3 ms·

ChuckMcM: what about using Bitcoin as a store of value or investment asset, in the same way people use commodities like gold and silver? Just as it's perfectly

by cs702 14y ago

ChuckMcM: what about using Bitcoin as a store of value or investment asset, in the same way people use commodities like gold and silver? Just as it's perfectly legal to have any portion of your wealth invested in gold or silver, which you can freely buy and sell at any time, shouldn't it be legal to have any portion of your wealth invested in bitcoins, which you should be able to buy and sell at any time like any other commodity? Edit: Note that the same argument can be made for bartering. According to the IRS, in the US, it's perfectly legal to barter any product, commodity, or service for another product, commodity, or service, so long as any taxes due are paid as required by tax law.[1] -- [1] http://www.irs.gov/businesses/small/article/0,,id=188095,00.html http://www.irs.gov/businesses/small/article/0,,id=188095,00....

joe_the_user 14y ago
I believe ChuckMcM is correct and I'd paraphrase his point as Bitcoin is not legal but in an enforcement gray area. For example, I suspect anyone who conducted business in gold or silver, who bought or sold goods and services using gold or silver, would be seeing the black helicopters in fairly short order. I could be wrong and the Feds might only show up once such entity had a little of traction but I am 100% certain they would stop any which seemed like plausible alternative to dollars, especially considering their legal right to do so is spelled out.
ChuckMcM 14y ago
As a value store, sure. Just like baseball trading cards. Where it gets dicey is where person A uses currency to get a proxy item (BitCoin, Casino Chip, Baseball Trading Card) takes that proxy item to Person B and uses it to purchase a good or service of some value, then Person B takes the proxy item and uses it to purchase a good or service from Person C who then converts it back to currency. In those situations the transaction between A and B has become 'lost' (or laundered) because its not possible to connect the transaction C made to the transaction A and B made beyond a reasonable doubt. And that is the stuff that gets the enforcement types all agitated. The IRS would like like to know if you bought some proxy thing, it appreciated in value, and then you sold it for a gain (or loss). BitCoin exchanges should send a 1099 of all transactions to the IRS (I don't know if they do that or not).
- narrator 14y ago
  Also a "Proxy Item" is always subject to capital gains tax and sales tax. Otherwise it would be money. This is the only thing really preventing competing currencies. In fact, Ron Paul has worked on getting this restriction repealed in the case of gold and silver: http://www.lewrockwell.com/paul/paul434.html http://www.lewrockwell.com/paul/paul434.html "The final step to ensuring competing currencies is to eliminate capital gains and sales taxes on gold and silver coins. Under current federal law, coins are considered collectibles, and are liable for capital gains taxes. Short-term capital gains rates are at income tax levels, up to 35 percent, while long-term capital gains taxes are assessed at the collectibles rate of 28 percent. Furthermore, these taxes actually tax monetary debasement. As the dollar weakens, the nominal dollar value of gold increases. The purchasing power of gold may remain relatively constant, but as the nominal dollar value increases, the federal government considers this an increase in wealth, and taxes accordingly. Thus, the more the dollar is debased, the more capital gains taxes must be paid on holdings of gold and other precious metals. Just as pernicious are the sales and use taxes which are assessed on gold and silver at the state level in many states. Imagine having to pay sales tax at the bank every time you change a $10 bill for a roll of quarters to do laundry. Inflation is a pernicious tax on the value of money, but even the official numbers, which are massaged downwards, are only on the order of 4% per year. Sales taxes in many states can take away 8% or more on every single transaction in which consumers wish to convert their Federal Reserve Notes into gold or silver."

by cs702 14y ago

joe_the_user 14y ago

I believe ChuckMcM is correct and I'd paraphrase his point as Bitcoin is not legal but in an enforcement gray area. For example, I suspect anyone who conducted business in gold or silver, who bought or sold goods and services using gold or silver, would be seeing the black helicopters in fairly short order. I could be wrong and the Feds might only show up once such entity had a little of traction but I am 100% certain they would stop any which seemed like plausible alternative to dollars, especially considering their legal right to do so is spelled out.

ChuckMcM 14y ago

As a value store, sure. Just like baseball trading cards. Where it gets dicey is where person A uses currency to get a proxy item (BitCoin, Casino Chip, Baseball Trading Card) takes that proxy item to Person B and uses it to purchase a good or service of some value, then Person B takes the proxy item and uses it to purchase a good or service from Person C who then converts it back to currency. In those situations the transaction between A and B has become 'lost' (or laundered) because its not possible to connect the transaction C made to the transaction A and B made beyond a reasonable doubt. And that is the stuff that gets the enforcement types all agitated. The IRS would like like to know if you bought some proxy thing, it appreciated in value, and then you sold it for a gain (or loss). BitCoin exchanges should send a 1099 of all transactions to the IRS (I don't know if they do that or not).

narrator 14y ago
Also a "Proxy Item" is always subject to capital gains tax and sales tax. Otherwise it would be money. This is the only thing really preventing competing currencies. In fact, Ron Paul has worked on getting this restriction repealed in the case of gold and silver: http://www.lewrockwell.com/paul/paul434.html http://www.lewrockwell.com/paul/paul434.html "The final step to ensuring competing currencies is to eliminate capital gains and sales taxes on gold and silver coins. Under current federal law, coins are considered collectibles, and are liable for capital gains taxes. Short-term capital gains rates are at income tax levels, up to 35 percent, while long-term capital gains taxes are assessed at the collectibles rate of 28 percent. Furthermore, these taxes actually tax monetary debasement. As the dollar weakens, the nominal dollar value of gold increases. The purchasing power of gold may remain relatively constant, but as the nominal dollar value increases, the federal government considers this an increase in wealth, and taxes accordingly. Thus, the more the dollar is debased, the more capital gains taxes must be paid on holdings of gold and other precious metals. Just as pernicious are the sales and use taxes which are assessed on gold and silver at the state level in many states. Imagine having to pay sales tax at the bank every time you change a $10 bill for a roll of quarters to do laundry. Inflation is a pernicious tax on the value of money, but even the official numbers, which are massaged downwards, are only on the order of 4% per year. Sales taxes in many states can take away 8% or more on every single transaction in which consumers wish to convert their Federal Reserve Notes into gold or silver."