How will the US tax bitcoin?

[James222]

Hi everyone. I heard that the U.S would start taxing bitcoin. But I'm wondering how are they gonna tax it as no one can take a certain amount of bitcoin during a transaction? Will they force the use of a custom bitcoin client?

[Bitcoin Magazine]

Hi everyone. I heard that the U.S would start taxing bitcoin. But I'm wondering how are they gonna tax it as no one can take a certain amount of bitcoin during a transaction? Will they force the use of a custom bitcoin client?

each Block will be taxed separately.

even if there are output transactions  

[Bitram]

They can't tax bitcoin straight forward. Standard money flow would be taxed (actually already is in some way) eventually VAT.

[zolace]

Probably they will try to tax it as they are doing with cash.With cash you can buy things that have VAT and things free of VAT.So they won\t be able to tax bitcoin but they can tax the products/services that you buy it with bitcoins.

[Sage]

The same way they tax bittorrent.

Now comply without question citizen.  We know about every bitcoin you've mined, bought, & spent!

[Beliathon]

The same way they tax bittorrent.

Now comply without question citizen.  We know about every bitcoin you've mined, bought, & spent!

ROFL, wins the thread.

They ain't taxin shit unless you're stupid enough to obey without any critical thinking whatsoever. Sadly, many Americans fit that description.

[bitcats]

[runam0k]

They ain't taxin shit unless you're stupid enough to obey without any critical thinking whatsoever. Sadly, many Americans fit that description.

Critical thinking won't change the USD fine or jail time you'll face if you get caught.  I think you mean "creative thinking" ie don't get caught.

[zolace]

Im sure is gonna be the same thing with regular money they are only gonna target the big bitcoin businesses and miners who bring in the most, they dont care for small potatoes.

[bryant.coleman]

The American Bitcoiners should be happy about it. Since BTC is being recognized as property, the users don't have to pay the income tax. They just have to pay the Capital gains tax, which is much lower than the income tax.

[Phildo]

The American Bitcoiners should be happy about it. Since BTC is being recognized as property, the users don't have to pay the income tax. They just have to pay the Capital gains tax, which is much lower than the income tax.

But it is also a much bigger pain in the ass to figure out. Which means more possibility for making mistakes. Also, the "discount" only kicks on on long term gains, which means it will only apply to bitcoins that you have held on to for more than a year.

[Sithara007]

The American Bitcoiners should be happy about it. Since BTC is being recognized as property, the users don't have to pay the income tax. They just have to pay the Capital gains tax, which is much lower than the income tax.

But it is also a much bigger pain in the ass to figure out. Which means more possibility for making mistakes. Also, the "discount" only kicks on on long term gains, which means it will only apply to bitcoins that you have held on to for more than a year.

OMG! Disaster for short-sellers.

[IrishFutbol]

There's going to be no simple way to enforce it, as unlike Stocks and Bonds, most people don't hold BTC at an investment firm, so there won't be a way for exchanges or businesses to track capital gains and losses.

It will resemble the way that people had to pay taxes on Swiss bank accounts.  No one is going to report your gains/losses to the IRS, but the IRS will likely get a list of citizens who use an exchange / use BTC to purchase goods, and for an unlucky few, they will audit their tax return.

It wouldn't shock me if they tried the same grace period that they did with the Swiss accounts and say you have until a certain date to catch up on your records and pay taxes / after this date, if we detect unreported transactions, you're getting charged with tax evasion.

[mintodev]

https://i.imgur.com/hSQtjv6.png

+1 to this.

[Beliathon]

after this date, if we detect unreported transactions, you're getting charged with tax evasion.

We, huh? So you're a government shill? Good to know. Looks like it's time to press that old ignore button.

I hope I'm the lucky first person to get charged with Bitcoin-based tax evasion. Going public and becoming a celebrity bitcoin hero, political prisoner, and state victim sob story would be fun!

Imagine all the Bitcoin donations you'd raise for lawyer's fees!!! Exciting times ahead, as the IRS demonizes itself and further erodes the very little legitimacy the US government has left.



Here's that approval graph again, this time all the way through 2011:

[Phildo]

There's going to be no simple way to enforce it, as unlike Stocks and Bonds, most people don't hold BTC at an investment firm, so there won't be a way for exchanges or businesses to track capital gains and losses.

It will resemble the way that people had to pay taxes on Swiss bank accounts.  No one is going to report your gains/losses to the IRS, but the IRS will likely get a list of citizens who use an exchange / use BTC to purchase goods, and for an unlucky few, they will audit their tax return.

It wouldn't shock me if they tried the same grace period that they did with the Swiss accounts and say you have until a certain date to catch up on your records and pay taxes / after this date, if we detect unreported transactions, you're getting charged with tax evasion.

It's not as easy as you make it sound to get the proper paperwork from an investment firm, especially when you make tons of trades.

It's much easier to track an individual bitcoin through the blockchain than to track an individual stock (which is what you need to do), especially when there are a ton of trades.

[Keyser Soze]

It's not as easy as you make it sound to get the proper paperwork from an investment firm, especially when you make tons of trades.

It's much easier to track an individual bitcoin through the blockchain than to track an individual stock (which is what you need to do), especially when there are a ton of trades.

Huh? While I cannot speak for companies outside the US, in the US brokers are required to keep track of cost basis for most any security. It is rather trivial for them to keep track of trades, send out trade confirmations, note the activity on their statements and provide a 1099 summary containing tax information such as gains and losses. The only time it can be an issue is if the holding is many years old and they do not have the cost basis for it (for various reasons such as transferred from another firm or from physical stock certificates), which is rather uncommon from my experience.

[Sage]

There are any number of ways to acquire, trade, hold, & spend crypto currencies in complete anonymity, and completely untraceable.

And with coming solutions like darkwallet, these tools will be built in to every wallet soon enough.  Coming distributed exchanges will enable completely anon trading in any stock, crypto, or commodity.

The power is finally shifting back to the people.

If you believe in the current system & what its doing around the world with your tax dollars, then go ahead...  Enable that monster by feeding it your wealth.  

If you don't, then use every tool at your disposable for non-violent, civil disobedience.

Fortunately, with the right tools there's not much 3 letter agencies around the world can do without your voluntary compliance.

3 letter agencies, you're fucked on this one.  You're going to have to wake up to the fact that the game has forever changed.  Luckily, it won't be for another decade before you figure that out.

[bryant.coleman]

But it is also a much bigger pain in the ass to figure out. Which means more possibility for making mistakes. Also, the "discount" only kicks on on long term gains, which means it will only apply to bitcoins that you have held on to for more than a year.

That's true. It might not be possible to fill the tax returns without professional help. And yes, short term gains will be taxed quite heavily. I think the Americans will have to find a way to legally evade the tax. Such as going to another country (Mexico.etc) and selling the BTCs there...

[bitcats]

after this date, if we detect unreported transactions, you're getting charged with tax evasion.

We, huh? So you're a government shill? Good to know. Looks like it's time to press that old ignore button.

I hope I'm the lucky first person to get charged with Bitcoin-based tax evasion. Going public and becoming a celebrity bitcoin hero, political prisoner, and state victim sob story would be fun!

Imagine all the Bitcoin donations you'd raise for lawyer's fees!!! Exciting times ahead, as the IRS demonizes itself and further erodes the very little legitimacy the US government has left.

  +1