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Who thinks trading in Bitcoin makes them magically exempt from the tax laws of their country? Of course, pretty unsure of how they'd have any sort of accountabi

Who thinks trading in Bitcoin makes them magically exempt from the tax laws of their country? Of course, pretty unsure of how they'd have any sort of accountability or venerability for self-reported Bitcoin income. "On your 1099 please list all Bitcoin address you've sent or received money from". Right.

wmf 13y ago
A lot of people operate on wishful thinking.
gamblor956 13y ago
That's how you report much of your income right now (in the US). Tax collection in the US is generally based self-reporting, and that extends to gain from foreign currency exchanges. Information collection from multiple parties is used only to audit the self-reported data. If the IRS discovers discrepancies upon comencing an audit, if may (probably will) impose penalties, back taxes, and interest. Sufficiently large underreporting usually leads to criminal charges. Thus, self-reporting of Bitcoin income is fundamentally no different than the existing tax regime.
- DanBC 13y ago
  The only scary thing is paying tax on something that has sometimes drastic changes in value. Taking tax off you, and simultaneously making it impossible to convert bitcoin to dollar seems a bit tricky too. Unless they're happy to accept bitcoin as payment of taxes?
betterunix 13y ago
""On your 1099 please list all Bitcoin address you've sent or received money from". Right." Yeah, here is what would happen if you were caught cheating: "Hi Mr. Auditor. I have nothing to do with Bitcoin, honest!" "Oh, well, what did you use 10kW of power every month for the past yeah?" "Oh, see, I was actually trying to make a cold fusion reactor!" "Show me." "No, I blew it up by accident." "Oh, well, funny how there is no crater..." Seriously, do you think the IRS does not know how to catch people who cheat on their taxes?
- joejohnson 13y ago
  There is no strong correlation between power consumption and the number of bitcoins you've mined. What's to stop me from hoarding hundreds of bitcoins but claiming I've only slush-mined 0.5 BTC?
  - betterunix 13y ago
    Nothing, but then you face the same problem that the mafia has: how do you spend all that hidden money without getting caught? Yes, you can get away with small things -- groceries, bullets, etc. -- but once you buy something big (a car, a boat, a house, a fancy rifle) you're going to have a hard time hiding the transaction.
    - lettergram 13y ago
      Unless of course you claim you made enough BitCoins to buy a house that year, but perhaps not so many as to furnish it (even though you did) Still avoided $20,000 in taxes and pretty much impossible to get caught unless you invite the IRS to your home.
      - betterunix 13y ago
        ...or if the IRS conducts an audit and just shows up, wondering why someone would buy a home, list it as their address, but not bother furnishing it.
pseudonym 13y ago
They don't care so much about the Bitcoins themselves as they do getting their cut of the fiat money when you cash them out, I'd wager. If you buy 300 bushels of apples for $1 and, for whatever reason, the price spikes to $300 overnight, when you sell them do you claim that "Well, I paid the tax on the $1 so I don't have to pay taxes on the $299"? If you keep your money in apples the IRS doesn't want 20% of your apples. It's only if you sell them back out and claim it as income.

wmf 13y ago

A lot of people operate on wishful thinking.

gamblor956 13y ago

That's how you report much of your income right now (in the US). Tax collection in the US is generally based self-reporting, and that extends to gain from foreign currency exchanges. Information collection from multiple parties is used only to audit the self-reported data. If the IRS discovers discrepancies upon comencing an audit, if may (probably will) impose penalties, back taxes, and interest. Sufficiently large underreporting usually leads to criminal charges. Thus, self-reporting of Bitcoin income is fundamentally no different than the existing tax regime.

DanBC 13y ago
The only scary thing is paying tax on something that has sometimes drastic changes in value. Taking tax off you, and simultaneously making it impossible to convert bitcoin to dollar seems a bit tricky too. Unless they're happy to accept bitcoin as payment of taxes?

betterunix 13y ago

""On your 1099 please list all Bitcoin address you've sent or received money from". Right." Yeah, here is what would happen if you were caught cheating: "Hi Mr. Auditor. I have nothing to do with Bitcoin, honest!" "Oh, well, what did you use 10kW of power every month for the past yeah?" "Oh, see, I was actually trying to make a cold fusion reactor!" "Show me." "No, I blew it up by accident." "Oh, well, funny how there is no crater..." Seriously, do you think the IRS does not know how to catch people who cheat on their taxes?

joejohnson 13y ago
There is no strong correlation between power consumption and the number of bitcoins you've mined. What's to stop me from hoarding hundreds of bitcoins but claiming I've only slush-mined 0.5 BTC?
- betterunix 13y ago
  Nothing, but then you face the same problem that the mafia has: how do you spend all that hidden money without getting caught? Yes, you can get away with small things -- groceries, bullets, etc. -- but once you buy something big (a car, a boat, a house, a fancy rifle) you're going to have a hard time hiding the transaction.
  - lettergram 13y ago
    Unless of course you claim you made enough BitCoins to buy a house that year, but perhaps not so many as to furnish it (even though you did) Still avoided $20,000 in taxes and pretty much impossible to get caught unless you invite the IRS to your home.
    - betterunix 13y ago
      ...or if the IRS conducts an audit and just shows up, wondering why someone would buy a home, list it as their address, but not bother furnishing it.

pseudonym 13y ago

They don't care so much about the Bitcoins themselves as they do getting their cut of the fiat money when you cash them out, I'd wager. If you buy 300 bushels of apples for $1 and, for whatever reason, the price spikes to $300 overnight, when you sell them do you claim that "Well, I paid the tax on the $1 so I don't have to pay taxes on the $299"? If you keep your money in apples the IRS doesn't want 20% of your apples. It's only if you sell them back out and claim it as income.