White House Petition to AMEND IRS NOTICE 2014-2 Taxing virtual currency/Bitcoin

[ManeBjorn]

Everyone should sign the petition and spread the links.  The IRS's recent ruling on how it will tax Bitcoin and crypto currencies are going to directly effect us all but especially negative is the requirement for miners.

http://www.cryptocoinsnews.com/2014/03/29/white-house-petition-amend-irs-notice-2014-2-taxing-virtual-currencybitcoin/

[1715111774]

1715111774

[1715111774]

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[Beliathon]

Everyone should sign the petition and spread the links.  The IRS's recent ruling on how it will tax Bitcoin and crypto currencies are going to directly effect us all but especially negative is the requirement for miners.

Or just wait for their shitty money-grab campaign to hit the news, create enough bad publicity that they have to stop.

It's how we won the copyright war, and it's how we'll win the crypto-tax war.

[pungopete468]

I like it the way it is;

Bitcoin is property and each coin can be individually tracked by its hash.

You can design a wallet that will spend newest hash first to reduce your tax liability below where it would be as a currency...

You cannot be required to sell one property before another because property is not fungible...

[franky1]

i laugh at the panicking people that have not fully understood the ruling or the method of tracking/auditing. nor spoke to a accountant about it, but they simply start a petition to change something they dont understand.

[pungopete468]

yup, but they won't get the necessary support because plenty of other people see it differently.

It's a burden for mining, however there are loop holes in that one too...

[Beliathon]

Here's my "petition" to the IRS:



Oh, sorry... you can't buy a vowel. We only accept real money, not your worthless fiat clown-currency monopoly money.

[jc01480]

How many ways can you split a hair exactly?

[Swordsoffreedom]

I like it the way it is;

Bitcoin is property and each coin can be individually tracked by its hash.

You can design a wallet that will spend newest hash first to reduce your tax liability below where it would be as a currency...

You cannot be required to sell one property before another because property is not fungible...

That sounds fairly proper for treating Bitcoin what is the alternative suggestion or approach then

[testerx]

i laugh at the panicking people that have not fully understood the ruling or the method of tracking/auditing. nor spoke to a accountant about it, but they simply start a petition to change something they dont understand.

Well my problem is that my accountant actually said a lot of very reassuring things, except they appear to be directly contradicted by the IRS publication even though he's read it.  I don't really feel like getting audited.

[pungopete468]

Well I like the tax implications with regard to purchasing BTC.

I suppose the real question is about mining. When a coin is mined it's a capital gain. However, a capital gain is valued on the market value and it isn't taxable until you take possession of your property. If you don't own the private key you don't own BTC remember?

You cannot be taxed on coins that you do not yet own.

When you pool mine BTC for profit you should have your coins transferred to an exchange where they can be traded for USD. You have never owned those coins, the blockchain will confirm that they were never in your possession, and a reasonable argument could be made to eliminate capital gains tax because of the ownership.

Don't send coins to your private address from the mining pool; trade them for USD, then buy BTC with USD and spend the newest hashes first... Capital gains on miners is greater than regular income. This should be sufficient to claim it was regular income.

The law is on your side when it comes to property.

[amspir]

When you pool mine BTC for profit you should have your coins transferred to an exchange where they can be traded for USD. You have never owned those coins, the blockchain will confirm that they were never in your possession, and a reasonable argument could be made to eliminate capital gains tax because of the ownership.

Don't send coins to your private address from the mining pool; trade them for USD, then buy BTC with USD and spend the newest hashes first... Capital gains on miners is greater than regular income. This should be sufficient to claim it was regular income.

You are still misunderstanding the process.  Without your documentation of your mining operation, the government see that you had unexplained funds transferred to your bank account.   They will want to tax all of it at the regular income tax rate.

If you want to lessen your tax liability, you would document your expenses in your mining operation to deduct it from gross income, and if you held onto the profits for more than a year, you would document the gains from your holdings at a lower capital gains rate, which is how Warren Buffet and Mitt Romney pay lower tax rates than the average American.

If you hypothetically wanted to evade taxes and break the law, you would find methods that don't trigger a report to the IRS.

[ManeBjorn]

With miner hardware and electricity costs some people make big losses they can deduct that is for sure.

When you pool mine BTC for profit you should have your coins transferred to an exchange where they can be traded for USD. You have never owned those coins, the blockchain will confirm that they were never in your possession, and a reasonable argument could be made to eliminate capital gains tax because of the ownership.

Don't send coins to your private address from the mining pool; trade them for USD, then buy BTC with USD and spend the newest hashes first... Capital gains on miners is greater than regular income. This should be sufficient to claim it was regular income.

You are still misunderstanding the process.  Without your documentation of your mining operation, the government see that you had unexplained funds transferred to your bank account.   They will want to tax all of it at the regular income tax rate.

If you want to lessen your tax liability, you would document your expenses in your mining operation to deduct it from gross income, and if you held onto the profits for more than a year, you would document the gains from your holdings at a lower capital gains rate, which is how Warren Buffet and Mitt Romney pay lower tax rates than the average American.

If you hypothetically wanted to evade taxes and break the law, you would find methods that don't trigger a report to the IRS.

[J_Dubbs]

i laugh at the panicking people that have not fully understood the ruling or the method of tracking/auditing. nor spoke to a accountant about it, but they simply start a petition to change something they dont understand.

Well my problem is that my accountant actually said a lot of very reassuring things, except they appear to be directly contradicted by the IRS publication even though he's read it.  I don't really feel like getting audited.

I met with a CPA today and he seemed to advise we only record income on spent BTC. For example, I buy mining gear with BTC, so the act of exchanging BTC for dollars or a good that are "real" is when we will record as income. Some of his advice seemed to contradict the IRS Q&A publication, but when I pressed on those he made the point that if I'm holding and not exchanging that it doesn't need to be reported as there's no taxable event. What he was advising sounded a lot like what I was hoping for, or what I thought would make more sense, but I do know the official guidance seems to state things differently. We both agreed it seems silly to report income on a virtual thing that is highly speculative. I mean, if you get $90k in mining payouts but at the year end some big news makes BTC worthless or illegal then you would owe taxes on that income but never saw any dollars, services, or physical goods from purchases because it was never exchanged and ended up worthless. He did say their guidance seems unclear enough that we come up with a method and stick with it until/unless they clarify. Lastly, a bit of confusion how to report some of the expenses, but I need to send him my spreadsheets, more to come...

[jonald_fyookball]

there's no need to change anything!

So what if miners have to pay tax on coins?
All it means is they can't postpone taxes by
hoarding.. so what?  

IRS has all kinds of BS rules...and there's just
as many ways to legally avoid them.  Any
smart company knows all this.

What does this have to do with the future of bitcoin?  nothing.

And if bitcoin were to be treated as a currency rather than
property, I think the same thing would happen -- miners
would have to be tax for receiving the currency through
their mining.  In both cases its income...

P.S. even if there was a problem, petitioning the whitehouse
wouldnt do shit

[seriouscoin]

Well I like the tax implications with regard to purchasing BTC.

I suppose the real question is about mining. When a coin is mined it's a capital gain. However, a capital gain is valued on the market value and it isn't taxable until you take possession of your property. If you don't own the private key you don't own BTC remember?

You cannot be taxed on coins that you do not yet own.

When you pool mine BTC for profit you should have your coins transferred to an exchange where they can be traded for USD. You have never owned those coins, the blockchain will confirm that they were never in your possession, and a reasonable argument could be made to eliminate capital gains tax because of the ownership.

Don't send coins to your private address from the mining pool; trade them for USD, then buy BTC with USD and spend the newest hashes first... Capital gains on miners is greater than regular income. This should be sufficient to claim it was regular income.

The law is on your side when it comes to property.

Do you have reading comprehensive problem? English isnt my first language and i can even understand IRS ruling perfectly.

Do you understand what "capital gain" mean? Think about it for 5 sec.....Let me explain to you what IRS is saying:

MINING will not be taxed as capital gain (since there is no capital in the first place ...duh), it will be included in gross income.

Capital gain ONLY APPLIES to SELL AND BUY btc as bitcoin is a property.

So any mining income will be taxable income. When you sell those mined btc, you might have capital gain/loss. Remember the max capital loss you can claim per year is $3k, the rest will be rolled to next year.

[pungopete468]

When you pool mine BTC for profit you should have your coins transferred to an exchange where they can be traded for USD. You have never owned those coins, the blockchain will confirm that they were never in your possession, and a reasonable argument could be made to eliminate capital gains tax because of the ownership.

Don't send coins to your private address from the mining pool; trade them for USD, then buy BTC with USD and spend the newest hashes first... Capital gains on miners is greater than regular income. This should be sufficient to claim it was regular income.

You are still misunderstanding the process.  Without your documentation of your mining operation, the government see that you had unexplained funds transferred to your bank account.   They will want to tax all of it at the regular income tax rate.

If you want to lessen your tax liability, you would document your expenses in your mining operation to deduct it from gross income, and if you held onto the profits for more than a year, you would document the gains from your holdings at a lower capital gains rate, which is how Warren Buffet and Mitt Romney pay lower tax rates than the average American.

If you hypothetically wanted to evade taxes and break the law, you would find methods that don't trigger a report to the IRS.

I'm understanding it clearly. The tax rate on a capital gain within 1 year of acquisition is greater than standard income tax.

I'm not telling anybody to evade taxes, I'm suggesting a way to consider mining as regular income for tax reporting purposes. This is a way to reduce tax liability, not eliminate it. The ownership aspect of a capital gain forms a loop hole that I am attempting to explain.

You can report your USD deposits as regular income and deduct the cost of mining operations from that. If you purchase Bitcoin then the capital gains will be taken later. It's just minimizing your tax liability.

[seriouscoin]

i laugh at the panicking people that have not fully understood the ruling or the method of tracking/auditing. nor spoke to a accountant about it, but they simply start a petition to change something they dont understand.

Well my problem is that my accountant actually said a lot of very reassuring things, except they appear to be directly contradicted by the IRS publication even though he's read it.  I don't really feel like getting audited.

I met with a CPA today and he seemed to advise we only record income on spent BTC. For example, I buy mining gear with BTC, so the act of exchanging BTC for dollars or a good that are "real" is when we will record as income. This means the non-exchanged BTC only has a cost basis at where it was mined. Some of his advice seemed to contradict the IRS Q&A publication, but when I pressed on those he made the point that if I'm holding and not exchanging that it doesn't need to be reported as there's no taxable event. What he was advising sounded a lot like what I was hoping for, or what I thought would make more sense, but I do know the official guidance seems to state things differently. We both agreed it seems silly to report income on a virtual thing that is highly speculative. I mean, if you get $90k in mining payouts but at the year end some big news makes BTC worthless or illegal then you would owe taxes on that income but never saw and dollars, services, or physical goods from purchases because it was never exchanged and ended up worthless. He did say their guidance seems unclear enough that we come up with a method and stick with it until/unless they clarify. Lastly, a bit of confusion how to report some of the expenses, but I need to send him my spreadsheets, more to come...

Your CPA is an idiot and so you are if you use him.

IRS ruling clearly indicates there are 2 possible ways of acquiring btc:

1) Mining:  a taxable event that will be in your gross income based on fair market value of the mined coins. There will be another taxable event when you sell those coins, thus fall into capital gain.
2) Buying: there willl be a taxable event when you sell btc.

[amspir]

I'm understanding it clearly. The tax rate on a capital gain within 1 year of acquisition is greater than standard income tax.

You are thinking that the long term capital gains rate is higher than the regular income tax rate.   It is not.

[jonald_fyookball]

When you pool mine BTC for profit you should have your coins transferred to an exchange where they can be traded for USD. You have never owned those coins, the blockchain will confirm that they were never in your possession, and a reasonable argument could be made to eliminate capital gains tax because of the ownership.

Don't send coins to your private address from the mining pool; trade them for USD, then buy BTC with USD and spend the newest hashes first... Capital gains on miners is greater than regular income. This should be sufficient to claim it was regular income.

You are still misunderstanding the process.  Without your documentation of your mining operation, the government see that you had unexplained funds transferred to your bank account.   They will want to tax all of it at the regular income tax rate.

If you want to lessen your tax liability, you would document your expenses in your mining operation to deduct it from gross income, and if you held onto the profits for more than a year, you would document the gains from your holdings at a lower capital gains rate, which is how Warren Buffet and Mitt Romney pay lower tax rates than the average American.

If you hypothetically wanted to evade taxes and break the law, you would find methods that don't trigger a report to the IRS.

I'm understanding it clearly. The tax rate on a capital gain within 1 year of acquisition is greater than standard income tax.

I'm not telling anybody to evade taxes, I'm suggesting a way to consider mining as regular income for tax reporting purposes. This is a way to reduce tax liability, not eliminate it. The ownership aspect of a capital gain forms a loop hole that I am attempting to explain.

You can report your USD deposits as regular income and deduct the cost of mining operations from that. If you purchase Bitcoin then the capital gains will be taken later. It's just minimizing your tax liability.

When you think about it, the IRS ruling encourages miners to sell their coins on the open market sooner rather than hoarding and selling later.  Seems to possibly help liquidity and stability of bitcoin.

[seriouscoin]

I'm understanding it clearly. The tax rate on a capital gain within 1 year of acquisition is greater than standard income tax.

You are thinking that the long term capital gains rate is higher than the regular income tax rate.   It is not.

The OP didnt understand the ruling at all...

Mining income is never considered capital gain. Its just regular income .... like he wishes.