4 ms·

They can make you pay because they're the government. They would make you pay taxes on the fair market value of the goods. http://www.irs.gov/taxtopics/tc420.ht

by eurleif 14y ago

They can make you pay because they're the government. They would make you pay taxes on the fair market value of the goods. http://www.irs.gov/taxtopics/tc420.html http://www.irs.gov/taxtopics/tc420.html The prohibition of exchange most likely would not enter into it, because that would be a completely separate law from the tax code..

randomdata 14y ago
Wouldn't the fair market value be zero, given that there is no possible way to give the item value under the given scenario?
- eurleif 14y ago
  An illegal market is still a market. http://en.wikipedia.org/wiki/Taxation_of_illegal_income_in_the_United_States http://en.wikipedia.org/wiki/Taxation_of_illegal_income_in_t...
- anigbrowl 14y ago
  Of course there's a way to give the item value - pass it to someone who is willing to pay for it with dollars. Likewise, the value of your bartered goods can be calculated on a dollar basis by examining what other people for the same goods. Really, how dumb do people think the IRS are? These are like middle school pranks for getting out of doing your homework.
  - robryan 14y ago
    I am sure this isn't their first time round the block either when it comes to pulling appart schemes to transfer wealth in something other than dollars.
  - randomdata 14y ago
    > Of course there's a way to give the item value - pass it to someone who is willing to pay for it with dollars. The previous posts said there would be no possible way to transfer the item into dollars. By definition, that makes the value equal to zero dollars. There is no transaction that can possibly made to demonstrate the fair market value being any greater. Of course the IRS will find some loophole to fabricate some value above zero, but that doesn't change the real market value.
    - anigbrowl 14y ago
      It's a false premise. If the goods are worth accumulating then they're fungible. Bnning teh exchange of something as a means of sidestepping currency transaction rules does not destroy inherent value. Suppose, for example, you have a scheme where people use goats as currency. The goats are all kept on a big farm somewhere, and when one person wants to transfer money to someone else who is a member of the scheme the farm operator updates the notional total of goats owned by each party. If there are enough members in the pool to provide a variety of goods and services to each other, it could be a tax avoidance scheme. You could proscribe that trade, while estimating liability by looking at the number of goats owned by the individual members and/or the $ value of goods and services exchanged, even if it were impractical to realize that money by selling the goats (because they all had a disease or because the nominal value had become wildly inflated compared to the going rate in agricultural markets).
    - eurleif 14y ago
      >The previous posts said there would be no possible way to transfer the item into dollars. "Possible" and "legal" are two different words, and two different concepts.
pseingatl 14y ago
There was a recent case involving the imposition of inheritance taxes on artwork that, because it contains bald eagle feathers, cannot be sold to pay the taxes. So theoretically the result of that case could give us some idea of how the courts would treat a situation where someone solely had bitcoin income but no way to exchange it. Plus, there is a certain amount of US-centric moaning in this thread (and I am not criticizing eurleif). Just because the US says "no" doesn't mean that another country won't say "yes." And in that case bitcoin can be converted to that country's currency and then back to USD.

by eurleif 14y ago

randomdata 14y ago

Wouldn't the fair market value be zero, given that there is no possible way to give the item value under the given scenario?

eurleif 14y ago
An illegal market is still a market. http://en.wikipedia.org/wiki/Taxation_of_illegal_income_in_the_United_States http://en.wikipedia.org/wiki/Taxation_of_illegal_income_in_t...
anigbrowl 14y ago
Of course there's a way to give the item value - pass it to someone who is willing to pay for it with dollars. Likewise, the value of your bartered goods can be calculated on a dollar basis by examining what other people for the same goods. Really, how dumb do people think the IRS are? These are like middle school pranks for getting out of doing your homework.
- robryan 14y ago
  I am sure this isn't their first time round the block either when it comes to pulling appart schemes to transfer wealth in something other than dollars.
- randomdata 14y ago
  > Of course there's a way to give the item value - pass it to someone who is willing to pay for it with dollars. The previous posts said there would be no possible way to transfer the item into dollars. By definition, that makes the value equal to zero dollars. There is no transaction that can possibly made to demonstrate the fair market value being any greater. Of course the IRS will find some loophole to fabricate some value above zero, but that doesn't change the real market value.
  - anigbrowl 14y ago
    It's a false premise. If the goods are worth accumulating then they're fungible. Bnning teh exchange of something as a means of sidestepping currency transaction rules does not destroy inherent value. Suppose, for example, you have a scheme where people use goats as currency. The goats are all kept on a big farm somewhere, and when one person wants to transfer money to someone else who is a member of the scheme the farm operator updates the notional total of goats owned by each party. If there are enough members in the pool to provide a variety of goods and services to each other, it could be a tax avoidance scheme. You could proscribe that trade, while estimating liability by looking at the number of goats owned by the individual members and/or the $ value of goods and services exchanged, even if it were impractical to realize that money by selling the goats (because they all had a disease or because the nominal value had become wildly inflated compared to the going rate in agricultural markets).
  - eurleif 14y ago
    >The previous posts said there would be no possible way to transfer the item into dollars. "Possible" and "legal" are two different words, and two different concepts.

pseingatl 14y ago

There was a recent case involving the imposition of inheritance taxes on artwork that, because it contains bald eagle feathers, cannot be sold to pay the taxes. So theoretically the result of that case could give us some idea of how the courts would treat a situation where someone solely had bitcoin income but no way to exchange it. Plus, there is a certain amount of US-centric moaning in this thread (and I am not criticizing eurleif). Just because the US says "no" doesn't mean that another country won't say "yes." And in that case bitcoin can be converted to that country's currency and then back to USD.