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Author Topic: Are Bitcoins taxable?  (Read 3536 times)
shooter_mcgavin
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May 10, 2011, 05:26:15 PM
 #1

Let's Bitcoin takes off. Say you lived in the US and had an online service that dealt in the equivalent of ~20,000 USD or more income for you (personally). What are the laws for income tax on a currency like this? Can you get in trouble with the IRS by simply having tons of BTC that the market values at (currently) almost 5$ per BTC?

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BitLex
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May 10, 2011, 06:24:10 PM
 #2

simply having tons isn't income,
if it's about income, BTC aren't any different from cash, you can avoid to pay taxes, but you're not allowed to.  Wink

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May 10, 2011, 08:12:16 PM
 #3

i would think they do not count as income until realized (converted to USD/other currency), and capital gains/losses also assessed at that point on the difference between acquisition and realization value. 

that is, no tax until you sell them, then you have to pay tax on the market value when you received them plus the capital gains tax on any value they gained between when you got them and when you sold them.


but i believe (if US state's sales tax is like it is in Canada) you would need to withhold sales tax on that 20k of sales if appropriate.  i'm basing this off the tax effect of community currencies, like canadian tire money, which i consider bitcoin to be the same as in a legal sense.  you have to pay sales tax on sales paid in CTM, but you can also pay that tax in CTM.

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May 10, 2011, 11:09:07 PM
 #4

The big question would be whether bitcoin is a currency or a barter good. In some areas it won't make a difference, but in the US it makes a big difference and we would hope for it to be considered a currency.

In a goods-for-currency trade, the seller pays income tax, at some exchange rate determined by the IRS.
In a goods-for-goods trade, both parties are taxed based on the value of what they receive. This is exactly as unfair as it sounds.

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May 11, 2011, 12:07:16 AM
 #5

If government really wants to tax you they will come up with some excuse

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October 09, 2017, 05:00:01 AM
 #6

Let's Bitcoin takes off. Say you lived in the US and had an online service that dealt in the equivalent of ~20,000 USD or more income for you (personally). What are the laws for income tax on a currency like this? Can you get in trouble with the IRS by simply having tons of BTC that the market values at (currently) almost 5$ per BTC?

I have thought of creating a topic regarding this topic, but instead, i used the search bar to see if there are previous topics about taxing the Bitcoins.  This was posted May 10, 2011, and nobody did care to reply this when I believe this is a high-quality topic. 

Should the government impose a tax on transactions using the cryptocurrency?   In what way they can. 

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October 09, 2017, 05:06:42 AM
 #7

Let's Bitcoin takes off. Say you lived in the US and had an online service that dealt in the equivalent of ~20,000 USD or more income for you (personally). What are the laws for income tax on a currency like this? Can you get in trouble with the IRS by simply having tons of BTC that the market values at (currently) almost 5$ per BTC?
In the US, Bitcoin is treated as a commodity and is thus not taxed unless you want to cash out to FIAT.
It is only then that you're forced to declare your income and be taxed on it. Bitcoins themselves are not (and cannot be) taxed.

   
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October 09, 2017, 05:08:12 AM
 #8

Yes bitcoin is taxable. Not by means of the government is taxing but I guess that the miners were the one who are asking for taxes. The confirmation is dependable on how much btc you spend. If you will spend the high amount in sending then the confirmation of your transaction will be fast.

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squatz1
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October 09, 2017, 05:19:54 AM
 #9

Yes bitcoin is taxable. Not by means of the government is taxing but I guess that the miners were the one who are asking for taxes. The confirmation is dependable on how much btc you spend. If you will spend the high amount in sending then the confirmation of your transaction will be fast.

Don't even know what you, nor most people on this thread are trying to say but I'll sum it up fast for you bud.

When you earn bitcoins, you're going to have to state that you've earned this -- easiest way is going to be convert these Bitcoins to cash and then file it on your taxes as earned income, as you wouldn't want a fluctuating price present on their as it would fuck with your taxes.

Don't believe what anyone says when they say no, you're going to have to pay taxes on any earned income. Plain and Simple.

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October 09, 2017, 05:27:14 AM
 #10

In the US they treat Bitcoin as any other commodity that are traded and for that reason trading Bitcoin on exchanges will be no different than any other commodity being traded on other financial platforms. You are taxed on your profits and not what the value of that commodity is.

The only time when you can calculate the profits, is when you convert back to the Fiat value in the Dollar value. So when you withdraw these coins to your bank account, you will be taxed on it.

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October 09, 2017, 05:42:32 AM
 #11

As others have said before me. Bitcoin is capital gains tax and not income tax. You can hold bitcoins for a long time and not pay any tax on them for many many years. But once you sell them, you have to pay a long term capital gains tax. If you sell them before a full year you have to pay short term capital gains tax.

So just keep them for a long time. Don't try and trade for a marginal profit because you'll get eaten alive by taxes.

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October 09, 2017, 05:46:14 AM
 #12

I need a better explanation for this

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October 09, 2017, 05:48:33 AM
 #13

Let's Bitcoin takes off. Say you lived in the US and had an online service that dealt in the equivalent of ~20,000 USD or more income for you (personally). What are the laws for income tax on a currency like this? Can you get in trouble with the IRS by simply having tons of BTC that the market values at (currently) almost 5$ per BTC?

Well, i really don’t think so. Not unless you go out and ahout to the world that you have bitcoins at hand. But maybe when you turn it into fiat, then that might be considered as an income. But then again, they don’t know if it was a gift or not. So i highly doubt its possible as of today.

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October 09, 2017, 05:51:11 AM
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Bitcoins can be taxable and it will be implemented by the government soon enough. You can avoid tax by investment, because in a few countries what income you have left after investment is the tax you have to pay for. Like what I mean is, let's say your income is around 100$(just an example)  and you invest 30$ in some shares or something else, the tax you will have to pay will be for 70$ and not for 100$,then again I am not sure if all countries follow this. This is totally different than tax evasion, this is avoiding of tax. Tax evasion is that you don't pay tax at all which is illegal in the every country where there is tax.

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October 09, 2017, 05:55:08 AM
 #15

Yes bitcoin is taxable. Not by means of the government is taxing but I guess that the miners were the one who are asking for taxes. The confirmation is dependable on how much btc you spend. If you will spend the high amount in sending then the confirmation of your transaction will be fast.

Don't even know what you, nor most people on this thread are trying to say but I'll sum it up fast for you bud.

When you earn bitcoins, you're going to have to state that you've earned this -- easiest way is going to be convert these Bitcoins to cash and then file it on your taxes as earned income, as you wouldn't want a fluctuating price present on their as it would fuck with your taxes.

Don't believe what anyone says when they say no, you're going to have to pay taxes on any earned income. Plain and Simple.
Bitcoin as an asset is not taxable. As mentioned in the above quote if the user make use of it directly without converting to fiat the transaction value doesn't get taxed. The same when converted to fiat, based on the value the user will be taxed. Several countries have been making plans to tax even for every transaction same as with gold storage.

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October 09, 2017, 06:09:55 AM
 #16

Let's Bitcoin takes off. Say you lived in the US and had an online service that dealt in the equivalent of ~20,000 USD or more income for you (personally). What are the laws for income tax on a currency like this? Can you get in trouble with the IRS by simply having tons of BTC that the market values at (currently) almost 5$ per BTC?
I think it will depend on the nature of the business or service that you will having, if it will violate local laws and policies especially on taxation then it should be taxable, Having that kind of amount of bitcoin you should be also responsible to your local laws and policies regarding that.

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October 09, 2017, 06:35:22 AM
 #17

I think when the government has heard enough of this cryptocurrency and the people are really into it and somehow able to measure the magnitude of the population using it, then, that will be the time they will propose law to regulate it and the tax that will be impose....

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October 09, 2017, 06:41:43 AM
 #18

Let's Bitcoin takes off. Say you lived in the US and had an online service that dealt in the equivalent of ~20,000 USD or more income for you (personally). What are the laws for income tax on a currency like this? Can you get in trouble with the IRS by simply having tons of BTC that the market values at (currently) almost 5$ per BTC?
Honestly, Online services somehow doesn't even covered by the law sometimes specially on taxes but surely the time will come that the Government will find it's way to capture those kind of illegal activities, as for you thread starter, It is better if you will just submit on the law of the local government for you to know the truth instead of thinking of the situation or scenarios and asking for online advice, it will just make you paranoid. Just go to a local government office and ask this kind of concern.

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October 09, 2017, 07:01:39 AM
 #19

ships that stop on the island can be taxes let alone this income is so large that it will take a lot of pocket money to pay a very infinite tax ,, it's according to my thinking whether the other is the same as me Smiley
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October 09, 2017, 07:07:36 AM
 #20

Yes, like many countries including USA , the taxation law has no mention of BITCOIN. But remeber , the taxation laws always keep the meanining of income so wide that tha taxmen will always bring some interpretation to include it.
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