4 ms·

i'm not so sure that pertains to actually paying your taxes, otherwise we would all be in an infinite loop of tax paying.

belltaco 8y ago
You're not taxed on the amount you pay, but if you made capital gains on your BTC. You can think of it with the same way with shares. Lets say you bought Apple shares for $100 a while ago. To pay your taxes, you sell five of them at $200. You now realized capital gains(aka profit) of $500, so next year that money gets added to your taxable income. Not sure if it works for BTC, but for shares you can deduct losses till a limit and reduce your capital income. In the above example if you had sold at $50 to pay taxes, you can deduct the $250 from taxable income as a loss next year.
- holtalanm 8y ago
  but with BTC, it would be significantly different, wouldn't it? I mean, you're not selling the BTC to pay your taxes in this case, you are directly paying your taxes with BTC. I'm highly doubting there would be any capital gains tax for this situation.
  - basch 8y ago
    "In general, the sale or exchange of convertible virtual currency, or the use of convertible virtual currency to pay for goods or services in a real-world economy transaction, has tax consequences that may result in a tax liability." It literally says that exchanging the BTC for your debt counts the same as selling it for USD and then paying your debt. You would get the exchange rate at the time of the transaction. If I bought a coin at 1k and pay my taxes with it when its at 2k, it then triggers a liability of 1k, on the gains from buying it to using it.
    - holtalanm 8y ago
      so i pay my taxes with bitcoin. which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes infinite loop.
      - basch 8y ago
        IF bitcoin keeps going up, yes. If at any point you pay your taxes at less, it would be capital losses and you could deduct it from your other gains/losses. IF I buy bitcoin at 5k, and pay my taxes at 5k, its not a taxable event. What you described is the EXACT SAME THING as selling your bitcoin for USD before paying your taxes. They are just letting you skip a step and offering to do the exchange for you.
        holtalanm 8y ago
        fair enough. I may still not agree with the policy, however.
        basch 8y ago

belltaco 8y ago

You're not taxed on the amount you pay, but if you made capital gains on your BTC. You can think of it with the same way with shares. Lets say you bought Apple shares for $100 a while ago. To pay your taxes, you sell five of them at $200. You now realized capital gains(aka profit) of $500, so next year that money gets added to your taxable income. Not sure if it works for BTC, but for shares you can deduct losses till a limit and reduce your capital income. In the above example if you had sold at $50 to pay taxes, you can deduct the $250 from taxable income as a loss next year.

holtalanm 8y ago
but with BTC, it would be significantly different, wouldn't it? I mean, you're not selling the BTC to pay your taxes in this case, you are directly paying your taxes with BTC. I'm highly doubting there would be any capital gains tax for this situation.
- basch 8y ago
  "In general, the sale or exchange of convertible virtual currency, or the use of convertible virtual currency to pay for goods or services in a real-world economy transaction, has tax consequences that may result in a tax liability." It literally says that exchanging the BTC for your debt counts the same as selling it for USD and then paying your debt. You would get the exchange rate at the time of the transaction. If I bought a coin at 1k and pay my taxes with it when its at 2k, it then triggers a liability of 1k, on the gains from buying it to using it.
  - holtalanm 8y ago
    so i pay my taxes with bitcoin. which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes, which get paid in bitcoin, which triggers more taxes infinite loop.
    - basch 8y ago
      IF bitcoin keeps going up, yes. If at any point you pay your taxes at less, it would be capital losses and you could deduct it from your other gains/losses. IF I buy bitcoin at 5k, and pay my taxes at 5k, its not a taxable event. What you described is the EXACT SAME THING as selling your bitcoin for USD before paying your taxes. They are just letting you skip a step and offering to do the exchange for you.
      - holtalanm 8y ago
        fair enough. I may still not agree with the policy, however.
        basch 8y ago