Bitcoin is property....but taxable?

[AZwarel]

Your best bet is to not convert it to fiat at all if you can avoid it. I know some need to recover cost from purchasing miners etc., but if you hold you can avoid taxes and enjoy the bull run.

Not converting to fiat does not make you immune from taxes. That would be considered tax evasion, and if they catch you there will be penalties and possible jail time depending on how severe.

The above is exactly correct.  With all the advances in the reporting over at Coinbase, I would not be surprised if we start receiving 1099s from them by the end of 2014

How would Coinbase figure out the 1099?  If you sell bitcoin through them, how will they figure out which bitcoin you sold. What if you transferred bitcoin to your account from another account and then sold it?  They could issue a 1099 showing your sold one bitcoin at $700 but who's to say how much you paid for that?  I'm afraid I see oppressive regulation coming our way.  The good news is, nice the IRS really starts to crackdown on bitcoin, the publicity will be good and enlighten the public about inflation, the fed and government controls.

I hope.

That is one of the main arguments against the technical impossibility of taxing bitcoin as an asset. Almost every bitcoin (and here i mean 0.00001 also!) was bought on different $ rates. So, how could they prove capital gains, if they can not stick a price tag on every separate bitcoin and satoshis you own? They just can not, unless they are going to read EVERY SINGLE transaction on the blockchain till genesis. And if you just did a mixing/altcoin buying and reselling, you completely erased your tracks.

Say people diversify, keep some on paper wallets, or even better, at blockchain.info, and just memorize the passphrase, now that is effectively a brain wallet! Not really a seizable property.

So yes, in theory as long as you keep precautions, and don't sold for fiat, they won't stand a chance to tax on you. (which is effectively a robbery. it is not for new schooling/hospitals. they did not even heard about this technology a year ago and somehow now it is part of the "budget"? come on).

On the other side, we all know government is the biggest mafia, they going to try regulate. But capital fly was never easier, and there are plenty of nice sunny places on Earth to take a 10 year old vacation from the US, and it's IRS commando :-)

Think globally!

[knightcoin]

[redwhitenblue]

If I buy a crate of tomatoes today and the price drops and I sell them for a loss tomorrow, can I write off the loss if I only buy and sell tomatoes as a hobby, not my primary business?

If I sell them at a profit, do I have to report the income?

I am not in the business of buying and selling bitcoin, do I have to report gains and losses to the IRS every time I spend them for goods and services?

Now here's the kicker...if the IRS says I must report the realized gain every time I spend them, then can I write off the loss that Hasfast will never send me my miner?

Need a knowledgable US CPA.

A CPA is actually an accountant, although they generally are knowledgable about tax law they are probably not the *best* type of people to contact for tax questions. The best person would be a tax attorney (they would often be one and the same).

I am neither a CPA nor an attorney of any kind, however my understanding is that you should treat gains/losses on BTC as you would treat gains/losses on stocks. Any gains can be offset by losses, and losses that exceed your gains can offset your other income by up to 3,000 per year with the remaining being carried over to the next year.

[CEG5952]

The recordkeeping that may be required to trade against fiat is pretty arduous. I prefer to trade crypto-to-crypto, with my position being that there is no "gain" made until I transact to fiat.

[Harley997]

I don't think your "hobby" example is accurate.

A more accurate analogy would be you buying gold or a house.

You do not "use bitcon" as a hobby, it is more of an investment as you do not "invest" any of your time in maintaining or earning bitcoins.