First of all, I know I'm going to have to pay taxes on my bitcoin. Yes, I know this is partially against what the foundation of bitcoin is etc. etc., but I believe just because you can do something doesn't mean you should. Risk/Reward is also devastating. I'd rather pay 28% on my gains than spend time in jail, or have a criminal record.
So besides that, I know that you can't get taxed if you spend bitcoin on items. I would want to buy something that doesn't lose a lot of value quickly, such as gold. If you have another idea for this, please let me know. Gold was just the easiest I could think of.
Situation: Bitcoin goes way up in a bubble like scenario, and I want to cash out. Could I buy something, like gold, and hold onto it for a year, then sell so I don't get short term capital gains? With long-term capital gains, I may actually be able to get into the 0% tax bracket, so I stand to gain a lot this way.
Is something like the above feasible? Or is there an easier way to do it?
I don't think this is how this works.
You should consult a tax attorney/professional for tax advise however below is my interpretation of how BTC is taxed:
on 1/1/14 The price of BTC is 800 - you buy one BTC for 800
on 9/1/14 the price of BTC is 4,000 - you sell one BTC for four oz of gold - the value of this gold is 4,000
on 10/1/15 the price of gold is 1100 per oz - you sell this gold for 4,400
You would owe taxes on $3,200 gain of your one BTC that you bought on 1/1/14 and sold on 9/1/14 for the 2014 tax year. This would be taxed at the short term capital gains tax rate.
You would owe taxes on $400 gain on your 4 oz of gold that your purchased on 9/1/14 and sold on 101/15. Since this was held for more then one year you would be taxed at the long term capital gains tax rate. This would be taxed in the 2015 tax year.