After all, it's not as if the IRS doesn't know about following money trails.
http://web.williams.edu/Mathematics/sjmiller/public_html/math/talks/Benford_Williams20min.pdf They use benford's law extensively.
This thread has been linked to from elsewhere on reddit. ] A tax attorney visits /r/bitcoin. Top comment is a declaration of intent to commit tax fraud. Sovereign citizens, Rage Against the Mac...
Just because something isn't exchanged in USD doesn't mean that it has no value in USD. Convert the value to BTC or LTC or whatever it's traded in, then convert that value to USD.
Running a program on your computer makes you self-employed? I guess every Halo player is now a military contractor, by the same logic.
If he used LIFO, then he wouldn't pay any tax on his purchase, because there would be no capital gains between when he purchased the $5 of Bitcoin and then immediately exchanged it for beer.
How is that relevant to what Coinbase reports?
It only works out you're rich and powerful enough to get away with it.
Most of these responses are wrong. The key point here is when you actually have control of these assets. With the multipool situation, you never had control of them (i.e. in your wallet that ha...
People on /r/bitcoins sound like newbie drug dealers/money launderers. People with way more power, assets and connections than you guys have tried to hide their income from the IRS and failed....
Pretty easy actually. How do you figure they catch most money launderers? The IRS isn't your mother. They can get access to pretty much everything you do.
Yeah, lying to the IRS is a sure way to get yourself some serious jail time and fines.
No kidding. If you're willing to lose all your shit and go to jail, go ahead and "hide" stuff from the IRS. Good luck with that though. People with much more money and power have tried and failed...
How do fincens definitions of administrators apply to miners. I am by no means a law expert, but the way I'm reading it miners and mining pools are required to register as MSBs. Someone please te...
I actually follow global water issues pretty closely. It's pretty damn sad... :(
And I agree with that. But, that would mean that it turns a lot of otherwise well-intentioned people into "criminals" overnight. That ain't cool. :(
Hey IRS, should I bring out the lube if you want to butt fuck me?
Is this confirmed? If so, this is fine with me. I feel like some evil bitcoiners could report the losses, and not report their gains.
Yep. For example a person who makes a purchase of illegal drugs, found out, charged, and is dragged in and then let go due to a procedural error still has to pay that sales tax. But the individua...
Your display of bravery is unparalleled, my good gentlesir. I tip my fedora to you.
I flat out refuse to do #2 They can go fuck themselves with that horse shit
The Canadian authority AKA Revenue Canada, I believe, has taken more or less the same position as this IRS "bombshell" for almost a year now. There was no gnashing of teeth upon receipt of this g...
Capital losses in excess of capital gains are limited to 3000 a year. You can always reduce your capital gains tax to 0 but you can only offset regular income by 3000 a year.
> For example, can they demand you point out the addresses you have? An audit isn't a criminal investigation so you can't "plead the fifth". You either tell them the truth, or don't....
It's been ruled on already . > The decision by the IRS comes from their frustration at trying to > separate personally earned miles, which are considered "rebates" and > t...
They can just force Overstock and Tigerdirect to give them the information directly, they don't need to park a van outside your house.
TIL Bolivians are more freedom loving than Marylanders.
> What's to fund the government if they can't inflate Those 21 million bitcoins can go down to 8 decimals. That's 21x108 bitcoin "units". You don't need to worry about inflation: It's...
Not all BTC transactions, but acquiring BTC via any major exchange is ties positively to your identity.
Maybe somewhere in your post or the title of your post you could mention that this is only applicable to US citizens? edit: maybe rename title to "I am a tax attorney, here is what the IRS notice...
Many nations are in crisis because of this very issue. It's cheaper to say, buy Coca-Cola than fresh water, and they aren't allowed to collect the rain themselves. Don't have any links for you bu...
How do I pay capital gains taxes on 10 satoshis? /u/changetip
How can they know how much coin you have, if any?
As a non-american citizen: I don't give a shit.
Literally no one is going to do any of that.
I agree. It'll play out similarly to internet file-sharing. We all know who won that battle.
I have a solution...vote Libertarian and work towards the abolishing of the IRS.
Yes, but I wouldn't be surprised if a computer algorithm at the IRS cross-references your income with your amazon activity, for example. Not saying it is that way, only that it conceivably could ...
I buy and sell my coins from LocalBitcoins without using my real name. :)
I think you're good: you know the market value of all those mined coins at the time you mined them, since you sold them on the open market. So just A) write a script to pull historical BTC prices...
Does the IRS have records that are any better than yours? Do they even count unregulated and probably illegal-to-operate stock exchange stocks as actual assets? What you should technically do...
Do they have the right tools to audit Bitcoin transactions? For example, can they demand you point out the addresses you have? Or can they reliably trace funds through change addresses? What's ...
Ooh it rolls over? Never knew that.
Do you think virtual currencies mined in online games and traded for virtual assets that have fair market value are subject to these rules?
Unless you have gains on other capital goods like OP meant. Then you can cancel out gains and losses against each other.
Altruism will get Bitcoin into more trouble than its worth. I own a Business and "this is actually good news"
Then please leave our society and have no financial interaction with the rest of us. You have no right to disobey our laws and social contract.
I wonder what rewards points and airline miles people think of this. They now have to pay capital gains tax on their convertible virtual currency that acts as a substitute for real currency. Fo...
> Or a cow with the QR code branded on their hide LMAO!!
why? Coinbase is not the only platform in the world to purchase bitcoins. If bitcoin grows in popularity this tax issue will become decreasingly important as mixing technologies improve, and more...
Also, what about altcoins that are not directly pegged to the USD? I don't know of anywhere I can buy Zetacoin for USD, for example. I have to buy it on an exchange with another cryptocurrency. H...
Actual first world problem.
The maximum loss of capital gain is $3000 per year on taxes. Example: you buy $90,000 in bitcoin and later sell it for $60,000. You lost $30,000 overall and claim that loss on your taxes. You can...
This is the real question isn't it. Oddly enough tax offices do not like to discuss the topic of enforcement practices too much...
But for the larger majority of miners, this is the reality now in the US. The result will be poor compliance. The IRS will find it very difficult to prove any of this even took place.
> just build a better, uncorruptible one? We got along way to go before "incorruptible".
It all depends on what you can defend in court. You're basically describing a Cayman Island's offshore account...which is a legal grey area.
or you could just ignore the parasites.
> How are they going to know unless you show them? T'hey won't. You could run an entire business off the books and not pay a cent...until they decide you need an audit. Al Capone was b...
More accurately...gaining independence from the system is illegal.
The IRS has access to a lot of data which it can use to flag suspicious behavior and follow up with an audit. If, for example, you report income of $30,000 a year but register a $100,000 TESLA in...
All windfalls are taxed as income. If you dig up a chest of gold coins on your property you will be taxed on that as income.
> Why would everyone not do that? Your scam should work equally well with bananas or gold or cocaine or whatever -- so therefore hundreds of people before you have tried it over the last f...
The government now controls every possible entry into Bitcoin from US Dollars (even localbitcoins) and can now lock you up for not giving them a percentage of your profit for using a deflationary...
Pretty sure no one is actually collecting the rainwater from the guy's property. He himself is just not allowed to collect that water because it doesn't belong to him. I have family out in west...
They could see transactions to / from Coinbase, for example, or they could decide to audit a vendor that accepts BTC and look at what customers have paid with BTC. Trifling with the IRS is unwise...
Can you elaborate on the $600 exemption?
Vinny Lingum was talking to the crowd at Coinsummit today and I asked him basically if he had any plans to do this or add any features that help people calculate their bitcoin-value-at-purchase a...
Stock brokerages can agree to identify stock in the transaction, which is the prerequisite for using LIFO. Bitcoin exchanges don't offer that feature.
Well, you can trace the seperate coins on the blockchain. One could imagine a wallet that just applies the current exchange price to every transaction you do and save the exact capital gains in a...
Many of us get our coins through legit exchanges like BitStamp or coin-selling services like CoinBase that require linking with a bank account and a whole mess of identity verification. We just g...
They have interpretations to handle such things. They consider you still having control of them. It doesn't matter where it is. You may be required to present your friend to substantiate your cla...
The difference in those times was that only a few people could afford a printing press. Centralized technology = centralized government
The exchange you bought/sold them at tells them. Plus the threat of prison if you try to hide it and they find out from someone else.
"The biggest issue for most bitcoin users is determining their basis. Because bitcoins are fungible, you run into the problem of tracing the cost of each bitcoin you hold. You cannot just arbitra...
Okay, I was under the impression that we could choose FIFO, LIFO, or weighted average, whichever of the three was most advantageous to us? Why do you recommend not using LIFO? I programmed a pyth...
No - you're right. This is a nightmare scenario.
Well, I think Gyft and e-gifter turning over their records would bum a lot of bitcoiners out, and we know that the USgov requested records from the Mt Gox bankruptcy...don't you think they want t...
Be careful with buying things with it too, for example if you have all kinds of stuff being shipped to you from Overstock/Tigerdirect every month, the IRS might get suspicious especially if you h...
Sometimes I'm relieved that I don't live in the United States. I'd like to preface my next comments by saying that I own no Bitcoin and absolutely, unequivocally implore people to avoid any att...
The IRS notice means nothing to me.
Like public-urination laws. Can't get to a bathroom? Sorry, you must let your bladder burst.
Can you sue those owners for trespassing on your property?
Of course, there is the other alternative: You guys are going to vote me down into pergatory, but how about "fuck governments" like you guys used to soap box? I find it laughable that on the on...
I'm looking forward to the Second American Revolution. This time, it'll be fought with code, not guns. It's becoming apparent that engineering, not politics, is the answer to this country's probl...
Good stuff, I was really hoping this might be the case. In general, the treatment of BTC as a capital property is a pretty big deal IMHO. So many people whining about why it's not a currency, i...
I wish I understood.
From what I can figure after reading all the stuff on the IRS website about bartering, digital currency transactions will be considered bartering. However, based on what understand of what I've r...
They document how to do it DAYS before the deadline and they do not specify which method will be accepted? How possible is that they will not pay a lot of attention to bitcoins profit this year...
Nah im not going to be paying this douchebag tax. The IRS are fascist spooks...just another tumor courtesy of the Federal Reserve cancer great minds like JP Morgan and Woody Wilson bestowed upon ...
Ok crazy. Tell it to your own tax authority. http://www.ato.gov.au/General/Correct-a-mistake-or-dispute-a-decision/Correct-(amend)-an-income-tax-return/
people like you are the reaon why bitcoin isnt taken seriously
Yes. If you win a car you are taxed based on the value of the car.
I wonder how many BTC user lives in the US? Maybe they should form a consumer association to present a common platform to deal with IRS. This could include actions from petitioning to the ext...
How should you file your taxes when you buy Bitcoins to really transfer money to a different country?
It does not appear that the wash sale rules apply to bitcoins. The statute specifically applies to "Shares of stock and securities," which arguably does not include bitcoins. That doesn't mean th...
Since it is capital property, does this mean I can sell it below my cost basis (assuming price has dropped) and then rebuy, to lock in some losses as a capital loss that I can deduct? For stock...
My opsec is getting a boost this week is all I can say.
Maybe this has been answered elsewhere and I just can't find it. Hope someone can shed some light. I have been mining altcoins on Multipool for the last couple months with my video card wheneve...
I can't wait to see how they handle systems like Ethereum in light of this. The government is going to choke on its own regulations trying to tax and regulate systems that are built explicitly to...
They think crypto is a static thing that won't come up with invisible blockchains, and if they want to kill invisible blockchains they'll have to start linking all the things in physical reality ...
A question I asked on another post, but I'd love your input: "What is to stop the following scenario: As a law abiding, tax paying citizen, I buy 100 coins on coinbase today for $500 per coin. ...
and six years if the omission is more than 25% of your income.
Always amazes me that somehow we live in a world where using NATURE is illegal
That's an interesting question. There's no correct answer and it highlights the flaw in the IRS's ruling. You'd have to take a best guess at valuing the coins, perhaps by relating the price back ...
Yes indeed. Also not allowed to capture and re-use water. So no making a greywater system from your shower or sink water. One use and you're done with it.
Its good news in the sense that it adds certainty to the situation, which is generally a good thing for markets even when the certainty relates to something that can be considered negative.
This is an important issue for US taxpayers to consider. Last I saw, they said they are not filing any 1099s.
Yeah... ridiculous, ain't it?
Yes, the coins are taxed twice. However, the second round of taxation only applies to the appreciation that occurred after the bitcoin was mined.
Gold watches, art, jewelry. The tried and true ways to hide assets.
This reminds me of the "use tax" that everyone was supposed to pay when they made purchases online. No one complied.
If we are holding bitcoin as an investment or an investment vehicle, can we consider it to be part of a self-directed 401k, roth 401k, or any other type of investment account with tax benefits? I...
The IRS has three years to audit you after accepting a return, IIRC. So, it may be in your interest to amend.
I'm not in the US so i'm not sure I understand... Why would any of you guys comply? How could the IRS know about your BTC transactions if you don't tell them?
How the hell would they even know who owns what? It's just a bunch of addresses. So if a person bought all their bitcoin privately rather than going through exchanges...
I agree with your overall sentiments and frustrations. On #3, though, the basic strategy as a miner to protect against this risk is to immediately sell upon receipt the correct percentage of yo...
Right. Well the State is really just another predator, like lions or mosquitoes. Humans have had many adversities over the last couple hundred thousand years, and we use technology to overcome th...
How does the IRS police the taxing of Bitcoin transactions? Isn't it anonymous cash? edit - Without using a bank as the "middle man" how can anyone other than yourself work out what you should ...
We cant collect rainwater here in Colorado. It belongs to somebody else due to hundreds of years old water rights.
> Because bitcoins are fungible, you run into the problem of tracing > the cost of each bitcoin you hold. Although 'bitcoins' are fungible because people treat them that way, t...
Hmm, wouldn't you only pay tax on the $5 worth? Your basis for that $5 was ~$0.78. So your capital gain was $4.22. Taxed at 15% that's $0.63. Oh wait now I get it...yeah that sucks
That's an interesting way to look at it. The printing press, in many ways, was the enabling technology for true democratic federal republics such as we have. From that perspective, technology/e...
The IRS has probably made a mistake w.r.t. the nature of mining. If Bitcoin is property and/or an asset, then the process of solo mining it is a self-award that the network allows; the network ...
They already did exactly that with these guidelines. Large investors and trading houses don't care if it's taxed just like every other commodity they trade. They are the group that never planne...
I don't think it's really bad news. I think most people will just ignore the law.
I believe the state of Maryland (and others?) actually DOES tax you if they find out you collect and use rain water on your property. No shit.
This is why it's INCREDIBLY IMPORTANT for market anarchists (and all early adopters) to be VERY careful. The governments of the world are licking their chops waiting for us to make a wrong move s...
Some altcoins, upon release to the public, take a while to reach their first exchange and have no market, yet can be mined. Under these rules, when mining such coins before there is any exchange ...
Yep. Bitcoin itself is the first shot. Libertarians now know where to focus our attention. Instead of politics, the focus is on 3D printing, decentralized financial tools, encryption, etc. The ...
I would say so, yes -- which is why I believe this news is much worse than anything we've experienced so far. The CGT burden for every purchase is simply beyond anything I ever expected, and the ...
I was actually going to ask about how my BitTorrent downloads are taxed. Do I cite the fair value of the Blu-Ray if I downloaded a version that's very compressed and only 720p?
Just watch the fiat side. Cashing out of exchanges into fiat will be one such area. Use localbitcoins instead and use cash transactions in person. Also every purchase you make with bitcoin and ...
Isn't the burden now placed on simply spending Bitcoin far outweigh the small benefits of using Bitcoin? A lot of work for little gain.
This system simply won't work until the IRS gets off their collective asses and creates a brand new hybrid asset category that is crypto-specific. 1). See above. 2). Simply unmanageable. Ther...
Wow. This community never ceases to amaze me. What did you expect to happen?
I'm in the same boat. How easy/likely will it be for them to track my transactions and audit me or whatever?
This all plays well for IRS if bitcoin appreciates. Now imagine bitcoin goes to $100, and all the bitcoiners start filing capital losses. This can offset dividend income etc, i.e. Uncle Sam will ...
The IRS would know if they found out from bitstamp. It's hard to be confident that that will never happen.
Yes, make it more difficult to comply with taxation, the evasion of which is already an American pass-time.
As an Australian business owner we've had to do this before. Mistakes happen and it's no big deal.
isn't it the other way around? they will let their favorite big corporations who lobby them off the hook, while going after the "little people" to whatever extent is practical, as usual?
The real question is, What is Coinbase reporting?
So let's say I bought 5 BTC for $100 each last year. Today I sell them all on Bitstamp for ~$2900 total, change my mind, and rebuy 5BTC for essentially the same price. I'm completely back to BTC....
I'm totally not interested in learning these rules. You know why? Because I have no intention of obeying them.
The day trader question is a good one, theoretically, a crypto day trader who started with $1001 a year ago, who is back down to $1000, could be facing huge tax liabilities although they lost mon...
Is there any other 'manufactured' property that are taxed before being sold? This sounds like special treatment, malice?
They absolutely will. But by and large, bitcoin, along with other technologies aimed at making practical anonymity and anonymous markets turnkey for consumers, will create an overall unmanageable...
They'll be okay with it to the extent you can actually prove your tracing. To be honest I would be skeptical that you can meet the burden absent strong records and disciplined transfers.
What about when laundering bitcoin, how do I declare that?
What's to fund the government if they can't inflate, and if the IRS can't cope with the ballooning burden of tracking and enforcing the tax rules on bitcoin transactions? If government can't fund...
If I am able to trace the funds and document it properly, do you expect the IRS to be okay with that approach instead the FIFO?
They might pick a few people and make examples of them.
Nothing if the company is cooperating, but it will make Agorism much easier.
Okay, lets say that bitcoin is the only currency used, world-wide. You get your paycheck in bitcoin. Whats to stop the IRS from taking a percentage of your bitcoin each paycheck, like they do fia...
In your comment above, your said you could separate wallets. I assume what you mean is trying to hold those coins physically separately, much like holding stocks of the same company but with diff...
There's no specific ruling on the proper method for bitcoins. So, we have to look at other types of assets for guidance, where the availability of LIFO is generally quite restricted. Therefore, i...
With LIFO, is it just not advisable or absolutely not allowed? Why not advisable?
Replace Bitcoin users with American taxpayers. Also the ability of the IRS to enforce this is practically laughable, big corporations maybe but the regular person using bitcoin err no.
This is exactly the sort of crap Bitcoin will destroy. Create as many rules as you like oh masters.
Yes the FIFO treatment is rough given the massive appreciation in bitcoin since just last year. You can use separate wallets though in order to enable "tracing" if you want to avoid this problem ...
What terrifies me the most is that we are recommended to use FIFO and not LIFO. That means the bitcoin I've had in cold storage for a year that I bought at $90 is basically pointless. If I buy $5...
EDIT: THIS POST DISCUSSES THE TAX TREATMENT FOR US CITIZENS. I THOUGHT THAT WAS APPARENT WHEN THE IRS IS INVOLVED, BUT APOLOGIES IF THE TITLE CONFUSED ANY NON-US BITCOIN USERS. Hey guys, I've r...
https://www.reddit.com/r/Bitcoin/comments/21g6sx/i_am_a_tax_attorney_here_is_what_the_irs_notice/