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Spending it on a purchase is considered to be the same as selling it at a specific price. If you use bitcoin as a currency, then you have to report every transa

Spending it on a purchase is considered to be the same as selling it at a specific price. If you use bitcoin as a currency, then you have to report every transaction on your tax report, including the price that you acquired the bitcoin at, and its price at the time that you used it to purchase something.

ryandrake 6y ago
We have to do that with securities too. You sell, you report. If my Bitcoin wallet was hosted with some financial company like Coinbase, I'd want/expect them to send me a 1099-B reporting those sales to help me with my taxes, just like Schwab sends me a 1099-B for stock transactions. But if not, just keep a record of the transaction in your own documents, showing the price of Bitcoin when the transaction happened, and that should be enough for the IRS.
- leereeves 6y ago
  I think rashkov is talking about trading Bitcoin directly for goods and services, as originally intended. If you did that, you'd have to report every purchase on your taxes as a separate asset sale.
  - ryandrake 6y ago
    That doesn't seem unreasonable. If I traded you a share of TSLA for a laptop, the IRS would treat it similarly, no? Bartering transactions are taxable.
    - deleted 6y ago
      [deleted]
    - gpapilion 6y ago
      Yes completely taxable. The difference being most people don’t trade Tesla shares for laptops.
derekp7 6y ago
I recal a thread on /r/personalfinance where someone bought Bitcoin, directly for another altcoin after the Bitcoin value went up, the end-of-year happened, then in January the altcoin value tanked. If both happened in the same year that person could use the loss of the altcoin to offset the gain of the bitcoin. But since they were in separate years, they had to come up with some huge amount of money to pay taxes on the gains from bitcoin (gains that were wiped out by the drop in value from the altcoin). To do this properly, everytime you use bitcoin to buy something you should sell enough bitcoin (for cash) at the same time to generate enough cash to cover the tax on the main transaction (assuming bitcoin went up in value from when you acquired it).

ryandrake 6y ago

We have to do that with securities too. You sell, you report. If my Bitcoin wallet was hosted with some financial company like Coinbase, I'd want/expect them to send me a 1099-B reporting those sales to help me with my taxes, just like Schwab sends me a 1099-B for stock transactions. But if not, just keep a record of the transaction in your own documents, showing the price of Bitcoin when the transaction happened, and that should be enough for the IRS.

leereeves 6y ago
I think rashkov is talking about trading Bitcoin directly for goods and services, as originally intended. If you did that, you'd have to report every purchase on your taxes as a separate asset sale.
- ryandrake 6y ago
  That doesn't seem unreasonable. If I traded you a share of TSLA for a laptop, the IRS would treat it similarly, no? Bartering transactions are taxable.
  - deleted 6y ago
    [deleted]
  - gpapilion 6y ago
    Yes completely taxable. The difference being most people don’t trade Tesla shares for laptops.

derekp7 6y ago

I recal a thread on /r/personalfinance where someone bought Bitcoin, directly for another altcoin after the Bitcoin value went up, the end-of-year happened, then in January the altcoin value tanked. If both happened in the same year that person could use the loss of the altcoin to offset the gain of the bitcoin. But since they were in separate years, they had to come up with some huge amount of money to pay taxes on the gains from bitcoin (gains that were wiped out by the drop in value from the altcoin). To do this properly, everytime you use bitcoin to buy something you should sell enough bitcoin (for cash) at the same time to generate enough cash to cover the tax on the main transaction (assuming bitcoin went up in value from when you acquired it).