4 ms·

Why do you believe there should be no capital gains on it?

risho 6y ago
because you can't use it as a money if you need to pay capital gains on every stick of gum you buy. they should find other ways to collect taxes that doesn't inhibit it.
- etimberg 6y ago
  If you held any other foreign currency you would have to track it like this. For example, I live in Canada and if I bought USD and then spent it over the course of a year in Canada I would be responsible for the capital gain tracked on each expenditure based on the day's exchange rate. It's hard to see how Bitcoin should be any different.
  - risho 6y ago
    because the goal would be to have bitcoin be an international money, not a national one. i'm not saying people shouldn't pay taxes, i would just suggest that there are better ways to collect it such that it doesn't inhibit progress. as it exists right now it is infeasible to use bitcoin as money day to day and accurately report your taxes.
  - wmf 6y ago
    There's an exemption for foreign currencies that does not apply to cryptocurrency.
garmaine 6y ago
Or subject to VAT...
nichohel 6y ago
Possibly funny thought: If you have to declare a capital gain on every BTC purchase of a cup of coffee, why can't you declare a capital loss every time you spend dollars that you earned long ago, and which have decreased significantly in value since then, due to inflation?
- wmf 6y ago
  Serious answer: In the US, capital gains and losses are defined relative to the US dollar.
- chii 6y ago
  you can and would declare capital losses on gold sold at a loss. Cash does not have gains/losses, as they are themselves the unit of accounting. The inflation effect causing cash to lose value is something you suck up - it's incentive to invest the cash.
  - ineedasername 6y ago
    US cash doesn't have gains/losses, but assets held in foreign currencies & converted to USD are subject to capital gains/losses.
- ineedasername 6y ago
  Technically yes, the same rules apply as if you were trading in any international currency. If you sell yen at a profit to convert to USD & purchase something, you owe tax. What sort of tax can be complicated depending on how long the asset was held. I'm not an accountant, but I think assets held less than a year are taxed as personal income, so marginal rates apply. Assets held longer than a year are, I believe, taxed as regular capital gains. I'm not sure what would/should happen with extremely short term trades, i.e, you convert to Euros from USD for a vacation, the USD crashes, you convert back upon return from your vacation. I doubt the IRS worries too much about it, but I suppose technically you should file Form 8949 along with a Schedule D.
- nichohel 6y ago
  The responses are valid as far as they go, but the larger point is that the government in a jurisdiction is free to inflate its own currency at great benefit to itself while simultaneously extracting taxes on fictitious "gains" of other currencies or equivalents (like BTC) against that currency.

because you can't use it as a money if you need to pay capital gains on every stick of gum you buy. they should find other ways to collect taxes that doesn't inhibit it.

etimberg 6y ago
If you held any other foreign currency you would have to track it like this. For example, I live in Canada and if I bought USD and then spent it over the course of a year in Canada I would be responsible for the capital gain tracked on each expenditure based on the day's exchange rate. It's hard to see how Bitcoin should be any different.
- risho 6y ago
  because the goal would be to have bitcoin be an international money, not a national one. i'm not saying people shouldn't pay taxes, i would just suggest that there are better ways to collect it such that it doesn't inhibit progress. as it exists right now it is infeasible to use bitcoin as money day to day and accurately report your taxes.
- wmf 6y ago
  There's an exemption for foreign currencies that does not apply to cryptocurrency.

garmaine 6y ago

Or subject to VAT...

nichohel 6y ago

Possibly funny thought: If you have to declare a capital gain on every BTC purchase of a cup of coffee, why can't you declare a capital loss every time you spend dollars that you earned long ago, and which have decreased significantly in value since then, due to inflation?

wmf 6y ago
Serious answer: In the US, capital gains and losses are defined relative to the US dollar.
chii 6y ago
you can and would declare capital losses on gold sold at a loss. Cash does not have gains/losses, as they are themselves the unit of accounting. The inflation effect causing cash to lose value is something you suck up - it's incentive to invest the cash.
- ineedasername 6y ago
  US cash doesn't have gains/losses, but assets held in foreign currencies & converted to USD are subject to capital gains/losses.
ineedasername 6y ago
Technically yes, the same rules apply as if you were trading in any international currency. If you sell yen at a profit to convert to USD & purchase something, you owe tax. What sort of tax can be complicated depending on how long the asset was held. I'm not an accountant, but I think assets held less than a year are taxed as personal income, so marginal rates apply. Assets held longer than a year are, I believe, taxed as regular capital gains. I'm not sure what would/should happen with extremely short term trades, i.e, you convert to Euros from USD for a vacation, the USD crashes, you convert back upon return from your vacation. I doubt the IRS worries too much about it, but I suppose technically you should file Form 8949 along with a Schedule D.
nichohel 6y ago
The responses are valid as far as they go, but the larger point is that the government in a jurisdiction is free to inflate its own currency at great benefit to itself while simultaneously extracting taxes on fictitious "gains" of other currencies or equivalents (like BTC) against that currency.