Posted on 04/01/2014 6:33:18 AM PDT by Errant
Does the IRS really want to you to track your capital gains on bitcoin every time you buy a sandwich or a sweater in the digital currency?
After our analysis of the Internal Revenue Service guidelines on bitcoin, released in March, some people expressed surprise.
They were amazed that the IRS could seriously be applying capital gains rules to something that the bitcoin community sees as a currency, and which in many cases uses as such.
“This can’t be good for bitcoin”, said one commenter privately to Coindesk. ” If it’s not a currency, then how are you supposed to use it like one?” he mused.
But as far as the IRS is concerned, it isn’t a currency. It’s property, pure and simple. And the laws for tax on property are already pretty clearly defined.
When dealing in currencies, you declare the foreign losses and gains if you exchange them for another currency. But when you’re dealing in property, then whenever you’re trading it for something else, you declare the capital gains taxes that you have incurred.
This can be a good thing for investors who are in it for the longer term. They will end up having to pay long-term capital gains tax when exchanging their bitcoins for fiat currency, as long as they have held those bitcoins for longer than a year and a day. If they have held them for shorter than that, then they will pay short-term capital gains tax, which is the same as the ordinary income tax rate.
We double checked this with several people, including Keith A. Aqui, who wrote the IRS Notice. ”When you exchange property for other property, then you have to declare, because it’s a capital asset,” he confirmed.
(Excerpt) Read more at coindesk.com ...
I went to their regulation concerning property use as income. The example they've used is a painting used to pay for one month's rent. Is a "painting" worth the same if you cut it in half? Or perhaps in 100 pieces? Bitcoin is fungible despite claims that it isn't and it will be used as such.
I'm not sure why the IRS didn't attach the "commodity" tag instead. Certainly other countries have already. It better fits that description if the term "currency" is too taboo. It is "mined" like gold, or "farmed" like grain. It's units are extremely divisible like a commodity, and unlike a "property". I differ with the idea that individual values of bitcoins are easily tractable like a property. They are not, when they are divided or added together during an exchange.
Better take another look guys and look at redoing your guidance.
Our “Masters” do not like competition. They will do any and every thing to hobble it.
IMHO, the IRS never “messes up” - they follow directions. I wish we knew exactly who came up with the FATCA legislation and exactly why they wanted it.
Other News:
•CEO of Bitcoin Officially Bans China
•Federal Bank VP: Bitcoin Threat Means Banks Must ‘Adapt or Die’
•Online and Mobile Gamers Can Now Buy In-Game Perks with BTC Through SuperRewards
•PBOC Officials Discuss Bitcoin as China’s Central Bank Stays Silent on Rumours
•How Israel Can, and Should, Become Ground Zero for Bitcoin
•Understanding the value of Bitcoin means finding the right balance
No they didn’t mess up. They know perfectly well what Bitcoin is, just like they know perfectly what gold and silver coins are. It is not their objective to be philosophically correct. Their objective is to privilege the dollar and that is what they are doing here. Don’t expect the government to just lay down and allow a new form of currency that could jeopardize their ability to extract taxes.
“Is a “painting” worth the same if you cut it in half? Or perhaps in 100 pieces?”
Is a bitcoin?
Of course it is... And better, it’s fractions are easily recombined - unlike a painting.
The IRS didn’t mess up. Bitcoin threatens the Fed, and threatens the ability of governments everywhere to steal through inflation. They have to crush it.
In the gilded ballroom of Hyatt’s Savoy ballroom, World War D‘s opening speaker Dr Mark Faber delivered a blunt message: the old world order is over.
‘The US reached a peak in prosperity and influence in the world in the 1950s or 1960s,’ said Faber. But since the 70s the superpower has been locked into a cycle of bubbles, busts and growing debt.
Debt, and the way it has manipulated the global economy, was the main theme of Faber’s address.
‘There are some people who claim to be economists who will tell you debts do not matter,’ Faber told the packed ballroom.
But the real story is different….
Faber explained the flaw at the heart of expansionary monetary policy (such as QE). ‘When you drop dollar bills into the economy…it won’t lift all prices and assets equally at the same time,’ he said. In the 60s and 70s, extra money flowing through the economy inflated wages; in the early 2000s, money printing inflated commodities. But, Faber points out, this price and asset growth is never equal.
In other words, money printing creates more bubbles. Some assets go up, they overshoot, collapse and cause significant damage which necessitates, in the view of the US Federal Reserve, more money printing. It is a vicious cycle we’ve seen since the 70s: each time there was an economic problem, the Fed printed money and created more distortions.
Continued here: http://www.moneymorning.com.au/20140331/dr-marc-faber-the-terminal-phase-of-a-credit-and-asset-bubble.html
When your fiat is based on “debt”, why should anyone expect anything other than the natural inclination to create more of it?
Just sayin’...
All I can say is when Ted Cruz is president he will abolish the IRS, even if he is not elected president he will aggressively pursue the goal. this would be the final solution, and surgically remove many of our woes.
Cruz 2016!
What is the number of his bill in the senate to abolish the IRS?
It is. Two halves of a Bitcoin are worth a Bitcoin. Two halves of a painting are not worth a full painting. Part of the value of the painting resides in continuity - that it remains in one piece. Each part of a Bitcoin is percentagely equal (half is worth half, quarter worth 25%, etc), and can be recombined into the original item, with the same value.
The video below will confirm what Cruz intends to do regarding the IRS, now you know a serious Bill, is not just drafted and submitted, if you are serious you need to rally the troops, this takes time, but should be easier after the 2014 election when conservatives have the House and Senate, which I believe we will.
http://www.youtube.com/watch?v=Qb7D3hWw9IA Only 50 seconds.
At the above link you will many other videos of Cruz saying abolish the IRS, now what I like about Cruz he means what he says.
Get back to me when he does something more than a youtube video. I guess expecting a legislator to actually submit a bill is too much work for these hacks.
Isn’t this a good thing. The govt will share in losses on bit coin as well as gains.............................
No, the paperwork will kill it for anyone who wants to remain honest - especially miners. Th9s ruling will only create more lawbreakers and benefit those who prey off of them if it stands. If it isn’t changed, it will speak volumes about our country and where we’re all headed, as if we didn’t need another sign post.
No, the paperwork will kill it for anyone who wants to remain honest - especially miners. Th9s ruling will only create more lawbreakers and benefit those who prey off of them if it stands. If it isn’t changed, it will speak volumes about our country and where we’re all headed, as if we didn’t need another sign post.
My “joke” was everyone here only talks about gains with bit coin............................
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