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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 spen

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.

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.