Bitcoin Tax Information - Interesting

[EuSouBitcoin]

I think Bitcoin is considered a commodity for income tax purposes in the US. See IRS Publication 550 for details.

[the joint]

The only thing I found interesting was that you have NO income lol
How much was that TradeHill cheque? $5?

Total profits exceeded 4 figures.  I showed all this to them.  They concluded I have "no income."

[kjlimo]

Yes, you can pour loads of money into your "hobby" and not be allowed to deduct one red cent, but Caesar wants a piece of your first nickle of income.

So if you made 100 BTC last year and it's sitting in your wallet.dat, how much do you send to the IRS?  Do they even have a receiving address for BTC?

Here's one interpretation:

We need some more data, so let's assume the 100 BTC was earned by mining two bitcoin blocks.  One on June 30, 2011 and the other on November 1, 2011.

Record this as ordinary income of

50 BTC * $17 (price of bitcoins on June 30, 2011)   = $850
50 BTC * $3.10 (price of bitcoins on June 30, 2011) = $155
                                                               Total $1,005

So whatever your tax bracket is (let's assume 25%), then your tax line would include $251 of tax.

Now if you want to offset the $1,005 with hardware & electricity costs, I think that's reasonable (and why I haven't declared any income yet).  I'm not sure if you'll need to setup some sort of LLC to do that or not.

Disclaimer: I'm not a tax accountant, and do not rely on these estimates or interpretations as they are a brainstorm of thought and have not been verified by a qualified source.

I think this would apply only if you sold BTC for fiat - and in that case, the exchange rate at the time of sale would apply. If you simply hold on to your mined coins, there is no tax involved.

So say you cultivated 10,000 bushels of corn on June 30, 2011, someone said this is considered a "taxable event" and you would need to pay taxes on the market value of that corn.

~do not use this as tax advice~

[sunnankar]

If someone has a token amount of Bitcoin "income" (common definition not IRS definition) then it likely doesn't matter.  However if you have a significant amount it would be a good idea to consult with an accountant and tax professional.

The above post should be considered informational and not relied upon as tax advice.

Anyone who has any income or deductions that are BitCoin related should really consider getting A Lawyer's Take On BitCoin And Taxes which is 31 pages with 108 footnotes to statutes, cases, etc. The legal landscape is murkier than you may think and there are several reasonable approaches that can be taken and they can all lead to a different outcome having a massive effect on tax liability (or the opposite if you have other income to offset).

[vampire]

If someone has a token amount of Bitcoin "income" (common definition not IRS definition) then it likely doesn't matter.  However if you have a significant amount it would be a good idea to consult with an accountant and tax professional.

The above post should be considered informational and not relied upon as tax advice.

Anyone who has any income or deductions that are BitCoin related should really consider getting A Lawyer's Take On BitCoin And Taxes which is 31 pages with 108 footnotes to statutes, cases, etc. The legal landscape is murkier than you may think and there are several reasonable approaches that can be taken and they can all lead to a different outcome having a massive effect on tax liability (or the opposite if you have other income to offset).

Huh a pay wall? Anyway I don't take gold bugs seriously. Anyways lawyers are usually completely clueless about tax laws, you need an accountant.

[Phinnaeus Gage]

Hell with calling it a hobby! Call it research and that you're writing an in-depth white paper on Bitcoin: Yes, at the moment my position is positive, but I'm hoping to experience negativity, thus giving my paper cred. If I fail, and my position continues to spiral upwards--beyond my control--I will claim my ill gotten gains the next time I choose to file my taxes.

~Bruno~

[Raoul Duke]

Hell with calling it a hobby! Call it research and that you're writing an in-depth white paper on Bitcoin: Yes, at the moment my position is positive, but I'm hoping to experience negativity, thus giving my paper cred. If I fail, and my position continues to spiral upwards--beyond my control--I will claim my ill gotten gains the next time I choose to file my taxes.

~Bruno~

And when you finish you can show them the result of your research: A true white paper!

[JDBound]

If someone has a token amount of Bitcoin "income" (common definition not IRS definition) then it likely doesn't matter.  However if you have a significant amount it would be a good idea to consult with an accountant and tax professional.

The above post should be considered informational and not relied upon as tax advice.

Anyone who has any income or deductions that are BitCoin related should really consider getting A Lawyer's Take On BitCoin And Taxes which is 31 pages with 108 footnotes to statutes, cases, etc. The legal landscape is murkier than you may think and there are several reasonable approaches that can be taken and they can all lead to a different outcome having a massive effect on tax liability (or the opposite if you have other income to offset).

You could count footnotes and pay for something. Or you could support CLAG.
https://bitcointalk.org/index.php?topic=76216.0
www.theclag.org

[Seal]

Hell with calling it a hobby! Call it research and that you're writing an in-depth white paper on Bitcoin: Yes, at the moment my position is positive, but I'm hoping to experience negativity, thus giving my paper cred. If I fail, and my position continues to spiral upwards--beyond my control--I will claim my ill gotten gains the next time I choose to file my taxes.

~Bruno~

And when you finish you can show them the result of your reasearch: A true white paper!

Loooool 

[Raoul Duke]

Hell with calling it a hobby! Call it research and that you're writing an in-depth white paper on Bitcoin: Yes, at the moment my position is positive, but I'm hoping to experience negativity, thus giving my paper cred. If I fail, and my position continues to spiral upwards--beyond my control--I will claim my ill gotten gains the next time I choose to file my taxes.

~Bruno~

And when you finish you can show them the result of your reasearch: A true white paper!

Loooool 

Don't laugh... I got confused, sorry! That's not Phinn's white paper, that's Bitcoin Magazine April Edition.

[marcus_of_augustus]

If you are simply mining bitcoins and don't sell them or trade  them for anything, then there are zero tax implications.

It is like digging up shiny rocks (or gold) in your back garden and storing it in a safe place inside the house. But even more nebulous, you are finding special digital patterns on the network, that may or may not be valuable to others, and storing the output on your electronic equipment.

[niko]

Yes, you can pour loads of money into your "hobby" and not be allowed to deduct one red cent, but Caesar wants a piece of your first nickle of income.

So if you made 100 BTC last year and it's sitting in your wallet.dat, how much do you send to the IRS?  Do they even have a receiving address for BTC?

Here's one interpretation:

We need some more data, so let's assume the 100 BTC was earned by mining two bitcoin blocks.  One on June 30, 2011 and the other on November 1, 2011.

Record this as ordinary income of

50 BTC * $17 (price of bitcoins on June 30, 2011)   = $850
50 BTC * $3.10 (price of bitcoins on June 30, 2011) = $155
                                                               Total $1,005

So whatever your tax bracket is (let's assume 25%), then your tax line would include $251 of tax.

Now if you want to offset the $1,005 with hardware & electricity costs, I think that's reasonable (and why I haven't declared any income yet).  I'm not sure if you'll need to setup some sort of LLC to do that or not.

Disclaimer: I'm not a tax accountant, and do not rely on these estimates or interpretations as they are a brainstorm of thought and have not been verified by a qualified source.

I think this would apply only if you sold BTC for fiat - and in that case, the exchange rate at the time of sale would apply. If you simply hold on to your mined coins, there is no tax involved.

So say you cultivated 10,000 bushels of corn on June 30, 2011, someone said this is considered a "taxable event" and you would need to pay taxes on the market value of that corn.

~do not use this as tax advice~

Say you came up with a patentable and marketable idea, and kept it to yourself. Is this a taxable event?  Ich don't think so. Say you painted a painting, even framed it, but never took it to the gallery for sale; instead, you kept it at home. Taxable event?  Not in my country of residence.

A related thought: If Bitcoin is treated as a commodity, then in most jurisdictions each and every BTC transaction will include sales tax or VAT.

[kjlimo]

If you are simply mining bitcoins and don't sell them or trade  them for anything, then there are zero tax implications.

It is like digging up shiny rocks (or gold) in your back garden and storing it in a safe place inside the house. But even more nebulous, you are finding special digital patterns on the network, that may or may not be valuable to others, and storing the output on your electronic equipment.

I think you are wrong.  If u r in a baseball game and happen to catch the 3,000th hit for a most valuable player and the ball is valued @ $1,000,000, Uncle Sam considers that a taxable event & charges u taxes on the fair market value of that ball.

The rocks you dig up would already be yours if they were in your back garden.  However, if someone realized your house was on a gold mine, your property taxes would be reassessed on the increased value of your property (which happens to have gold that no one ever found yet)

[Phinnaeus Gage]

Hell with calling it a hobby! Call it research and that you're writing an in-depth white paper on Bitcoin: Yes, at the moment my position is positive, but I'm hoping to experience negativity, thus giving my paper cred. If I fail, and my position continues to spiral upwards--beyond my control--I will claim my ill gotten gains the next time I choose to file my taxes.

~Bruno~

And when you finish you can show them the result of your reasearch: A true white paper!

Loooool 

Don't laugh... I got confused, sorry! That's not Phinn's white paper, that's Bitcoin Magazine April Edition.

Line 42a: Hobby Income: Ad and subscription revenue derived from Bitcon Magazine.

[kjlimo]

Yes, you can pour loads of money into your "hobby" and not be allowed to deduct one red cent, but Caesar wants a piece of your first nickle of income.

So if you made 100 BTC last year and it's sitting in your wallet.dat, how much do you send to the IRS?  Do they even have a receiving address for BTC?

Here's one interpretation:

We need some more data, so let's assume the 100 BTC was earned by mining two bitcoin blocks.  One on June 30, 2011 and the other on November 1, 2011.

Record this as ordinary income of

50 BTC * $17 (price of bitcoins on June 30, 2011)   = $850
50 BTC * $3.10 (price of bitcoins on June 30, 2011) = $155
                                                               Total $1,005

So whatever your tax bracket is (let's assume 25%), then your tax line would include $251 of tax.

Now if you want to offset the $1,005 with hardware & electricity costs, I think that's reasonable (and why I haven't declared any income yet).  I'm not sure if you'll need to setup some sort of LLC to do that or not.

Disclaimer: I'm not a tax accountant, and do not rely on these estimates or interpretations as they are a brainstorm of thought and have not been verified by a qualified source.

I think this would apply only if you sold BTC for fiat - and in that case, the exchange rate at the time of sale would apply. If you simply hold on to your mined coins, there is no tax involved.

So say you cultivated 10,000 bushels of corn on June 30, 2011, someone said this is considered a "taxable event" and you would need to pay taxes on the market value of that corn.

~do not use this as tax advice~

Say you came up with a patentable and marketable idea, and kept it to yourself. Is this a taxable event?  Ich don't think so. Say you painted a painting, even framed it, but never took it to the gallery for sale; instead, you kept it at home. Taxable event?  Not in my country of residence.

A related thought: If Bitcoin is treated as a commodity, then in most jurisdictions each and every BTC transaction will include sales tax or VAT.

Um, you just listed a bunch of things that don't have a large market to determine a price.  The handling of commodities in a coopperative share group works in a different manner.

Why wouldn't transactions involving bitcoins include sales tax?  If I buy something off of you and pay you in corn, you still need to give Uncle Sam sales tax...

[Phinnaeus Gage]

If I buy something off of you and pay you in corn, you still need to give Uncle Sam sales tax...

You'll be taken aback if you knew my gross sales, none of which include sales tax.

But to give you an idea, pick out any board on the side this barn (below). I get no less than $2 USD be linear foot. I get more for any floor boards as well as for the beams. Close to 90% of my clients--pass, present and future--ask me do I want to be paid in cash or check. Guess which one I state. My total tax liability for the past three years was...wait for it...$0.

[marcus_of_augustus]

If you are simply mining bitcoins and don't sell them or trade  them for anything, then there are zero tax implications.

It is like digging up shiny rocks (or gold) in your back garden and storing it in a safe place inside the house. But even more nebulous, you are finding special digital patterns on the network, that may or may not be valuable to others, and storing the output on your electronic equipment.

I think you are wrong.  If u r in a baseball game and happen to catch the 3,000th hit for a most valuable player and the ball is valued @ $1,000,000, Uncle Sam considers that a taxable event & charges u taxes on the fair market value of that ball.

The rocks you dig up would already be yours if they were in your back garden.  However, if someone realized your house was on a gold mine, your property taxes would be reassessed on the increased value of your property (which happens to have gold that no one ever found yet)

Oh yeah, I forgot to add the conditional about what kind of fucked up country you might live in ..... I'm sure Zimbabwe govt. considers anything that happens in your house a taxable event ... hell they probably charge you for breathing in some less freedom loving countries ...

[kjlimo]

If you are simply mining bitcoins and don't sell them or trade  them for anything, then there are zero tax implications.

It is like digging up shiny rocks (or gold) in your back garden and storing it in a safe place inside the house. But even more nebulous, you are finding special digital patterns on the network, that may or may not be valuable to others, and storing the output on your electronic equipment.

I think you are wrong.  If u r in a baseball game and happen to catch the 3,000th hit for a most valuable player and the ball is valued @ $1,000,000, Uncle Sam considers that a taxable event & charges u taxes on the fair market value of that ball.

The rocks you dig up would already be yours if they were in your back garden.  However, if someone realized your house was on a gold mine, your property taxes would be reassessed on the increased value of your property (which happens to have gold that no one ever found yet)

Oh yeah, I forgot to add the conditional about what kind of fucked up country you might live in ..... I'm sure Zimbabwe govt. considers anything that happens in your house a taxable event ... hell they probably charge you for breathing in some less freedom loving countries ...

This forum is discussing US taxes & laws...

What's so fucked up about property tax?  It's kinda a bit part of how roads & firefighters & police are funded...

I like my "fucked up country" that "forces" police & fire protection upon me and doesn't make me build my own roads.  Thank you Uncle Sam!

[marcus_of_augustus]

Didn't see the big, fat "USA" sign in the discussion topic title ..... you got me there.

Also, I notice you omitted to mention the $700 billion bankster bailout (and other much large wasteful spendings) along with the warm, fuzzy "roads, firefighters & police" catch-all phrase?

You keep on shovelling your bitcoins into county roads or whatever it is you think you are doing ... no-one's complaining. You shouldn't delude yourself about the lack of freedoms you exist under though.

[Raoul Duke]

Didn't see the big, fat "USA" sign in the discussion topic title ..... you got me there.

Also, I notice you omitted to mention the $700 billion bankster bailout (and other much large wasteful spendings) along with the warm, fuzzy "roads, firefighters & police" catch-all phrase?

You keep on shovelling your bitcoins into county roads or whatever it is you think you are doing ... no-one's complaining. You shouldn't delude yourself about the lack of freedoms you exist under though.

Don't you understand that it really is the ideal world for 90% of the population?
A world where you have no responsability at all because since you were born you're used to have others decide on everything you do.
True bliss!