Skip to comments.What the IRS Bitcoin Tax Guidelines Mean For You
Posted on 03/26/2014 6:05:50 AM PDT by Errant
The US Internal Revenue Service finally announced its guidance for virtual currencies yesterday, explicitly referring to bitcoin (see the announcement here and notice here). The increased clarity provided three weeks before the end of the US tax year - will come as a relief to many who were scared to get involved in bitcoin, commercially. But what does it mean for different members of the bitcoin community?
US businesses wanting to get involved in bitcoin have been waiting for this for a while. As recently as January, US Taxpayer Advocate Nina Olson pressured the IRS in her annual report to Congress, telling it that it needed to publish guidance. The lack of rules was a serious problem, she said, and many businesses would be surprised to hear that capital gains could be imposed on bitcoins.
Well, now, thats official: in its guidance, the IRS has said that bitcoin should be treated as property, making it subject to capital gains tax. That has significant ramifications for different kinds of businesses and individuals dealing in bitcoin.
(Excerpt) Read more at coindesk.com ...
They don’t need to make it illegal... just treat it as a commodity and tax the hell out of it as a barter exchange. Also, force people to keep accurate records of all transactions, which defeats the anonymous transaction feature.
From Business Insider:
“The IRS has ruled Bitcoin should be treated as property, not as currency, for tax purposes.
According to Bitcoin tax expert Tyson Cross, this will create a significant burden on Bitcoin users, as every transaction they ever make using the digital currency will have to be reported in some way.
That would not be the case if it had been ruled a digital currency.
“Users will have to track their transactions and determine the amount of their taxable gain each time,” he told BI in an email. “It’s quite a burden. The rules on taxing foreign currency provide an exception for ‘personal transactions’ for that very reason. It would be great to have that exception (or something similar) apply to bitcoins as well.”
But Cross adds the IRS’ guidance may not stand forever. The Treasury Department should now begin developing formal regulations tailored to digital currencies.
“That typically begins with a request for public comments, which was included in the notice,” he said. “Tax professionals can then identify issues and advocate possible solutions. So between now and the issuance of actual regulations (which takes years), there’s ample opportunity to shape the tax treatment.”
The agency says anyone who holds the currency will have to calculate its value from the date it was received to determine whether a gain or loss was realized, and report the result.
If you’ve done any Bitcoin mining, the fair market value of the virtual currency as of the date of receipt is includible in gross income.
If it’s going to come into widespread public acceptance ... things like this are inevitable. AND ... things like this INCREASE the public acceptance.
We now have an imaginary tax on an imaginary currency, developed through imaginary entities because someone decided they could realize a fantasy
algore is PISSED !
The record "keeping" isn't an issue, since it's all electronic. Moving it over to a tax app, might be a lot work tho. Anonymity never was a strong feature, even from its creation.
This will be burdensome for the little miner guys working out of their homes, unless this first guidance is greatly amended. They are also the ones that process the transactions.
I see someone building an app that will take all of the transaction data, pull in the historical price records (that's brings up another question: the price of record for determining value), and offer the ability to export all a your tax filing software!
What’s insane, it the amount and number of taxes “We The People” are subjected to. Land of the free my ass...
If I'm correct ( and I believe I am), that this is all an invention and the tool used is a miner, then the same mining concept and technology is surfing these threads (not only on FR) and conglomerating the suggestions
And what makes anyone think the honcho in this whole thing is NOT an obama created EO appointee of some "foreign finance commissioner" (that y'all thought was a legitimate, if useless office, etc.)
"tax the hell out of it "
"force people to keep accurate records of all transactions"
Do you work for the IRS? If not; I'm sure they would love to hire you!
And what makes anyone think the honcho in this whole thing is NOT an obama created EO appointee...
Because bitcoin was created by "geeks" who are not known for their worship of centralized control over anything. That's not to say that in the future, some government or central bank will not take the technology and attempt to use it to their advantage. But again, there is that competition thing from all the other digital currencies.
Is this a parody?
Lol, what do you all think airline “skymiles” and credit card “cash back” programs are?
in a round about way, they are alternate currency to skirt the IRS.
You mean they’re not marketing incentives???
I said, that’s what the IRS will do, not what I want them to do!
Also, that if the government doesn’t like anonymous crypto-currencies, it doesn’t have to outlaw them, it can simply tax them and create onerous record-keeping requirements.
It’s not my desire or recommendation... it’s my assessment.
Don’t forget compounded interest
They trade it as property. What is the big deal. I track when I buy them, and I track when I dispose of the asset. Just like I do with stocks, business assets, and, if I were ever to buy gold and silver, bullion.
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