13 ms·
3. Bitcoin
by bostand 10y ago
3. Bitcoin
- 21 10y agoIndeed, bitcoin is the true enabler. But the dangers are pretty high. You never know how ten years from now the digital trail you left comes back to bite you. Cashing large amounts it's not trivial. Sure, you can meet in private locations with local bitcoin buyers, but when you have $1 mil to sell it gets tricky, there aren't that many buyers in any particular area. And then you have the problem of justifying how you suddenly have one million.
- branchless 10y agoWhat actually happens when you try to get out of bitcoin? Let's say I put in $5k a few years back which is now worth $100k. I have to go on the exchange and nominate a bank account then sell then they transfer say USD into my account? At this point is this "capital gains" taxable? Assuming I'm willing to pay the tax if it's due has anyone had trouble with authorities questioning your new cash pile say if before this you had no real money and lucked out on Bitcoin?
- olegkikin 10y agoThe government doesn't give a shit, as long as it's legal and as long as you pay the taxes. Bitcoin isn't the only thing in the world that goes up and down in value, so it isn't new from the tax perspective.
- SomeStupidPoint 10y agoTo be fair, the IRS doesn't care if it's legal, as long as you pay your taxes. There are rules about how you report your illegal gains (and deductions on them).
- yason 10y agoYou have proof of this as the bitcoin transactions are public. The taxman can verify that you bought your coins five years ago and sold them this year. Multiply those by the BTC exchange rate five years ago and now, and it should be obvious that you put in 5k and got out 100k. You could've bought stock, or other currencies, but you bought BTC and it skyrocketed.
- lisper 10y ago> The taxman can verify that you bought your coins five years ago and sold them this year. How? The public block chain only contains records of how coins moved from one wallet to another. It doesn't have any information about who those wallets belonged to, or what the terms of the transaction were. Maybe the coins were sold for fiat currency, or maybe they were compensation for goods and services. There's no way to know just from the information in the blockchain. [EDIT] Let me make this more clear: it is easy to anonymize BTC. It is so easy that the technique even has a name (bitcoin tumbling) and companies that will do it for you as a service (e.g. https://bitlaunder.com https://bitlaunder.com). (I thought this was common knowledge around here.) In the face of these facts, how is the IRS going to enforce the tax code against a someone who tumbles their coins?
- toomuchtodo 10y agoAt some point the wallet will correlate with meat space.
- deleted 10y ago[deleted]
- lisper 10y agoYes, but if you want to enforce the tax code against dishonest actors it is not enough to correlate "at some point". You have to correlate an entire sub-chain and show that all of the intermediate wallets were controlled by the same entity. (See the update to my OP.)
- nightski 10y agoActually don't rely on my advice but I am pretty sure if you can't prove when you originally bought it and for what price you have to pay capital gains on the FULL amount. The burden is on you not the IRS.
- 10y ago
- ra 10y agoJust keep the documentation for purchase and sale, and for any costs incurred while holding / transacting your BTC. Speak to a local tax advisor about CGT. 100k is a significant amount and I would advise you don't intentionally break the law "cashing out".
- leakybit 10y agoOr you could set up a corporate bank account in the Caymens and cash out via btc-e (which is Russian) and not pay any tax.
- LeoPanthera 10y agoA fresh Coinbase account will let you sell $15,000 a week, and I assume that this increases over time.
- nemoniac 10y agoThat depends what country you're in. In my country there is no capital gains tax.
- deleted 10y ago[deleted]
- supergreg 10y agoOr you could, you know, use Bitcoin as money instead of trying to convert it to Dollars all at once.
- golergka 10y agoEarn Bitcoin as blackhat, then use it to order pizza to your real address. Seems like a solid plan.
- goatsi 10y agoGo to Alphabay and purchase some drugs. Buy MDMA at $9-20/g, sell it at $80-100/g. Buy LSD at $1/blotter, sell it at $10 a blotter. Buy Xanax at $0.90/pill, sell it at $2-5/pill. Obviously you need to make some connections for this to work.
- navait 10y agoThe idea is to put yourself at less legal risk, not more. The penalties for drug dealing are pretty harsh in most of the world.
- RangerScience 10y agoI tried tracing Bitcoin transactions once. Not being a security professional in any way, you should take my opinion with a grain of salt, but what I found was that if you send the coins through a mixer, it's probably impossible to figure out where they went afterwards. There's just way to many ways to obfuscate where they ultimately end up, with even a bit of effort. With proper precautions, I would not expect to be tracked down through the coins themselves.
- KON_Air 10y agoAlso anyone who can trace bitcoins just won't let themselves be in such a position to begin with.
- awqrre 10y ago
- prebrov 10y agoGet an airplane ticket, fly to China or Russia or Cayman Islands, cash a gazillion of bitcoins into any currency you want or gold bars or pebbles. Done! Naturally, you'll have to shell out some "transaction fees" to some authorities, but that's just standard laundering thing.
- ycmbntrthrwaway 10y agoBefore bitcoin and even now there are options such as liberty reserve and web money.
- nickjarboe 10y agoThe major plot point of Neal Stephenson's novel Reamde (2011) was people paying off ransomware in a MMORPG with in-game gold which was easily changed for real money. One of the characters makes the comment that ransomware was not possible until anonymous payment online could happen. It would be interesting to know when Stephenson became aware of bitcoin.