Can we have a "Digital Commodity" since BTC is a Digital Currency?

[Fuzzy]

My greatest concern with using BitCoin is the Government trying to impose some sort of tax or stifling it in some way, as it is self classified as a currency. What we need is a Digital Commodity, to make trading between people more like "trading" than "selling/buying".

If I pay cash for a TV, the Govt will demand a slice in the form of sales Tax. However, if I were to trade a PS3 for said television, there is no "currency" involved.

Any ideas?

Edit: We need an economist in here, I've probably fudged the buy vs trade analogy right up. And how do those taxes work?

[1714965237]

1714965237

[1714965237]

1714965237

[1714965237]

1714965237

[artisbigshirts]

Are bytes of data a commodity or a currency?
The information stored on your hard drive?

Can you trade a TV for a piece of software without the government whining?

[Fuzzy]

Can you [insert free activity] without the government whining?

 

[Red Emerald]

Can you [insert free activity] without the government whining?

 

 

[Portnoy]

it is self classified as a currency.

It is?   

[Matthew N. Wright]

it is self classified as a currency.

It is?  

Bitcoin.org for the longest time has been calling it a digital currency and "money" if I'm not mistaken. Even at the CIA presentation, I think Gavin Andreson called it money, so yea, we're pretty fucked on that front already.

[hazek]

Please, let's not be so naive as to think that a thing potentially endangering the government's monopoly on money and their ability to tax would/could not get attacked by them becuase of what words we use to describe bitcoins..  

[Matthew N. Wright]

Please, let's not be so naive as to think that a thing potentially endangering the government's monopoly on money and their ability to tax would/could not get attacked by them becuase of what words we use to describe bitcoins..  

Spirit of the law vs. Letter of the law. They'll get you on the spirit of the law, but they'll get you on the letter of the law even quicker.

[Fuzzy]

Please, let's not be so naive as to think that a thing potentially endangering the government's monopoly on money and their ability to tax would/could not get attacked by them becuase of what words we use to describe bitcoins..  

Either way, that's about all there is to it I guess.

[BusmasterDMA]

Barter transactions are already subject to federal income tax (and probably sales tax in most jurisdictions):
http://www.irs.gov/businesses/small/article/0,,id=187920,00.html
http://dor.wa.gov/Content/GetAFormOrPublication/PublicationBySubject/TaxTopics/Bartering.aspx

[unclescrooge]

Please, let's not be so naive as to think that a thing potentially endangering the government's monopoly on money and their ability to tax would/could not get attacked by them becuase of what words we use to describe bitcoins..  

+1

Did you see what governments have tried (and failed) to do against p2p used to exchange songs and movies, when that was just threatening majors cartels?

So now what do you think will happen with a P2P technology the threaten THEIR power? Do be naive, to bring bitcoin and its benefits to society, we will have to fight against governments.

We should not care about what authorities think about bitcoins. Only what people think. Or simply give up now.

[paraipan]

Barter transactions are already subject to federal income tax (and probably sales tax in most jurisdictions):
http://www.irs.gov/businesses/small/article/0,,id=187920,00.html
http://dor.wa.gov/Content/GetAFormOrPublication/PublicationBySubject/TaxTopics/Bartering.aspx

Interesting, quoting from second link...

Bartering transactions are taxable
Imagine coming to work at your accounting business on a Monday morning and finding that the plumbing in the employee washroom has been leaking over the weekend. While insurance will cover the water damage, it will not pay for the new plumbing work. Fortunately, one of your clients is a plumber. So, you call Jake the Plumber and tell him your problem. The two of you agree that the work will cost an amount equivalent to six months’ accounting work. Jake does the work, you do his accounting work, and no money changes hands.

Is there any tax liability associated with this barter transaction? Yes!

I still don't get how there is any "tax liability" in there but will follow on this thread and try to learn from others.

[Red Emerald]

Barter transactions are already subject to federal income tax (and probably sales tax in most jurisdictions):
http://www.irs.gov/businesses/small/article/0,,id=187920,00.html
http://dor.wa.gov/Content/GetAFormOrPublication/PublicationBySubject/TaxTopics/Bartering.aspx

Interesting, quoting from second link...

Bartering transactions are taxable
Imagine coming to work at your accounting business on a Monday morning and finding that the plumbing in the employee washroom has been leaking over the weekend. While insurance will cover the water damage, it will not pay for the new plumbing work. Fortunately, one of your clients is a plumber. So, you call Jake the Plumber and tell him your problem. The two of you agree that the work will cost an amount equivalent to six months’ accounting work. Jake does the work, you do his accounting work, and no money changes hands.

Is there any tax liability associated with this barter transaction? Yes!

I still don't get how there is any "tax liability" in there but will follow on this thread and try to learn from others.

Seems to me there is always "tax liability"

[BusmasterDMA]

I still don't get how there is any "tax liability" in there but will follow on this thread and try to learn from others.

A couple more links:
http://money.howstuffworks.com/bartering4.htm
http://biztaxlaw.about.com/od/businesstaxes/tp/barterinfo.htm

(I was only referring to the USA; I have no idea about elsewhere. Also IANAL.)

[DeathAndTaxes]

I still don't get how there is any "tax liability" in there but will follow on this thread and try to learn from others.

Because the govt taxes TRANSACTIONS.  Transactions are "usually" in the form of fiat but making them not in fiat doesn't erase the tax liability.

Say Joe The Plumber is flexible and you need pipe repairs worth $300 done.

Joe The Plumber could accept $300 USD (fiat)
Joe The Plumber could accept 9 years of VPS hosting worth $300.
Joe The Pulmber could accept Gold coin worth $300.
Joe The Plumber could accept 60 BTC (worth $300).
Joe The plumber could accept 100 gift cert good for one Burger King Whopper each (worth $300).

In each instance a $300 transaction has taken place.  Joe has gained $300 in taxable income and if the state charges a sale tax then sales tax is due on the $300 each.

Bitcoin doesn't make that magically go away and making it a digital commodity has absolutely no relevance (according to the IRS and state agencies).

[paraipan]

I still don't get how there is any "tax liability" in there but will follow on this thread and try to learn from others.

Because the govt taxes TRANSACTIONS.  Transactions are "usually" in the form of fiat but making them not in fiat doesn't erase the tax liability.

Say Joe The Plumber is flexible and you need pipe repairs worth $300 done.

Joe The Plumber could accept $300 USD (fiat)
Joe The Plumber could accept 9 years of VPS hosting worth $300.
Joe The Pulmber could accept Gold coin worth $300.
Joe The Plumber could accept 60 BTC (worth $300).
Joe The plumber could accept 100 gift cert good for one Burger King Whopper each (worth $300).

In each instance a $300 transaction has taken place.  Joe has gained $300 in taxable income and if the state charges a sale tax then sales tax is due on the $300 each.

Bitcoin doesn't make that magically go away and making it a digital commodity has absolutely no relevance (according to the IRS and state agencies).

Wait moment...

Because the govt taxes TRANSACTIONS...

people already pay a taxes on their income and assets, and now you tell that we pay a tax when exchanging those same assets between us ?

[Blazr]

people already pay a taxes on their income and assets, and now you tell that we pay a tax when exchanging those same assets between us ?

Depending on your country/state you can be liable for sales tax on transactions (also called VAT, GST).

If the good you purchase then goes up in value, you can be taxed on that as well in some places. All of this is usually on top of income taxes. Yep, taxes suck so bad.

[hazek]

I still don't get how there is any "tax liability" in there but will follow on this thread and try to learn from others.

Because the govt taxes TRANSACTIONS.  Transactions are "usually" in the form of fiat but making them not in fiat doesn't erase the tax liability.

Say Joe The Plumber is flexible and you need pipe repairs worth $300 done.

Joe The Plumber could accept $300 USD (fiat)
Joe The Plumber could accept 9 years of VPS hosting worth $300.
Joe The Pulmber could accept Gold coin worth $300.
Joe The Plumber could accept 60 BTC (worth $300).
Joe The plumber could accept 100 gift cert good for one Burger King Whopper each (worth $300).

In each instance a $300 transaction has taken place.  Joe has gained $300 in taxable income and if the state charges a sale tax then sales tax is due on the $300 each.

Bitcoin doesn't make that magically go away and making it a digital commodity has absolutely no relevance (according to the IRS and state agencies).

If you claim that the value was based on a negoitiated rate in btc and not the US Dollar then how would the government know how to value the transaction? Do they have a btc publication schedule on some website that I can download? The current market rate at MtGox at the point of coin transfer? Any exchange you see fit to use? A value at a specific point in time like when you are talking to the plumber on the phone? When he arrives at the house to start work? Two days later when the work is complete? If you have an open account with him then perhaps a week later when he mails you the invoice? Do you give the government a copy of the block chain on disk with the key as proof?

I think this subject has yet to be truly explored, tried or tested and cannot be answered with any certainty.

I think the answers to your questions are the same as the answer to the question: How does government tax barter?

I don't think it's hard let alone impossible to tax transactions in bitcoins, what could be hard though is knowing about transactions that aren't voluntarily declared much like undeclared paper cash or barter transactions. We're still lucky enough to not have a chip implanted in everyone of us or a probe hovering over our heads recording every step we make so we still have some freedom to hide from uncle Sam.

The argument that Bitcoin jeopardizes government's power to tax is based on being able to hide your activity and wealth rather than it being difficult for them to find a way to tax your Bitcoin transactions or wealth.

[BladeMcCool]

If you work for McCool International, you are not allowed to give us your SSN or your real name. We operate on pseudonymns only. So, there will be no taxation. We have similar arrangements with our suppliers, and have a vertically integrated supply chain that is all operating pseudonymously without any reporting. Soon our inexepensive manufactured products will be available at black markets near you, and since we avoid all the bullshit middlemen and taxation we can certainly undercut the "lol abiding" (as we like to call them) competition.

[rjk]

If you work for McCool International, you are not allowed to give us your SSN or your real name. We operate on pseudonymns only. So, there will be no taxation. We have similar arrangements with our suppliers, and have a vertically integrated supply chain that is all operating pseudonymously without any reporting. Soon our inexepensive manufactured products will be available at black markets near you, and since we avoid all the bullshit middlemen and taxation we can certainly undercut the "lol abiding" (as we like to call them) competition.

Buzzwords detected, reading and comprehension threads forcibly aborted.