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this is interesting. I get the FX angle, but what if you never convert your BTC to USD? in that case your profits are not "realized" and so long as you pay for

this is interesting. I get the FX angle, but what if you never convert your BTC to USD? in that case your profits are not "realized" and so long as you pay for stuff in BTC how can they possibly calculate your gains

ksherlock 9y ago
https://www.irs.gov/newsroom/four-facts-about-bartering https://www.irs.gov/newsroom/four-facts-about-bartering Barter Income Barter dollars or trade dollars are identical to real dollars for tax reporting. If you conduct any direct barter - barter for another’s products or services - you will have to report the fair market value of the products or services you received on your tax return.
wiredfool 9y ago
In all likelihood, they'll use the date of sale/purchase to set a exchange rate. This is a recordkeeping and tax form nightmare, especially if there is a lot of trading. It may be possible to report the net gains over the year for frequent trading similar to security trading, but the details are somewhat foggy at the moment. The theory is not though, and the IRS has had the position for some time that gains in bitcoin imply taxable capital gains.
patio11 9y ago
“Realization” has a meaning in accounting and swapping property for property does, generally, realize the gains. This might or might not generate an informational return to the IRS. Most transactions in the economy don’t. They’re still taxed. The tax system functions on a combination of informational returns and auto matching, human-intensive audits on a small selection of returns each year, and the honor system. “They can’t tax us if we don’t write stuff down!” is believed by many people, including Bitcoiners, and they are often surprised to find that the IRS has thought of this clever strategy before. For example: “I see you own a boat. What year did you buy it in?” “Oh I dunno.” “2015. Let’s try again: how much did you buy it for?” “I dunno.” “List price, great answer. OK, you understated your income from 2015 by $65k. Here’s your bill for $150k.” “You can’t do that!” “I get that a lot.”
an_account 9y ago
The stuff you buy has value. By law you have to report that value. It would probably be harder for them to catch though, but if suddenly you have a new house you couldn’t afford then they would probably audit you.
deleted 9y ago
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ksherlock 9y ago

https://www.irs.gov/newsroom/four-facts-about-bartering https://www.irs.gov/newsroom/four-facts-about-bartering Barter Income Barter dollars or trade dollars are identical to real dollars for tax reporting. If you conduct any direct barter - barter for another’s products or services - you will have to report the fair market value of the products or services you received on your tax return.

wiredfool 9y ago

In all likelihood, they'll use the date of sale/purchase to set a exchange rate. This is a recordkeeping and tax form nightmare, especially if there is a lot of trading. It may be possible to report the net gains over the year for frequent trading similar to security trading, but the details are somewhat foggy at the moment. The theory is not though, and the IRS has had the position for some time that gains in bitcoin imply taxable capital gains.

patio11 9y ago

“Realization” has a meaning in accounting and swapping property for property does, generally, realize the gains. This might or might not generate an informational return to the IRS. Most transactions in the economy don’t. They’re still taxed. The tax system functions on a combination of informational returns and auto matching, human-intensive audits on a small selection of returns each year, and the honor system. “They can’t tax us if we don’t write stuff down!” is believed by many people, including Bitcoiners, and they are often surprised to find that the IRS has thought of this clever strategy before. For example: “I see you own a boat. What year did you buy it in?” “Oh I dunno.” “2015. Let’s try again: how much did you buy it for?” “I dunno.” “List price, great answer. OK, you understated your income from 2015 by $65k. Here’s your bill for $150k.” “You can’t do that!” “I get that a lot.”

an_account 9y ago

The stuff you buy has value. By law you have to report that value. It would probably be harder for them to catch though, but if suddenly you have a new house you couldn’t afford then they would probably audit you.

deleted 9y ago

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