Bitcoin Tax Information - Interesting

[kjlimo]

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.

I didn't realize that the IRS and HR Block operate outside of the USA...

The bailout was paid by federal taxes.  We were discussing property taxes which are where police, firefighters & police receive much funding...

Didn't realize you were such the tax expert...

I also didn't realize how much freedom I was giving up by choosing to let others give me an economically effecient model rather than hiring my own personal fire dept & police dept.

I suppose you have built all the roads you use as well?  Or do you stick to 100% toll roads?

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[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.

I didn't realize that the IRS and HR Block operate outside of the USA...

The bailout was paid by federal taxes.  We were discussing property taxes which are where police, firefighters & police receive much funding...

Didn't realize you were such the tax expert...

I also didn't realize how much freedom I was giving up by choosing to let others give me an economically effecient model rather than hiring my own personal fire dept & police dept.

I suppose you have built all the roads you use as well?  Or do you stick to 100% toll roads?

Seen what happened to police and firefighter pension funds on Wall St. .... wiped out. Keep on paying those property taxes buddy they are lining to go on forever ... hope that makes you feel warm and fuzzy.

Property taxes are an odious way to raise money for community projects. Ever thought about passing the hat around before bonding others into mad schemes that run for eternity? (Like pension funds siphoning off to Wall St.)

[JoelKatz]

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

I don't agree. If it's a business, you have business losses (equipment depreciation, electricity, and so on). If nothing else, you can file them and carry them over in case you make a profit in the future. If it's a hobby, you'll have hobby losses. Again, if you don't file them, you can't use them to offset your (you hope!) future profits when you sell those Bitcoins.

If you have gains from other activities in the same category, you can usually use the losses to offsets gains from other activities. For example, if you are a self-employed consultant and mine Bitcoins in the reasonable hope of making a profit, every dollar you spent mining is effectively one dollar you didn't earn consulting. (Not counting capital expenses which you have to depreciate, but that's still better than nothing.)

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.

Exactly, and it costs you money to do this -- costs you have every right to offset against future profits .. *if* you report them.

[marcus_of_augustus]

"Hobby losses" wtf?

I guess it all depends on how far, as a society, you are willing to go down the tax rabbit hole? Ever swapped fruit, veges, cakes, jams, pickles with your family and friends and never thought one whit about taxes? It's fun, try it sometime ... or forever be a slave to the beast.

http://www.zerohedge.com/news/guest-post-all-transactions-be-conducted-presence-tax-collector

"All Transactions To Be Conducted In The Presence Of A Tax Collector

In the terminal collapse of the Roman Empire, there was perhaps no greater burden to the average citizen than the extreme taxes they were forced to pay.

The tax 'reforms' of Emperor Diocletian in the 3rd century were so rigid and unwavering that many people were driven to starvation and bankruptcy. The state went so far as to chase around widows and children to collect taxes owed.

By the 4th century, the Roman economy and tax structure were so dismal that many farmers abandoned their lands in order to receive public entitlements.

At this point, the imperial government was spending the majority of the funds it collected on either the military or public entitlements. For a time, according to historian Joseph Tainter, "those who lived off the treasury were more numerous than those paying into it."

[JoelKatz]

"Hobby losses" wtf?

The basic idea is that hobbies are generally money losing operations. If they were money makers, they'd be businesses, not hobbies.

But hobby profits are taxable. For example, if you raise show cows as a hobby, and sell a prize winner for $15,000, you have a $15,000 taxable gain. It wouldn't be fair to tax you fully on that gain and not allow you to deduct any of your expenses. Imagine if it cost you $20,000 last year to buy food and supplies for that cow. Is it fair to charge you a $15,000 taxable gain next year when you sell it?

But it's also not fair to let you deduct the $20,000 when you incur it. What if you never sell that cow? Hobbies are one of the ways we spend money; if they were always deductible, everything would be deductible. (My hobby is driving expensive sports cars. Maybe one day I'll make a profit at it, but until then, I need to deduct the costs of all my sports cars.)

Hence .. hobby losses. When you have hobby losses, you can use them to offset hobby profits (either in that same year or carried over). So if you spend, say, $20,000 buying food and supplies for your cow, you can report that as a hobby loss. Then, next year when you sell the cow, you can use the carried over loss to offset the $15,000 taxable sale and thus not pay any taxes as it would be a loss overall.

If you mine Bitcoins and it's not a business, it's a hobby. If you have losses (electricity, equipment) you should be able to carry them over as hobby losses and use them to offset an eventual profit when you sell your Bitcoins. However, I think you're okay even if you don't report them because you should be able to deduct them anyway as a cost basis. (When you sell something, you can generally deduct what it cost you to acquire it.)

http://en.wikipedia.org/wiki/Internal_Revenue_Code_section_183

[triplehelix]

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!
[/quote]

if roads, police, firefighters, the post office and schools combined even made up half of what my taxes were spent on, i would 1) be paying a hell of a lot less in tax, 2) not be nearly as dissatisfied with my tax bill.

[DeathAndTaxes]

This forum is discussing US taxes & laws...

Well it is confusing because your examples are 100% wrong for US tax code.

Catching a baseball which might be worth $1M isn't a taxable event.
Painting a painting which someday might be sold at auction for $1M isn't a taxable event.
Digging up some shiny rocks that some culture someday may consider worth $1M isn't a taxable event.
Your house going up in value isn't a taxable event (for the purposes of income tax).

Selling the baseball, painting, gold, or your house ARE taxable events.

[ryu-fk]

Only suckers pay tax

[DeathAndTaxes]

Only suckers pay tax

Says the guy living at home with mom.

When you actually have something to lose it kinda changes the risk vs reward dynamic.

Pray tell me how you managed to not pay real estate taxes on your property?

[Bitcoin Oz]

If you print your bitcoins on paper is it considered art ?

I will also only pay tax when its not spent on invading other countries.

[fivebells]

Only suckers pay tax

I've seen someone end up on the pointy end of the IRS recently.  Trust me, you don't want to end up there.  Their power to collect from you is pretty awesome, and extremely disruptive if they get aggressive about it.

[drrussellshane]

I don't need to file any taxes this year 

Just want to clarify here because the words you are using don't jive with your conclusion.

A person whose income is below certain levels is not required to file taxes.  That doesn't mean their income, from whatever source, isn't considered taxable income.

And related:
 - http://www.bankrate.com/finance/money-guides/turning-hobby-into-business-means-tax-breaks.aspx

No, seriously.  H&R block said don't even bother coming in, that I have NO income.

That's because the income tax in part stems from one's use of the private credit of the Federal Reserve.

The income tax was never constitutional.... until the private Federal Reserve came along and people started circulating their debt notes as "money".

Don't use their private credit, and suddenly the income tax is not nearly as much of a problem.