irs just ruled that bitcoin is property, not a currency

[chad]

http://blogs.wsj.com/totalreturn/2014/03/25/qa-the-new-irs-rules-on-bitcoin/

from the article, highlights:

you now have to pay capital gains on it when you spend it or risk tax fraud.

if you get in payment, you have to declare it as income.

if you mine, it, you have to pay self-employment tax.

[Ares]

That's not my address:

Title 15 states they have to PROVE you owe a debt anyway. Good luck to ya fellas..

They probably hope people will voluntarily comply with their scheme...

Not only that, the IRS doesn't have the authority to define what is and what is NOT a currency. That's up to Congress to decide.

[singular_me]

after having almost endorsed it as a new alternative currency which caused a rush into it, here comes the trap....

[Ares]

after having almost endorsed it as a new alternative currency which caused a rush into it, here comes the trap....

They can tax it at the point of sale, that's nothing new. But if you mine it they have no proof of how much you mined. If you don't cash out, they have absolutely nothing on you to prove you even own any yet alone owe a tax on it.

[madfranks]

Quote from the article:


Bitcoin miners would have to report their earnings as taxable income with a value equal to the worth on the day it was mined.

I have a few opinions. One, this is pretty complex, every day you have to keep a spreadsheet or something to keep track of how much BTC you mined, how much electricity you burned, and the average daily value of BTC on that day. Sounds like a pain in the ass.

Two, it's no different than any other property. How many of you have ever found something valuable or bartered for something valuable? Nobody actually claims these things as income, and everyone gets away with it. How many of you have ever sold a gold coin at your local shop, do you declare that as income? Probably not, and nobody's ever been in trouble with the IRS over it.

Three, what about other cryptos? This article seems to only mention Bitcoins, but never "cryptocurrencies" in general. So what if you mine litecoins instead? The bitcoin regulations don't apply now?

Four, treating bitcoins as property has generally been the unofficial method people have been treating it anyways. This IRS statement basically confirms how people have been treating it already.

[madfranks]

The ruling takes effect immediately and covers past and future transactions and tax returns.

I thought retroactive enforcement of new laws was against the constitution or something? I know, I know, the entire IRS is unconstitutional, but seriously, how can they do this?

[madfranks]

Ha ha, one more thing. At least the government isn't making it illegal. This IRS ruling, as complicated as it seems, is giving the US government's stamp of approval on bitcoins. Not that I personally think it's needed, but it adds lots of legitimacy to the currency. Many other governments and states take their lead from the US, so in one regard this ruling has greenlighted bitcoins as legitimate to the world.

[mick silver]

mad you need to ask yourself why would the irs give a green light to anything unless they have something to gain are could they be part of bitcoins just like they are owned by the banks

[JohnQPublic]

(http://blogs.wsj.com/totalreturn/2014/03/25/qa-the-new-irs-rules-on-bitcoin/)
...if you mine, it, you have to pay self-employment tax.

If you pan gold, do you need to pay self employment tax?

[Ares]

mad you need to ask yourself why would the irs give a green light to anything unless they have something to gain are could they be part of bitcoins just like they are owned by the banks

All about revenue. Congress hasn't legislated one way or the other on if Bitcoin is a currency or not. Leaving the IRS (whose job it is to get revenue) to try and decide what Bitcoin is. They do not have the authority to declare it a currency. So it's not surprising to see them call it "property". That enables them to extract revenue from it. But as Mad Franks pointed out. It doesn't exactly fit the scope of property either, and for tracking purposes its a nightmare to try and say you own this address and these bitcoins are yours.. Are they going to do that for everyone who owns bitcoins? Are they going to go after every Bitcoin address? Nope. They are hoping you'll just declare it on tax returns giving them the evidence they need in order to declare you owe a tax. Outside of you declaring it, it's like what Mad Franks said if you go and sell an ounce of gold you are technically supposed to declare that as income. Have any of you declared it as income?

[Neuro]

I didn't know IRS was part of the legislative branch of government...

[Shami-Amourae]

I didn't know IRS was part of the legislative branch of government...

Government is just a way for Jews to take away money from, and control goyim.

[Neuro]

Government is just a way for Jews to take away money from, and control goyim.
Extrajewdicial injustice?

[madfranks]

mad you need to ask yourself why would the irs give a green light to anything unless they have something to gain are could they be part of bitcoins just like they are owned by the banks

They tax gains on gold and silver the same way. Since the IRS "greenlights" gold and silver do they control it?

We all knew they would tax it one way or another. The FRN I work my ass off for is taxed at 30%, while my bitcoin gains are taxed at capital rates which for me is much, much lower. Plus now you can claim capital losses if you bought high and sold low (or if you lose them in a digital boating accident, wink wink).

[7th trump]

I should have made a bet with those who didn't believe me that they would impose a tax on bitcoin through Social Security (self-employment taxes, IE...the federal income tax).
Go eat a pile of horse dung palani.....you lost this argument. Your theory about lawful money is WRONG!!
Social Security......I told you so!

[Neuro]

I should have made a bet with those who didn't believe me that they would impose a tax on bitcoin through Social Security (self-employment taxes, IE...the federal income tax).
Go eat a pile of horse dung palani.....you lost this argument. Your theory about lawful money is WRONG!!
Social Security......I told you so!
I think the tax is capital gains tax, which have nothing to do with social security taxes, afaik...

[Ares]

I think the tax is capital gains tax, which have nothing to do with social security taxes, afaik...

well I think 7th Trump was referring to these two in particular.

if you get in payment, you have to declare it as income.

if you mine, it, you have to pay self-employment tax.

They are basically stating that if you mine you should be filing for a self employment form. Can't remember the form number off the top of my head, but once you fill one out you'll be given a Tax ID to use for your "business". After that you just declared that you are federal business and are subject to those taxes. If you never fill out that form, the IRS doesn't have the jurisdiction to say anything to you and the burden of proof is on them.

As for income, that only applies if you're a federal person.... If you don't have a W-4 on file with the SSA they have no jurisdiction, even on property unless you declare it as such and VOLUNTEER into their fraud.

[madfranks]

From the bitcoin forums:


It is just saying that "bitcoin is property." When determining the appropriate course of action, ask yourself what course of action you would take in an analogous case using physical property that you're already familiar with. Here are a few examples:

Growing a few dollars of tomatoes and trading them at the local farmer's market for some jam has the same tax implications as mining a few dollars of bitcoins and trading it for a beer at a local bar.

Purchasing a 1 acre greenhouse and growing $1,000,000 of tomatoes and selling them to Trader Joe's has the same tax implications as setting up an industrial bitcoin mining operation and selling $1,000,000 of coins to Second Market.

Cashing in one of the gold coins your grandfather gave you when you were a boy has the same tax implications as cashing in a bitcoin you acquired a few years ago.

Selling the 10 BRK-A shares on the NYSE for $1,860,000 that you bought for $100,000 many many years ago has the same tax implications as selling $1,860,000 of bitcoin that you acquired last year.

Receiving $50 of scotch as a gift from your buddy for helping him move has the same tax implication as receiving $50 of bitcoins for helping a forum member write some software.

Receiving $120,000 a year from your engineering job has the same tax implications as receiving $120,000 of bitcoins as a paid developer for a bitcoin start up.

[Ponce]

If you were to file, even one time, then that's all that it would take for them to send you a "reminder" every year to file once again....... never file what they don't know and safe you will be.......and.......if you get find out then let them prove it, never say anything.

V

[Horn]

Are they going to do that for everyone who owns purchases bitcoins?

Unless your exchange wants to be target for denial of service attacks, most likely.

My solution would be to sell your property in a country that you are visiting and outside their jurisdiction.

[Neuro]

well I think 7th Trump was referring to these two in particular.

if you get in payment, you have to declare it as income.

if you mine, it, you have to pay self-employment tax.

They are basically stating that if you mine you should be filing for a self employment form. Can't remember the form number off the top of my head, but once you fill one out you'll be given a Tax ID to use for your "business". After that you just declared that you are federal business and are subject to those taxes. If you never fill out that form, the IRS doesn't have the jurisdiction to say anything to you and the burden of proof is on them.

As for income, that only applies if you're a federal person.... If you don't have a W-4 on file with the SSA they have no jurisdiction, even on property unless you declare it as such and VOLUNTEER into their fraud.
I wonder if you can deduct house rent and electricity as a legitimate business expense for your bitcoin mining operation, the fact that you have a bed and sleep there , is because of the nature of bitcoin mining, the rig keeps humming along even if you are asleep, but you have to be there if the rig overheats and catches fire for instance, or a burglar comes and tries to steal your rig... Since you are working 24/7, you need a toilet, bathroom, kitchen, and it would be inhumane not to let your family stay there also. Pretty much all your expenses should be viewed as legitimate business expense. You can easily prove that your meager earnings doesn't allow you to hire someone else for, lets say night watch man, since your business expenses are so high. And the losses can be deducted from other earnings you may have...

[7th trump]

I think the tax is capital gains tax, which have nothing to do with social security taxes, afaik...

Actually it does Neuro.
Mining will fall under "Subtitle C- Employment Taxes"......a 1099 (self-employment form)
"Employment" is defined in chapter 21, 26usc 3121(b)....... (Social Security).

[Neuro]

Actually it does Neuro.
Mining will fall under "Subtitle C- Employment Taxes"......a 1099 (self-employment form)
"Employment" is defined in chapter 21, 26usc 3121(b)....... (Social Security).
Yeah I saw that, after my post...

[Buddha]

http://blogs.wsj.com/totalreturn/2014/03/25/qa-the-new-irs-rules-on-bitcoin/

from the article, highlights:

you now have to pay capital gains on it when you spend it or risk tax fraud.

if you get in payment, you have to declare it as income.

if you mine, it, you have to pay self-employment tax.

Good I would tell those bitch niggers to shut the fuck up, bring some guns down here, I have my own, let's see what happens...

[osoab]

I don't understand the reasoning for the self-employment tax for the miners.

If the feds are considering bitcoin/cryptos property, then wouldn't cryptos fall under the treasure category if it was mined? Wouldn't that yield a different tax rate since it wasn't "earned"?

Shouldn't crypto miners/holders do just the opposite of what "treasure" hunters/finders always end up doing and keep their mouths shut?

How are they determining the conversion rate for bitcoin to frns or do they just want 1/3-1/2 of your cryptos every year?

[Glass]

I don't understand the reasoning for the self-employment tax for the miners.

If the feds are considering bitcoin/cryptos property, then wouldn't cryptos fall under the treasure category if it was mined? Wouldn't that yield a different tax rate since it wasn't "earned"?

Shouldn't crypto miners/holders do just the opposite of what "treasure" hunters/finders always end up doing and keep their mouths shut?

How are they determining the conversion rate for bitcoin to frns or do they just want 1/3-1/2 of your cryptos every year?

They are using a capital gains assessment. Number of FRNS to acquire 1 Bit coin subtracted from Number of FRN's obtained when selling 1 Bit coin X Capital Gains Tax rate. In Australia it is 1/3 (33%). Every time you sell precious metals you do the math and pay 1/3 of the difference.

Only applies on the event of a sale. This is why they have inheritance tax because they could miss the capital gain when you die if you didn't sell in your lifetime but handed it down to offspring. It effectively converts an inheritance into a sale which becomes an assessable event.

Remembering that before there is tax there must be assessment.

[vacuum]

Three, what about other cryptos? This article seems to only mention Bitcoins, but never "cryptocurrencies" in general. So what if you mine litecoins instead?

First, the word "cryptocurrency" has the word "currency" in it. I don't see how they could delcare all furture cryptocurrencies to not be currencies. They'd have to define the term.

Second, what if the government or banks come up with their own cryptocurrency? Then then would have to follow the same rules they're making right now.

It appears these rules mean bitcoin is treated the same as gold for tax purposes, I think.

[7th trump]

They are using a capital gains assessment. Number of FRNS to acquire 1 Bit coin subtracted from Number of FRN's obtained when selling 1 Bit coin X Capital Gains Tax rate. In Australia it is 1/3 (33%). Every time you sell precious metals you do the math and pay 1/3 of the difference.

Only applies on the event of a sale. This is why they have inheritance tax because they could miss the capital gain when you die if you didn't sell in your lifetime but handed it down to offspring. It effectively converts an inheritance into a sale which becomes an assessable event.

Remembering that before there is tax there must be assessment.

The self-employment tax side of it here in the US is because mining bitcoin is no different than owning your own business. Mining = working for yourself.
You don't hire someone to mine bitcoin (computer generated) for you like being "employed" to physically mine gold in a tunnel or panning for it.....hence the "self-employment"....which is nothing but Social Security causing the imposition in the first place.
As for the capital gains........yes when you sell it you'll have to pay a tax on the gains if any.

[EE_]

The whole thing sounds rediculas. My guess is it's just another law on the books tha's not enforced unless it's needed in the event of a tax case, fraud, audit, etc. People don't realize there are litterally thousands of obscure state and federal laws on the books that are rarely enforced. They may only come up if needed for special circumstances, or in a court of law.

My other thought is, maybe there is something else the IRS and the banks are working on for the future of crypto's, that we'll hear about in the future.

I wouldn't give the new IRS law another thought. Fuck'em

Bitcoins are property, not currency, IRS says regarding taxes
By Kevin Drawbaugh and Patrick Temple-West
WASHINGTON Tue Mar 25, 2014 7:03pm EDT

WASHINGTON (Reuters) - Wading into a murky tax question for the digital age, the U.S. Internal Revenue Service said on Tuesday that bitcoins and other virtual currencies are to be treated, for tax purposes, as property and not as currency.

"General tax principles that apply to property transactions apply to transactions using virtual currency," the IRS said in a statement, meaning that bitcoins would be taxed as ordinary income or as assets subject to capital gains taxes, depending on the circumstance.

Bitcoin, the best-known virtual currency, started circulating in 2009. Its present market value is around $8 billion, with up to 80,000 transactions occurring daily, according to accounting firm PricewaterhouseCoopers LLP.

Recent incidents have brought the currency under new regulatory scrutiny, such as the failure of Mt. Gox, a Tokyo-based exchange that filed for bankruptcy after losing an estimated $650 million worth of customer bitcoins.

Unlike conventional money, bitcoin is generated by computers and is independent of control or backing by any government or central bank, which its proponents like, but which also has led to calls for more guidance on U.S. tax treatment.

The IRS supplied that in its statement, which dealt a blow to bitcoin "miners," who unlock new bitcoins online. The IRS said miners must include the fair market value of the virtual currency as gross income on the date of receipt.

This change "is a disincentive to start looking for bitcoins," said John Barrie, a partner with law firm Bryan Cave LLP, who advises charities that receive bitcoins as donations.

NOT LEGAL TENDER

The IRS also said that virtual currency is not to be treated as legal-tender currency to determine if a transaction causes a foreign currency gain or loss under U.S. tax law.

For other forms of gains or losses involving virtual currency, the IRS explained how to determine the U.S. dollar value of virtual currency and said taxable gains or losses can be incurred in related property transactions.

"The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer," the IRS said.

If a taxpayer holds virtual currency as capital - like stocks or bonds or other investment property - gains or losses are realized as capital gains or losses, the agency said.

However, when virtual currency is held as inventory or other property mainly for sale to customers in a trade or business, ordinary gains or losses are generally incurred, the IRS said.

Capital gains and losses are taxable and deductible at different rates and amounts than ordinary gains and losses.

Democratic Senator Tom Carper, who chaired a Senate committee hearing last year on bitcoin, said in a statement that the IRS guidance "provides clarity for taxpayers who want to ensure that they're doing the right thing and playing by the rules when utilizing bitcoin and other digital currencies."

MINERS HURT

New bitcoins come from a process called mining. Computer programmers around the world compete to crack an automatically generated code and the first to do so is rewarded with a small stash. This happens about every 10 minutes.

Some online retailers will accept bitcoins as payment. The maximum potential number of bitcoins in circulation is 21 million, compared with around 12 million currently.

On the IRS guidance, William Lewis, a lawyer in Sunnyvale, California, who represents a start-up company creating a platform for virtual currencies, said: "This is going to be unfavorable to bitcoin miners because they're going to have to include in income the fair market value of the virtual currency on the date they mined it.

"It's going to make life difficult for a lot of people who have been mining over the past year, who have to go back and see what the values were on those dates when they mined it."

http://www.reuters.com/article/2014/03/25/us-bitcoin-irs-idUSBREA2O1LR20140325

[Horn]

My other thought is, maybe there is something else the IRS and the banks are working on for the future of crypto's, that we'll hear about in the future.

Of course they'll come out with their own legal tender crypto-currency.

First batch of a couple billion or so coins will be called a penny.

the next batch of a billion coins or so will be called a nickel so on, and so forth to infinity and beyond..!

[Neuro]

I don't understand the reasoning for the self-employment tax for the miners.

If the feds are considering bitcoin/cryptos property, then wouldn't cryptos fall under the treasure category if it was mined? Wouldn't that yield a different tax rate since it wasn't "earned"?

Shouldn't crypto miners/holders do just the opposite of what "treasure" hunters/finders always end up doing and keep their mouths shut?

How are they determining the conversion rate for bitcoin to frns or do they just want 1/3-1/2 of your cryptos every year?
An analogy would be if you built your own house (property), you wouldn't be required to pay income tax...

[Norweger]

"Jews just ruled that they want more money"

[Bigjon]

I should have made a bet with those who didn't believe me that they would impose a tax on bitcoin through Social Security (self-employment taxes, IE...the federal income tax).
Go eat a pile of horse dung palani.....you lost this argument. Your theory about lawful money is WRONG!!
Social Security......I told you so!

I think you are wrong on this issue. Your premise is wrong that all income taxes stem from our agreement to take SS. The income tax only taxes the use of private credit based money (expandable money). If we don't use private credit money we are not liable to pay a tax on it and we have a right to opt out of the private credit FRN based money system, via the redeeming public money clause in the USC.

Tax Exemption: http://stormthunder.com/#ixzz2x50jYUlP
scrape
Under Creative Commons License: Attribution Non-Commercial No Derivatives

Redeemed in lawful money Pursuant to 12 USC 411
:True Name: dba LEGAL NAME

If you redeem your bitcoins for public money USN instead of FRN's there is no taxable event.

[Ares]

I think you are wrong on this issue. Your premise is wrong that all income taxes stem from our agreement to take SS. The income tax only taxes the use of private credit based money (expandable money). If we don't use private credit money we are not liable to pay a tax on it and we have a right to opt out of the private credit FRN based money system, via the redeeming public money clause in the USC.

Tax Exemption: http://stormthunder.com/#ixzz2x50jYUlP
scrape
Under Creative Commons License: Attribution Non-Commercial No Derivatives

Redeemed in lawful money Pursuant to 12 USC 411
:True Name: dba LEGAL NAME

If you redeem your bitcoins for public money USN instead of FRN's there is no taxable event.

Definitely agree there. However 7th Trump has pointed out before that taxing liability does happen when you volunteer into it via SS. When you fill out a W-4 at an employer or a 1099 as a self employment type individual, then you are VOLUNTEERING to be a tax payer. Your signature is your bond. That's why so many tax protestors get thrown in jail including Pete Hendrickson. You can't have a signed uncontested W-4 on file at the SSA while contesting the amount of tax you owe. Why it gets thrown out of court as frivolous, or in Irwin Schiff's case the judge told him the Constitution did not apply. The judge although evasive when asked why it didn't apply was correct simply because Irwin CONTRACTED to be a taxpayer. You have the UNLIMITED right to contract. Some of those contracts the Constitution cannot help you.

So if you never fill out a W-4 or a 1099 and when you cash out make a note to Redeemed in Lawful Money Pursuant to Title 12 U.S.C. 411, then you did not have a taxable event.

[chad]

the income tax started as a tax on millionaires & businesses in 1913. businesses don't have ss numbers. and ss numbers didn't exist in 1913 for millionaires. massive retard fail for anyone who keeps harping on this. it's like you don't have an ability to read.

[Ares]

the income tax started as a tax on millionaires & businesses in 1913. businesses don't have ss numbers. and ss numbers didn't exist in 1913 for millionaires. massive retard fail for anyone who keeps harping on this. it's like you don't have an ability to read.

I've looked into that one as well. There was no SS back in 1933, that is correct. They relied on self reporting from the individual (still do actually). But was able to better track it in 1933 when people volunteered for the social catch all safety net.

You weren't even required to file unless you made more than 6,000 dollars a year. Which is equivalent to 60,000 dollars today I believe. So 95% of the population was excluded. I think this was done by design, as the money diluted the reporting standard stayed the same. Even today if you make less than 6,000 a year you don't have to report it. Now it acts as an inflation safety valve, to try and keep the FED's money printing in check (more you make the more they take). The IRS is nothing more than a PRIVATE government contractor. Title 26 narrowly defines what is and what is not an employer, and or an employee. Neither one of us fit their definition. So it's all voluntary anyway. Unless of course you work for the Federal government.

THE INTERNAL REVENUE SERVICE is incorporated in Delaware as a collection agency for a Puerto Rico company; INTERNAL REVENUE TAX AND AUDIT SERVICE (IRS) For Profit General Delaware Corporation Incorporation Date 7/12/33 File No. 0325720

[madfranks]

First, the word "cryptocurrency" has the word "currency" in it. I don't see how they could delcare all furture cryptocurrencies to not be currencies. They'd have to define the term.

Second, what if the government or banks come up with their own cryptocurrency? Then then would have to follow the same rules they're making right now.

It appears these rules mean bitcoin is treated the same as gold for tax purposes, I think.

I've done some more reading on this, and apparently the IRS ruling applies to all "virtual currencies", so if they're using that term, they must recognize it as a currency!

Also, I'm surprised I didn't know this, but gold and silver, even investment bullion, is considered "collectables" under the IRS and is taxed at 28% for capital gains!!! That means the IRS taxes your capital gains on gold more than they do for bitcoins.