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Author Topic: Anyone know what happened to knightmb and his 371,000 BTC?  (Read 73632 times)
SgtSpike
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May 16, 2011, 11:07:24 PM
 #101

@rezin777: very nice questions, in my opinion.

manufacturers may have income as a result of manufacture. for example, see

http://www.irs.gov/businesses/small/industries/article/0,,id=100355,00.html

which says 'To figure taxable income, you must value your inventory at the beginning and end of each tax year'.

inventory rules are complicated, however, and involve many line-drawing problems. but it's very possible for a business to be required to include goods purchased below market in 'inventory' at fair market value before sale. for example, the same document i linked above directs taxpayers to include in taxable inventory all 'purchased merchandise if title has passed to you, even if the merchandise is in transit or you do not have physical possession for another reason'.

in general, there isn't a tax difference between 'making' and 'mining'. making gold from atomic processes (or more realistically at today's level of technology, making a diamond from conventional industrial processes for planned sale) would almost definitely have the same tax treatment as mining it, unless there are specific statutes that differentiate the two. what may be leading to an intuition that 'making' something isn't taxable is that if you just make something for yourself, not for sale or for its financial value, then it is likely not taxable.

but of course, i'm not commenting on this case or giving tax advice!

@vess, it is not correct to say 'a simple purchase is never taxable for the purchaser' under federal law in the united states. that is usually true, but there are many situations that require marking to market even if there is a purchase but no sale. it's 'for most ordinary taxpayers, trading most securities', not 'period, end of story'. i agree with you about what 'capitalism' is, however. it's hard to find people who actually engage in business in the modern world who have the extreme 'robber baron' view of nondisclosure norms. nor would those norms be economically productive in most situations.
You are taking things completely out of context.

Quote
An inventory is necessary to clearly show income when the production, purchase, or sale of merchandise is an income-producing factor. If you must account for an inventory in your business, you must use an accrual method of accounting for your purchases and sales
This means that if you keep an inventory of finished goods on hand, available for sale, you must know the value of said goods.  It doesn't mean that producing the goods themselves is taxable, only that you must know the value of your inventory so that when you sell it, you have proper accounting for your cost of goods sold, so you know what your income is after expenses.

NOWHERE does it say that you are taxed for income when you produce goods.  You are ONLY taxed when you sell the goods you produce!
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SgtSpike
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May 16, 2011, 11:10:42 PM
 #102

What if bitcoins are not produced for sale but as a long term investment?
Or if they end up becoming unsalable?

This is exactly why there is no tax on product manufactured, only a tax on when it is sold.
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May 16, 2011, 11:34:40 PM
 #103

NOWHERE does it say that you are taxed for income when you produce goods.  You are ONLY taxed when you sell the goods you produce!

Agreed.  I looked at the rules for inventories when trying to figure out bitcoin taxation.  I didn't see an indication that inventories are taxable prior to sale.  Rather, it seems that tax is due on income when goods are sold.  The income is reduced by the "cost of goods sold".  For a retailer, that would primarily be the amount paid for the goods, and for a manufacturer, the cost of manufacturing and raw materials.

That said, the first question is whether bitcoins are inventory or a capital asset.  That affects whether they are eligible for the more favorable capital gains tax rate and whether there is a limit on deducting losses.  I found an interesting discussion of the distinction in the context of real estate: http://www.nysscpa.org/cpajournal/2007/707/essentials/p42.htm

Property is a capital asset unless it meets one of the specific definitions of a noncapital asset, one of which is "Stock in trade, inventory, and other property you hold mainly for sale to customers in your trade or business."

If you mine bitcoins and sell them all on Mt. Gox, it may be true that they are held "mainly for sale" but I would question whether they are for sale "to customers".  If you sell via an exchange or market without even knowing who bought them, and without any advertising, salespeople, etc., it hardly seems that you are in the business of selling to customers.  I found some discussion of what constitutes a "customer" in this article (search for "customer"): http://www.chapman.com/media/news/media.858.pdf

If you are running a business like Bitcoin4Cash (in the U.S.), it's a different story and the bitcoins are likely inventory.  If you advertise bitcoins for sale on #bitcoin-otc, it's more of a gray area.  If you mine coins and hold them as an investment, they do not seem to be held "mainly for sale".  If you sell some and hold some, it's another gray area.

Information is for entertainment purposes only, this is not tax advice, etc.
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May 16, 2011, 11:45:04 PM
 #104

As long as the US does not recognize bitcoins as a currency, there will be no taxation of mining or taxation of valuation gains until the bitcoins are sold.

If bitcoins are ever considered a "foreign currency" under US law, they would likely be subject to tax laws on ordinary or capital gains BEFORE being sold, and maybe tax on foreign currency transactions is what unk was trying to get at.  Hard to say whether currency produced out of thin air would be considered a gain on a currency transaction though.  Tongue

http://www.maximadvisors.com/knowledge-library/US-Taxation-Foreign-Currency-Gains-Losses.html

But, in order to be taxed in this manner, the US would be forced to recognize bitcoins as a legitimate currency.  Cheesy
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May 16, 2011, 11:50:22 PM
 #105

What if bitcoins are not produced for sale but as a long term investment?

What if the bitcoins are destroyed?  Are you burning legal or illegal tender?

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SgtSpike
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May 16, 2011, 11:53:10 PM
 #106

What if bitcoins are not produced for sale but as a long term investment?

What if the bitcoins are destroyed?  Are you burning legal or illegal tender?
You're not burning tender at all, according to the US.  Wink

Unless they recognize it as a currency.  Then they'll throw you in jail for it.
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May 16, 2011, 11:54:23 PM
 #107

Is it actually a crime to literally burn money?

(I dont always get new reply notifications, pls send a pm when you think it has happened)

Wanna gimme some BTC for any or no reason? 1FmvtS66LFh6ycrXDwKRQTexGJw4UWiqDX Smiley

The more you believe in Bitcoin, and the more you show you do to other people, the faster the real value will soar!

Do you like mmmBananas?!
SgtSpike
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May 16, 2011, 11:56:19 PM
 #108

Is it actually a crime to literally burn money?
Yes, but I don't think anyone has ever been prosecuting for doing so.

It's also a crime to deface money in any way (i.e. writing on it, etc).
CydeWeys
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May 17, 2011, 12:25:26 AM
 #109

It's also a crime to deface money in any way (i.e. writing on it, etc).

Actually that's not true.  See WheresGeorge; they've been around for over ten years and the entire point is to write on money.  It's only illegal if you're mutilating the currency to the point where it's no longer fit for recirculation, but even that is only "technically" illegal, i.e. you're not going to get prosecuted for it even if you do it.  The only thing you're realistically going to get in trouble for is defacing currency with the intent to commit fraud, e.g. taking a $5 bill, bleaching the ink out, and printing a $100 on it.

http://www.wheresgeorge.com/
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May 17, 2011, 12:33:13 AM
 #110

I don't know where in the law it says that I have to pay tax just for having chickens, gold or otherwise. If it does exist, they can pry said tax from my dead cold fingers.

Damn statists and their tax pedantry.
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May 17, 2011, 12:47:39 AM
 #111

it's not a crime in the us just to write on money. the crime requires an 'intent to render such bank bill, draft, note, or other evidence of debt unfit to be reissued'. i've never understood the point of even that, because someone burning their own money seems to be doing everyone else a favour, modulo the carbon emissions. (similarly, outrage at flag burning in the us has always struck me as silly: you didn't burn my flag. you burned your own flag.)

as for taxes on manufacturing, inventories, and sale, the problem is that we're deep into a grey area, and the various classifications are difficult. i may have misspoken about us law on manufactured goods. you seem to be right that mere manufacture of goods does not result in taxable income. traditional mining (which might have nothing to do with bitcoin mining) can, however, but it's complicated. see for example 26 CFR 1.613-4.
rezin777
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May 17, 2011, 12:51:37 AM
 #112

as for taxes on manufacturing, inventories, and sale, the problem is that we're deep into a grey area, and the various classifications are difficult. i may have misspoken about us law on manufactured goods. you seem to be right that mere manufacture of goods does not result in taxable income. traditional mining (which might have nothing to do with bitcoin mining) can, however, but it's complicated. see for example 26 CFR 1.613-4.

It's a wonder that people wouldn't become disgusted with such extensive tax laws and simply refuse to produce anything at all. Unless of course, they had strong incentive to believe in what those taxes were being use for.
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May 17, 2011, 01:19:30 AM
 #113

Removed: Statist found it "too objectionable" ... read below if you can be bothered.

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May 17, 2011, 01:31:49 AM
 #114

It is sad, sad statement of the mindset of society that a thread about a glorious win by an enterprising, far-sighted individual gets turned into a sordid discussion of taxes and various other leeches wanting to bleed him of his new found wealth. You should all be ashamed ... in fact some of you are probably on the gubmint teat and this is your angle to get hold of something you were never entitled to, i.e. a slick form of theft.

You guys are all just so far gone and fucked up by the statist brainwashing that it is too late, I fear .... even bitcoins will not save you if you are not prepared to stand up to the looters ... and Just Say No! ... hands off my wealth fuckers.

I only discuss taxes because I try to avoid being "under the gun" of the government with the biggest guns on the planet. If that makes me a coward, so be it. I'd rather be a grey man (even though I do a poor job) than a dead man.
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May 17, 2011, 01:41:31 AM
 #115

Oh my god, Moa, would you give it a rest? When was the last time you had an original thought or did something productive for society? Is all you're capable of doing criticizing people who have even a small interest in the law? You've probably turned off more dozens of people to Bitcoin through your deranged rants than all the government regulators ever will. Are you really as uncreative and narrow as you pretend, or are you just trolling? Most of us here could write a computer program whose posts to the forum would be better than yours.

Or maybe you're just trying to kiss up to the person you perceive to be the new rich guy. How noble and intelligent of you. What a clever idea. Knight, if you're reading, stay far away from Moa.

Seriously, what have you ever done for anyone? I'm a long-time user of this forum and I was finally motivated to create a special anonymous account just to trash you. Your understanding of technology is facile. Your understanding of economics and politics is juvenile. You strike me as some sort of incompetent bond trader (or maybe gold or currency?) who's down on his luck. Your conception of the government is idiotic at best. You make me, an avid libertarian, want to become a totalitarian statist with your smug condescension at anything you don't understand. Go fuck yourself in the backwater nanny state where you live and leave the rest of us alone.
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May 17, 2011, 01:46:11 AM
 #116

Oh my god, Moa, would you give it a rest? When was the last time you had an original thought or did something productive for society? Is all you're capable of doing criticizing people who have even a small interest in the law? You've probably turned off more dozens of people to Bitcoin through your deranged rants than all the government regulators ever will. Are you really as uncreative and narrow as you pretend, or are you just trolling? Most of us here could write a computer program whose posts to the forum would be better than yours.

Or maybe you're just trying to kiss up to the person you perceive to be the new rich guy. How noble and intelligent of you. What a clever idea. Knight, if you're reading, stay far away from Moa.

Seriously, what have you ever done for anyone? I'm a long-time user of this forum and I was finally motivated to create a special anonymous account just to trash you. Your understanding of technology is facile. Your understanding of economics and politics is juvenile. You strike me as some sort of incompetent bond trader (or maybe gold or currency?) who's down on his luck. Your conception of the government is idiotic at best. You make me, an avid libertarian, want to become a totalitarian statist with your smug condescension at anything you don't understand. Go fuck yourself in the backwater nanny state where you live and leave the rest of us alone.

Well that particular truth must have got you off your arse to do something ... a new account huh? How creative, some nice big words in there though, thanks for your thoughts. (A simple "tone it down" would probably have sufficed.)

Edit: Statist is most probably "noagendamarket" or someone who he has revealed my location too ... thanks mate.

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May 17, 2011, 01:55:46 AM
 #117

It is sad, sad statement of the mindset of society that a thread about a glorious win by an enterprising, far-sighted individual gets turned into a sordid discussion of taxes and various other leeches wanting to bleed him of his new found wealth. You should all be ashamed ... in fact some of you are probably on the gubmint teat and this is your angle to get hold of something you were never entitled to, i.e. a slick form of theft.

You guys are all just so far gone and fucked up by the statist brainwashing that it is too late, I fear .... even bitcoins will not save you if you are not prepared to stand up to the looters ... and Just Say No! ... hands off my wealth fuckers.
Or, we could just discuss existing tax laws like adults, until someone like you comes along.  Huh  And I'm not a leech of the government teat.  I am a working individual who abhors the absurd amount of welfare dollars we give away every day, all the while going into deeper and deeper national debt.  I would like nothing more than to see all of the welfare-driven programs abolished, and the tax rate halved because of it.

Apparently, trickery, cheating other people, and tax evasion is ok in your book.  Remind me never to do business with you.
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May 17, 2011, 02:02:27 AM
 #118

Or, we could just discuss existing tax laws like adults, until someone like you comes along.  Huh  And I'm not a leech of the government teat.  I am a working individual who abhors the absurd amount of welfare dollars we give away every day, all the while going into deeper and deeper national debt.  I would like nothing more than to see all of the welfare-driven programs abolished, and the tax rate halved because of it.

Apparently, trickery, cheating other people, and tax evasion is ok in your book.  Remind me never to do business with you.

None of those things are necessary. As unrealistic as it might sound to you, if you disagree with the way taxes are being spent, live your life in a way that will ensure that you pay as few taxes as possible. I know this is difficult for most, but it's hypocritical to claim you disagree with the welfare/warfare state while continuing to pay for it.
Anonymous
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May 17, 2011, 02:15:03 AM
 #119

It is sad, sad statement of the mindset of society that a thread about a glorious win by an enterprising, far-sighted individual gets turned into a sordid discussion of taxes and various other leeches wanting to bleed him of his new found wealth. You should all be ashamed ... in fact some of you are probably on the gubmint teat and this is your angle to get hold of something you were never entitled to, i.e. a slick form of theft.

You guys are all just so far gone and fucked up by the statist brainwashing that it is too late, I fear .... even bitcoins will not save you if you are not prepared to stand up to the looters ... and Just Say No! ... hands off my wealth fuckers.
Apparently, trickery, cheating other people, and tax evasion is ok in your book.  Remind me never to do business with you.

There is no trickery or cheating involved when it comes to the vilification of theft.
Anonymous
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May 17, 2011, 02:16:50 AM
 #120

Oh my god, Moa, would you give it a rest? When was the last time you had an original thought or did something productive for society? Is all you're capable of doing criticizing people who have even a small interest in the law? You've probably turned off more dozens of people to Bitcoin through your deranged rants than all the government regulators ever will. Are you really as uncreative and narrow as you pretend, or are you just trolling? Most of us here could write a computer program whose posts to the forum would be better than yours.

Or maybe you're just trying to kiss up to the person you perceive to be the new rich guy. How noble and intelligent of you. What a clever idea. Knight, if you're reading, stay far away from Moa.

Seriously, what have you ever done for anyone? I'm a long-time user of this forum and I was finally motivated to create a special anonymous account just to trash you. Your understanding of technology is facile. Your understanding of economics and politics is juvenile. You strike me as some sort of incompetent bond trader (or maybe gold or currency?) who's down on his luck. Your conception of the government is idiotic at best. You make me, an avid libertarian, want to become a totalitarian statist with your smug condescension at anything you don't understand. Go fuck yourself in the backwater nanny state where you live and leave the rest of us alone.
Argumentum ad hominem.
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