Author Topic: [USA] IRS Declares Virtual Currency to Be Property, Not Currency  (Read 11248 times)

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Offline luckybit

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If you don't want unnecessary taxes on your Bitshares, while I'm not giving tax advice this is how I would think to do it.

Buy your Bitshares and don't sell them until cryptocurrency is made tax free. Just trade within the Bitshares ecosystem. Trade within is still income so you might still be taxed but you wont pay as much.

If you sell and buy Bitshares for Fiat/Bitcoin over and over, that is where you get taxed.
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Offline luckybit

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Not familiar with US legislation. Does anyone have a guess whether this will move the price up or downwoards?

It's not going to move the price but its a pain in the ass for taxpayers to have to try and track every trade. It's probably impossible to do it with the current technology as this would have to be built into clients themselves to work.

Bitshares wont have this problem as much because of how it's designed but if you use Cryptsy it means you have to track every single trade and the capital gains on everything.

If you use all sorts of mining pools, Cryptsy and sites which are shut down or the information is just lost, you'll have to deal with the IRS someday unless we can get a law passed to make cryptocurrency tax free.

Technology doesn't solve every problem. Sometimes you have to work the system to get a favorable bill passed and that is the reason to interface with regulators.

I actually can not imagine how that would be possible to track my trades!!!! It's a horrible scenario :((

I suggest you contact your lawyer and accountant. Did you think that the IRS was going to let us get away with not paying taxes?

Maybe this will make the community demand that cryptocurrency be tax free. Organize politically while you pay your taxes. In the short term as a bandaid it is possible to create an extension to the different clients to handle taxes, that will at least allow people to attempt to track it. The client itself could track the daily $ value of Bitcoin and have a button to click to see all the dollar values of your trades. Another button and it could turn it into a CSV. Then you could take that CSV to some professional Bitcoin accounting software or to your accountant.




« Last Edit: March 26, 2014, 12:41:53 am by luckybit »
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Offline santaclause102

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Not familiar with US legislation. Does anyone have a guess whether this will move the price up or downwoards?

It's not going to move the price but its a pain in the ass for taxpayers to have to try and track every trade. It's probably impossible to do it with the current technology as this would have to be built into clients themselves to work.

Bitshares wont have this problem as much because of how it's designed but if you use Cryptsy it means you have to track every single trade and the capital gains on everything.

If you use all sorts of mining pools, Cryptsy and sites which are shut down or the information is just lost, you'll have to deal with the IRS someday unless we can get a law passed to make cryptocurrency tax free.

Technology doesn't solve every problem. Sometimes you have to work the system to get a favorable bill passed and that is the reason to interface with regulators.

I actually can not imagine how that would be possible to track my trades!!!! It's a horrible scenario :((

Offline luckybit

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How this will affect Bitshare X  ?

 I'm thinking that it gives more power to BitAssets because as they are not fluctuating like bitcoins there is no capital losses or gains. So the merchant could use that and it pretty save. But this is not the same with the bitshares themselves.

BitAssets wont acquire capital gains. Once you buy into the Bitshares system by buying Bitshares the only thing being traded are Bitshares. So you don't pay capital gains on every BitAsset.

There might be some sort of tax if its treated like gambling due to prediction market elements but that is not capital gains. That is more like winning the lottery and you pay tax as income.

So if you buy BitUSD with Bitcoin I would guess you would pay some sort of capital gain tax on the trade but it would be minimal because BitUSD price is supposed to be stable. The capital gain would come from Bitcoin which might buy a bit more BitUSD tomorrow than today.

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Offline luckybit

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Not familiar with US legislation. Does anyone have a guess whether this will move the price up or downwoards?

It's not going to move the price but its a pain in the ass for taxpayers to have to try and track every trade. It's probably impossible to do it with the current technology as this would have to be built into clients themselves to work.

Bitshares wont have this problem as much because of how it's designed but if you use Cryptsy it means you have to track every single trade and the capital gains on everything.

If you use all sorts of mining pools, Cryptsy and sites which are shut down or the information is just lost, you'll have to deal with the IRS someday unless we can get a law passed to make cryptocurrency tax free.

Technology doesn't solve every problem. Sometimes you have to work the system to get a favorable bill passed and that is the reason to interface with regulators.
https://metaexchange.info | Bitcoin<->Altcoin exchange | Instant | Safe | Low spreads

Offline oco101

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How this will affect Bitshare X  ?

 I'm thinking that it gives more power to BitAssets because as they are not fluctuating like bitcoins there is no capital losses or gains. So the merchant could use that and it pretty save. But this is not the same with the bitshares themselves.

Offline davidpbrown

Having clear legislation must be a big positive for business enagement. It's not quite death by taxes but might be a PITA for individuals to understand - I expect it'll be a positive overall.

But wasnt this clarification?

Clear as mud to me when I read it. I'm not familar with US taxes; perhaps it's clearer to those who've done an IRS form before.
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Offline santaclause102

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Having clear legislation must be a big positive for business enagement. It's not quite death by taxes but might be a PITA for individuals to understand - I expect it'll be a positive overall.

But wasnt this clarification?

Offline BldSwtTrs

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This is definetly a good news. A huge good news.

Now merchants know how to make their comptability, Wall Steet knows how to deal with taxation.

Remember what happened after the FinCEN guidance... Removing incertitudes is good.

Offline oco101

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"The rules provide clarity for those investing in Bitcoin and were welcomed by attendees at a conference on virtual currencies in San Francisco."
http://www.pcworld.com/article/2111740/us-will-tax-bitcoin-as-property-like-stocks-rather-than-as-currency.html

But still  not convince this is good news  ! Need to hear a financial US expert on that. Like what is the effect on business like Coinbase ?


Offline davidpbrown

Having clear legislation must be a big positive for business enagement. It's not quite death by taxes but might be a PITA for individuals to understand - I expect it'll be a positive overall.
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Offline oco101

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Not familiar either. But one thing is for sure the price will drop big time at least until is more clear if is good or bad. Hope I'm wrong tough !!!
« Last Edit: March 25, 2014, 09:14:12 pm by oco101 »

Offline santaclause102

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Not familiar with US legislation. Does anyone have a guess whether this will move the price up or downwoards?

Offline Stan

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Meanwhile, leading gold and silver advocate Mike Maloney just had a few nice things to say about crypto currencies vs. the banking system.

http://hiddensecretsofmoney.com/blog/BitcoinDestroysBankingLeechesMikeMaloney
Anything said on these forums does not constitute an intent to create a legal obligation or contract of any kind.   These are merely my opinions which I reserve the right to change at any time.