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The exchanges will all eventually have reporting requirements for US citizens making transfers above a certain threshold in a certain period of time. Once the

by iaw 14y ago

The exchanges will all eventually have reporting requirements for US citizens making transfers above a certain threshold in a certain period of time. Once the IRS actually gets to work and addresses this they'll probably end up altering terminology so that a bit coin "account" is comparable to all bit coins within an individuals direct ownership and control. In the end investment proceeds from bitcoin will be taxed and traced. I wouldn't try to outsmart or game the US government in terms of account balances, I could see a "smart" early adopter going to jail because of their efforts to avoid taxes.

SilasX 14y ago
And if the money's never on an exchange, but just in the network? And how do they prove I own any bitcoin?
- jiggy2011 14y ago
  I wondered about this too, if it gets to the point where you can buy significant goods and services with bitcoin then it's basically a tax evaders dream.
  - dublinben 14y ago
    Only to the point where the IRS audits you for spending significantly more money than you earn. Drug dealers and organized criminals get caught for this very problem concerning undeclared cash.
    - SilasX 14y ago
      Good point. But even if you reveal ownership of any bitcoins "as soon as you have to" (oh yeah I sold some consulting overseas for 100 BTC ...), and pay the taxes on them, it still functions as a great way to protect your savings against inflation-happy governments, in a way that commodities and "inflation-protected government bonds" can't. Ask any Argentinian if they'd like to have kept a stash before the Corralito.
    - jiggy2011 14y ago
      That's true, if you have a ferrari and declare minimum wage income you'll have problems though there are many less conspicuous ways to spend/save/invest the money. You would certainly get a significant rise in tax evasion. I'm not actually convinced that's a bad thing overall (though I'm not inherently anti tax). If it brings tax schemes previously only available to the wealthy into the hands of commoners.
- deleted 14y ago
  [deleted]
ksherlock 14y ago
If you make money buying and selling bitcoins, that is a taxable capital gain.

by iaw 14y ago

SilasX 14y ago

And if the money's never on an exchange, but just in the network? And how do they prove I own any bitcoin?

jiggy2011 14y ago
I wondered about this too, if it gets to the point where you can buy significant goods and services with bitcoin then it's basically a tax evaders dream.
- dublinben 14y ago
  Only to the point where the IRS audits you for spending significantly more money than you earn. Drug dealers and organized criminals get caught for this very problem concerning undeclared cash.
  - SilasX 14y ago
    Good point. But even if you reveal ownership of any bitcoins "as soon as you have to" (oh yeah I sold some consulting overseas for 100 BTC ...), and pay the taxes on them, it still functions as a great way to protect your savings against inflation-happy governments, in a way that commodities and "inflation-protected government bonds" can't. Ask any Argentinian if they'd like to have kept a stash before the Corralito.
  - jiggy2011 14y ago
    That's true, if you have a ferrari and declare minimum wage income you'll have problems though there are many less conspicuous ways to spend/save/invest the money. You would certainly get a significant rise in tax evasion. I'm not actually convinced that's a bad thing overall (though I'm not inherently anti tax). If it brings tax schemes previously only available to the wealthy into the hands of commoners.
deleted 14y ago
[deleted]

ksherlock 14y ago

If you make money buying and selling bitcoins, that is a taxable capital gain.