3 ms·

That's not unique to Bitcoin though, is it? I have a box of foreign money at home which I use every time I am abroad. I bet most people have something like it.

by xorcist 11y ago

That's not unique to Bitcoin though, is it? I have a box of foreign money at home which I use every time I am abroad. I bet most people have something like it. If I were to trust you on this, I'd have to record the price of that currency with every cup of coffee in every airport I buy. In practice nobody has done that, ever. I'd say that's safe. Should I suddenly pay cash for new sports cars or houses out of my little box that would be different of course. I doubt the difference between a cup of coffee and a sports car is really encoded in law, but the difference is there and should you find yourself in a grey area (old used car perhaps?) there are people specializing in this very matter that can help.

Rmilb 11y ago
>I have a box of foreign money at home which I use every time I am abroad. I bet most people have something like it. If I were to trust you on this, I'd have to record the price of that currency with every cup of coffee in every airport I buy. In practice nobody has done that, ever. I'd say that's safe. This is not true.In the US there is a tax exemption for small denomination purchases in foreign currency's(I think $200) [1]. I can't find a source right now... *Edit updating citation: User icebraining cited this source in this discussion. 1. https://www.law.cornell.edu/uscode/text/26/988 https://www.law.cornell.edu/uscode/text/26/988
grandsham 11y ago
well, for one, the IRS doesn't treat bitcoin as a currency, but as a commodity. While some foreign currency transactions fall under the regime of capital gains, a transaction resulting in the gain/loss of less than $200 are specifically excluded from capital gains [1]. Note that this relates specifically to changes in value of the US currency in relation to the commodity or foreign currency. In this sense there is a difference between a sports car and a cup of coffee encoded in law. If the euro you bought for $1 is suddenly worth $1.02, and you buy a 1 euro coffee, you'll only realize $0.02 in gains, and not hit the $200 threshold. If you buy a 100,000 euro sports car, you will realize a $2000 gain, and have to report that on your taxes. Since bitcoin is a commodity, it doesn't matter if the value moves 2 cents or 2 dollars or 2 million dollars, all gains are capital gains. So if you buy a coffee with euros you specifically don't need to report that, but with bitcoin you do. Whether the IRS is going to notice that you don't record every single capital gain arising from a bitcoin transaction is another question, but there is a major difference between foreign currencies and bitcoin as far as the IRS goes. [1]http://www.maximadvisors.com/2013/12/us-taxation-of-foreign-currency-gains-or-losses/ http://www.maximadvisors.com/2013/12/us-taxation-of-foreign-...

by xorcist 11y ago

Rmilb 11y ago

>I have a box of foreign money at home which I use every time I am abroad. I bet most people have something like it. If I were to trust you on this, I'd have to record the price of that currency with every cup of coffee in every airport I buy. In practice nobody has done that, ever. I'd say that's safe. This is not true.In the US there is a tax exemption for small denomination purchases in foreign currency's(I think $200) [1]. I can't find a source right now... *Edit updating citation: User icebraining cited this source in this discussion. 1. https://www.law.cornell.edu/uscode/text/26/988 https://www.law.cornell.edu/uscode/text/26/988

grandsham 11y ago

well, for one, the IRS doesn't treat bitcoin as a currency, but as a commodity. While some foreign currency transactions fall under the regime of capital gains, a transaction resulting in the gain/loss of less than $200 are specifically excluded from capital gains [1]. Note that this relates specifically to changes in value of the US currency in relation to the commodity or foreign currency. In this sense there is a difference between a sports car and a cup of coffee encoded in law. If the euro you bought for $1 is suddenly worth $1.02, and you buy a 1 euro coffee, you'll only realize $0.02 in gains, and not hit the $200 threshold. If you buy a 100,000 euro sports car, you will realize a $2000 gain, and have to report that on your taxes. Since bitcoin is a commodity, it doesn't matter if the value moves 2 cents or 2 dollars or 2 million dollars, all gains are capital gains. So if you buy a coffee with euros you specifically don't need to report that, but with bitcoin you do. Whether the IRS is going to notice that you don't record every single capital gain arising from a bitcoin transaction is another question, but there is a major difference between foreign currencies and bitcoin as far as the IRS goes. [1]http://www.maximadvisors.com/2013/12/us-taxation-of-foreign-currency-gains-or-losses/ http://www.maximadvisors.com/2013/12/us-taxation-of-foreign-...