Bitcoin and Taxation

[Akarbb]

I've posted an article about this, please feel free to comment.

http://thedailybitcoin.blogspot.com/2011/04/bitcoin-and-taxes.html

[kiba]

Take his article with a grain of salt.

Consult with a lawyer.

[Akarbb]

Take his article with a grain of salt.

Consult with a lawyer.

Take all articles with a grain of salt for that matter.  This is just information compiled from the information on the Bitcoin wiki, and the IRS website.

[mrabby]

That's probably the worst reasoning I've ever heard. Income is income, and depending on the laws of your local jurisdiction, you're supposed to pay taxes on that income. If you have bitcoins, and you keep them as bitcoins, it would be just like having a pile of Euro's or pounds laying around. If you convert those back to dollars at a higher exchange rate than what you paid for them, that counts as some form of capital gains.

The argument that 'it's hard to trace, so you don't have to pay taxes on it' is the exact same argument you can make for if you get paid in cash for something. You're still *supposed* to pay taxes, and just because it's in BTC doesn't some how make it 'special.'

[kiba]

Take all articles with a grain of salt for that matter.  This is just information compiled from the information on the Bitcoin wiki, and the IRS website.

The arguments you're offering wasn't congruent with what I heard on the forum. Fair enough that I should have said why...

But income is income, even though the IRS is a jerk.

(Would be best if a lawyer could chime in)

[Akarbb]

That's probably the worst reasoning I've ever heard. Income is income, and depending on the laws of your local jurisdiction, you're supposed to pay taxes on that income. If you have bitcoins, and you keep them as bitcoins, it would be just like having a pile of Euro's or pounds laying around. If you convert those back to dollars at a higher exchange rate than what you paid for them, that counts as some form of capital gains.

The argument that 'it's hard to trace, so you don't have to pay taxes on it' is the exact same argument you can make for if you get paid in cash for something. You're still *supposed* to pay taxes, and just because it's in BTC doesn't some how make it 'special.'

Everything is taxed, including your income that you claim.

[FreeMoney]

The government uses taxes to destroy lives. If you have to pay them to avoid your own destruction then fine, but don't pretend their demands are legitimate, or that you are fulfilling some kind of obligation because you aren't you have no obligation to aid in murder, imprisonment, torture, and destruction. If you happen to like some aspect of what the government is doing you pay for it directly without doing the evil parts.

Article is bogus, I paid tax on fruits and veggies today.

[ben bernank]

 Hold onto fiat for a few years and you are donating to the fed because we devalue it. True patriots keep their cash under the mattress so it automatically reduces in value. If you keep 100 dollars for 100 years you just donated 99 of it to your country.

[Anonymous]

The government uses taxes to destroy lives. If you have to pay them to avoid your own destruction then fine, but don't pretend their demands are legitimate, or that you are fulfilling some kind of obligation because you aren't you have no obligation to aid in murder, imprisonment, torture, and destruction. If you happen to like some aspect of what the government is doing you pay for it directly without doing the evil parts.

Article is bogus, I paid tax on fruits and veggies today.

Income tax is a protection racket. The mafia runs the same things...either pay up or something bad will happen.
Down here we have a gst which means everything you pay cash for already has tax applied. The merchants are basically slaves to the tax department.

Filling your car requires petrol tax. Even if you do cash in hand jobs you still need to drive there.

The argument that you "have to pay income tax" is a bit spurious when there are so many indirect taxes around.

[bitjet]

The government uses taxes to destroy lives. If you have to pay them to avoid your own destruction then fine, but don't pretend their demands are legitimate, or that you are fulfilling some kind of obligation because you aren't you have no obligation to aid in murder, imprisonment, torture, and destruction. If you happen to like some aspect of what the government is doing you pay for it directly without doing the evil parts.

amen brotha.

[bitjet]

That's probably the worst reasoning I've ever heard. Income is income, and depending on the laws of your local jurisdiction, you're supposed to pay taxes on that income. If you have bitcoins, and you keep them as bitcoins, it would be just like having a pile of Euro's or pounds laying around. If you convert those back to dollars at a higher exchange rate than what you paid for them, that counts as some form of capital gains.

The argument that 'it's hard to trace, so you don't have to pay taxes on it' is the exact same argument you can make for if you get paid in cash for something. You're still *supposed* to pay taxes, and just because it's in BTC doesn't some how make it 'special.'

Said like a true Statist.

[trentzb]

If you wish to not be subject to an income tax stop having income.

[Jered Kenna (TradeHill)]

Aren't  you supposed to pay tax everytime you gain even if it's in a barter? Obviously it's not going to happen and it's hard to know for sure.

Say for example some guy says. I'll give you my 2001 honda if you paint my barn.

The problem I see with btc is deciding how much to tax if you don't exchange it to USD or Euro or whatever.
Obviously if I sell you my car for 1000btc then change it to 800usd that 800usd should be taxable.

I hate taxes, I pay US taxes (American Citizen) and I don't even live in the US. That's BS.
I honestly probably wouldn't care if 99% wasn't wasted.

[steelhouse]

I don't think sales tax apply.  You are required to pay sales tax in dollars.  Many states don't collect them.  However, the businesses do have to pay income tax on sales and if you gain on your bitcoin - capital gains as collectibles.  When you buy actual bitcoin you are buying collectible so sales tax may apply.

[tomcollins]

Aren't  you supposed to pay tax everytime you gain even if it's in a barter? Obviously it's not going to happen and it's hard to know for sure.

Say for example some guy says. I'll give you my 2001 honda if you paint my barn.

The problem I see with btc is deciding how much to tax if you don't exchange it to USD or Euro or whatever.
Obviously if I sell you my car for 1000btc then change it to 800usd that 800usd should be taxable.

I hate taxes, I pay US taxes (American Citizen) and I don't even live in the US. That's BS.
I honestly probably wouldn't care if 99% wasn't wasted.

I believe even if you don't gain, you are supposed to count it.  I sell widgets.  I trade a widget for something considered equal value.  I still have to pay sales tax on the transaction (unless it's exempt from sales tax even if I sold it for cash).

[trentzb]

I believe even if you don't gain, you are supposed to count it.  I sell widgets.  I trade a widget for something considered equal value.  I still have to pay sales tax on the transaction (unless it's exempt from sales tax even if I sold it for cash).

I would agree with this assuming that you are relating value/tax to USD. I would not agree that you have to report to some entity when you exchange property for property of which both parties have supreme ownership rights to.

If I grow tomatoes in my garden and you grow corn in yours and we both agree to exchange tomatoes for corn at whatever rate we mutually arrive at, there is not an entity, agency, government on this planet that has the legal or lawful right to tax such an exchange assuming we each have supreme ownership rights to our respective gardens. Gain is moot in this scenario. Sales tax is moot in this scenario.

Of course I won't deny that such entity, agency, government may attempt to tax such an exchange and in some places of the world they may be successful. I am confident that in the US at least they would fail miserably.

[Akarbb]

I'm glad I sparked an interesting discussion!

[deadlizard]

If you wish to not be subject to an income tax stop having income.

+1

Compensation for labor is not income

[rezin777]

If you wish to not be subject to an income tax stop having income.

+1

Compensation for labor is not income

Income: a gain or recurrent benefit usually measured in money that derives from capital or labor

[deadlizard]

Income: a gain or recurrent benefit usually measured in money that derives from capital or labor

Populus vult decipi, ergo decipiatur