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That's specious reasoning, there are many BTC->USD exchanges and the IRS could easily compel you to exchange your currency for USD.
by ihsw 13y ago
That's specious reasoning, there are many BTC->USD exchanges and the IRS could easily compel you to exchange your currency for USD.
- qq66 13y agoWhy? If you make profits in a foreign currency such as Swiss franc, you only pay tax once you convert those to U.S. dollars.
- kudu 13y agoI'm not sure that's correct. I'm no tax expert, but from my limited knowledge of US income tax, it applies internationally and isn't based on currency. There are some tax treaties to protect people with multiple nationalities from double taxation, but I don't think it's related to currency. Do correct me if I'm wrong.
- saalweachter 13y agoWhile I'm not a tax expert either, the fact that the US demands that people living and working indefinitely in a foreign country pay taxes (something that people have been outraged about on HN before) seems to indicate that they're perfectly willing to tax your Yen.
- kevinnk 13y agoCitation needed, I'm not a tax expert but based on what advice I've previously been given and on http://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad http://www.irs.gov/Individuals/International-Taxpayers/U.S.-... I'm pretty sure that's not true.
- gamblor956 13y agoYou are supposed to pay profits earned in foreign currency on a quarterly basis, via self-reporting, much the same way that self-employment and investment income is suppoed to be reported. In practice, if you use a US financial exchange, they can pay the estimated taxes for you (but not all will do this), and you settle the taxes owed (or refund due) at the close of the tax year.
- javert 13y agoI thought you were supposed to pay profits on foreign currency only when you "cash out" to dollars. Guess I was wrong. Was I just confusing the tax rules for foreign currency, and commodities? Is that the rule for commodities?
- DanBC 13y agoI was under the impression that US tax authorities went after American citizens, even if those are dual-citizenship citizens who've never lived or worked in the US.
- Sealy 13y agoI believe this is the point which the IRS should (if at any point) tax. They can't tax bitcoin yet as they haven't even officially declared it as legal tender. They have to agree what it is first and declare it as a currency before they can tax it. This will take them a long time! Edit: I stand corrected by the comments below.
- saalweachter 13y agoChickens aren't a recognized currency either, but if you conduct your business in them, you will be required to fill out the tax forms pertaining to barter.
- jlgreco 13y agoDo you use the USD<->Chicken exchange rate at the time of barter, or do you use the USD<->Chicken exchange rate at the time that you actually perform that conversion? I think the rules for commodities and currencies are likely different. Regardless, bitcoin is clearly one of those two and you don't get to avoid the IRS by only dealing in commodities.
- gamblor956 13y agoSince there is no authority one way or the other, you generally get to pick. As long as you are consistent (i.e., you always treat it as a commodity/asset or always treat it as a currency), the IRS will generally accept your choice until they or the legislature issues affirmative guidance compelling a particular choice. (Note: this is known as a "method of accounting" in tax parlance.)
- kevinnk 13y agoSomething doesn't have to be legal tender to be taxed. If I'm a home builder I don't avoid paying taxes by being payed in, say, a house rather than USD. I still have to report it as income.