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Author Topic: Is the IRS ruling that bad really?  (Read 1953 times)
CryptoPanda
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April 02, 2014, 11:33:12 AM
 #21

It's basically the same tax treatment gold gets. What's the problem?
yeah exactly, why everyone presents is as so bad news

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achtung082
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April 02, 2014, 05:33:25 PM
 #22

It's basically the same tax treatment gold gets. What's the problem?
yeah exactly, why everyone presents is as so bad news

I have no issue with paying tax and welcome the acknowledgement that the IRS has now given the asset class. I do have issues with some aspects of the IRS rules.

1)An individual is not allowed to deduct expenses incurred in crating the property. If they want you to pay on creation then a deduction of expenses should be allowed.
2)An individual is not allowed to deduct losses on the the devaluation of the property that has not been used in a transaction or exchanged at the time of creation for $. You should be allowed to deduct loses if you have not yet used the property in a transaction.
or
3)An individual is required to pay “property tax” on creation of the property asset before realizing any benefit or gain from the property. The gain is only realized when the property is used in a transaction. The holder of the property should only pay tax on the gain from the time of creation of the property to the time of the transaction and not on the creation and gain at the time of the transaction.

To add consideration for and address either 1 and 2 or 3 in the rules would in my view be much more reasonable and fare.

It is my opinion that the rules are an attempt to deter individuals from getting involved in mining and transaction based activities.


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April 02, 2014, 05:36:46 PM
 #23

It's basically the same tax treatment gold gets. What's the problem?

Gold is not used for everyday transactions. Gold is used on major transactions, if ever so recording a transaction every once in a while is okay. But since BTC gets the same treatment, you have to record every transaction no matter how small (under IRS guidelines) and report capital gains/loss on it. Thats the problem, at least IMO. That and they were really vague, and that for me (personally) it was a bandaid solution. I do hope they revise it quickly!

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April 02, 2014, 08:41:12 PM
 #24

It's basically the same tax treatment gold gets. What's the problem?
yeah exactly, why everyone presents is as so bad news

Its actually cheaper then gold.  Anyways its still a huge amount that they can just take. I don't see why anyone pays these taxes when they can just go else where to where taxes are cheaper. So what I don't get is what keeps everyone from leaving and fleeing a country and moving to somewhere where the tax burden is less?
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April 02, 2014, 08:55:55 PM
 #25

Moving is a big decision IMO, I think thats the reason why people aren't fleeing US. PLus I think saving a tiny bit of taxes justifies costs for flight ticket imo :p

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April 03, 2014, 03:51:00 AM
 #26

It's basically the same tax treatment gold gets. What's the problem?

Gold is not used for everyday transactions. Gold is used on major transactions, if ever so recording a transaction every once in a while is okay. But since BTC gets the same treatment, you have to record every transaction no matter how small (under IRS guidelines) and report capital gains/loss on it. Thats the problem, at least IMO. That and they were really vague, and that for me (personally) it was a bandaid solution. I do hope they revise it quickly!

It's for transactions of under $600 they reported later

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April 03, 2014, 04:25:55 AM
 #27

WARNING: Not a lawyer, accountant or CPA. I've just done a lot of research on this.

And it turns out the every day user should only report on transactions over $600
Wondering how the initial burst of news articles missed that quite critical point?
They missed it because that is false. What I'm about to say is highly simplified because there are exceptions. You have it backwards: OTHER people have to report YOU to the IRS when THEY send you more than $600 (of anything) in a given tax year. YOU still have to report everything regardless.

I have no issue with paying tax and welcome the acknowledgement that the IRS has now given the asset class. I do have issues with some aspects of the IRS rules.

1)An individual is not allowed to deduct expenses incurred in crating the property. If they want you to pay on creation then a deduction of expenses should be allowed.
Where did you hear that? If you aren't mining as part of a business, then there are two ways you can deduct the expenses:
1) If your mining activities are at the level where the IRS classifies it as a business rather than a hobby, then you can deduct it as a self-employment expense.
2) If your mining activities are classified as a hobby, you can deduct the expenses up to the amount of mining income you've made by itemizing on your return.

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April 03, 2014, 11:15:37 AM
 #28

Actually you have to report everything, the $600 threshold is for a form 1099  Tongue

achtung082
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April 03, 2014, 12:10:58 PM
 #29

WARNING: Not a lawyer, accountant or CPA. I've just done a lot of research on this.

And it turns out the every day user should only report on transactions over $600
Wondering how the initial burst of news articles missed that quite critical point?
They missed it because that is false. What I'm about to say is highly simplified because there are exceptions. You have it backwards: OTHER people have to report YOU to the IRS when THEY send you more than $600 (of anything) in a given tax year. YOU still have to report everything regardless.

I have no issue with paying tax and welcome the acknowledgement that the IRS has now given the asset class. I do have issues with some aspects of the IRS rules.

1)An individual is not allowed to deduct expenses incurred in crating the property. If they want you to pay on creation then a deduction of expenses should be allowed.
Where did you hear that? If you aren't mining as part of a business, then there are two ways you can deduct the expenses:
1) If your mining activities are at the level where the IRS classifies it as a business rather than a hobby, then you can deduct it as a self-employment expense.
2) If your mining activities are classified as a hobby, you can deduct the expenses up to the amount of mining income you've made by itemizing on your return.
Thank you for you comments, they are very helpful in trying to understand how to file with the IRS.

The IRS Notice 2014-21 states in section 3. scope: 
"No inference should be drawn with respect to virtual currencies not
described in this notice. "

Does this mean you may not use any std TAX rules when declaring virtual currencies and only use those described in the notice? If this is the case how are you able to deduct expenses as an individual not engaged in a business?

If you mine 1btc at $500 you pay tax on receipt of the minded virtual currency, if you hold the 1btc and the price drops to $400. How do you claim this loss as an individual not evolved in a business?



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precrime3
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April 03, 2014, 03:53:21 PM
 #30

Since BTC is a property and classified as "capital gains" I would imagine that you would just record the USD price at time of receiving at a "fair market price" (Technically IRS states most stable price, which would be Mt. Gox, but you know....) and then record the USD price at time of selling for something, buying something etc. And if the USD price at that time happens to be lower than when you received, it would be a capital loss, and if you made a capital gain on it, you would be taxed for the difference, which effectively makes everyday transactions a burden. DISCLAIMER: Just a guy from the internet, please consult a lawyer or someone that does taxes before doing anything!

romang
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April 03, 2014, 03:54:56 PM
 #31

Good for me I will pay15% taxes instead of 30%

CryptoPanda
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April 04, 2014, 05:26:49 AM
 #32

Good for me I will pay15% taxes instead of 30%


Exactly and no one is focusing on that!

achtung082
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April 04, 2014, 12:38:15 PM
 #33

Good for me I will pay15% taxes instead of 30%


Exactly and no one is focusing on that!

That is good for you.

A lot of people are not focusing on that because that is not the issue.

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