft shifts to the Barbados, for example, instead of wherever they are registered now. The IRS ruling will become a 99% ignored laughingstock because they won't be able to enforce it.

This is accurate. The anonymous/untraceable nature of any cryptocurrency makes it easy to hide. But not everyone wants to break the law and risk going to jail. Anyone doing business in the #s that will make this taxable would mean that you are doing 100s of thousands of $USD in bitcoin. Which means you probably have more to lose (such as your money). Tax isn't THAT bad people.

If you want to break the law to make money there are also other options.

+1 best responses, yet.

[Beliathon]

Bitcoin is tanking and that is totally understandable.

Source of problem: You are interested in Bitcoin's daily fiat exchange rate instead of interested in Bitcoin's incredible utility as a superior technology, a better "way of doing money".

Ignore the exchange rate. Speculators don't matter. Judge it objectively, as a scientist would, and you will see cryptocurrency is the future, and fiat is the past.

There's no way around it.