15 ms·
Is there a tax guide that would explain the consequences of me using some of the bitcoin I bought in 2013 to buy an item on overstock this month? As I understa
by csmeder 13y ago
Is there a tax guide that would explain the consequences of me using some of the bitcoin I bought in 2013 to buy an item on overstock this month?
As I understand it I would have to record the value I paid for the bitcoin in 2013, calculate the value it appreciated between when I bought it and the amount I am using to buy the item. And then report this as capital gains on my 2014 tax return?
This sucks, this makes using bitcoin a lot more work than just paying with a credit card. Plus, it might mean having to hire an accountant instead of just using turbo tax?
- mcantelon 13y agoYou seriously think the IRS is going to go after you for an order on Overstock?
- cgore 13y agoPerhaps if you are a political enemy of $political_party_in_power.
- mcantelon 13y agoGood point.
- jasonwocky 13y agoI'm a political enemy of anybody who habitually doesn't pay their taxes, and thus by extension, raises mine.
- mcantelon 13y agoYou must boycott a lot of corporations.
- hbags 13y agoThere's a difference between using legal tax structures to reduce (or eliminate) your bill, and simply not paying your taxes.
- mcantelon 13y agoThe end result is the other guy has to pay your fair share of the taxes.
- gtCameron 13y agoSo how do you define "fair share" if it is not defined by following the tax laws as written?
- mcantelon 13y agoFairness is defined by law? Interesting idea. By "fair share" I mean, unsurprisingly, a share that is fair. Corporations are subject to taxation. A corporation that makes healthy profits, in part driven by publicly funded infrastructure, should be required to give back to maintain said infrastructure.
- grey-area 13y agoTypically corps accused of avoiding tax earn no profits after their myriad coats are applied, that's how they avoid taxes. While governments could probably do more to charge corps tax, this is a complex grey area and there is no simple way to define fair or collect taxes as accounting rules are so complex. If you tax revenue you penalise new companies, if you tax profit it is easy for corps to find costs or transfer funds to shield profits.
- mcantelon 13y agoThey play lots of shell games to hide the profits, yes, and it is complex. I'm more talking more about the big picture than specifics because, as you point out, this is an involved topic which involves a great deal of money. A lot of effort has gone into creating arguments to justify the idea that workers should have to pay all costs of public infrastructure.
- bostonpete 13y agoI don't see how being a political enemy implies that an individual would boycott a corporation. If my "enemy" is offering me a deal that is beneficial to me, then I make that deal.
- jasonwocky 13y agoI don't buy things from the vast majority of corporations in existence.
- VMG 13y agoAre you, by extension, raising the taxes for everybody else by ideologically supporting the current system? Do you feel responsible for all negative consequences caused by your tax dollars?
- jasonwocky 13y ago> Do you feel responsible for all negative consequences caused by your tax dollars? I've got other political enemies as well. If by "negative consequences of my tax dollars", you mean "things our governments spend money on that I disagree with"...no, I don't feel wholly responsible for them, since I fight the proponents of those things, too.
- VMG 13y agoSo are those who avoid paying taxes but fight for lower taxes also your political enemies?
- samolang 13y agoDo you pay sales tax on all of your internet purchases?
- Loughla 13y agoPretty sure you're supposed to. . . . .
- samolang 13y agoYes, but most people only do so for purchases where the website forces you to at the time of purchase (i.e. the company operates in your state).
- jasonwocky 13y agoIn New York, we can opt pay a flat yearly "Use tax" for an unlimited number items purchased over the Internet from outside of NYS that cost less than $1,000 each. For me, it's about $100, and yes I pay it. Items purchased online in NYS are subject to sales tax at the time of the transaction, and the burden is on the vendor to collect it.
- aestra 13y agoThank you.
- MarkMc 13y agoThe IRS thinking might be: (a) People who order on Overstock using Bitcoin are likely to be dodging a small amount of tax. (b) People who dodge a small amount of tax in one transaction are more likely to be dodging a large amount of tax on another transaction. Therefore, an Overstock order in Bitcoins could be a 'red flag' that causes the IRS to look into your other tax arrangements.
- deleted 13y ago[deleted]
- mapt 13y agoI offer no actual reply, only a thought experiment, keeping in mind that the USD is another floating currency that fluctuates in value: ... " Is there a tax guide that would explain the consequences of me using some of the US Dollars I traded for in 2013 to buy an item on overstock this month? As I understand it I would have to record the value I paid for the US Dollars in 2013, calculate the value it appreciated between when I bought it and the amount I am using to buy the item. And then report this as capital gains on my 2014 tax return? This sucks, this makes using US Dollars a lot more work than just paying with a credit card. Plus, it might mean having to hire an accountant instead of just using turbo tax? "
- natrius 13y agoExcept there are many statutes that give the dollar special tax treatment.
- scoofy 13y agoThis. People keep thinking that bitcoin is a currency. It's not. It's best thought of as a commodity, in the same way that all foreign currencies are essentially commodities, and using them to pay for things is bartering and capital gains laws apply.
- bunderbunder 13y agoSort of. The US tax code provides some special provisions[1] that are meant to make life easier for people making smaller transactions in foreign currency. IANAL, but if I had to hazard a wild guess, for the purposes of the statute in question "foreign currency" is defined as the official currency of a sovereign nation that is not the USA. With BTC not being controlled by any country that would imply that for the purposes of tax law it is just another commodity - but something like the Euro is not. [1]: See section (e) at http://www.law.cornell.edu/uscode/text/26/988 http://www.law.cornell.edu/uscode/text/26/988
- mapt 13y ago
- aresant 13y agoThe best and most complete thread on this topic is over @ Reddit written by a tax attorney: http://www.reddit.com/r/Bitcoin/comments/1uccfz/i_am_a_tax_attorney_here_are_my_answers_to_the/ http://www.reddit.com/r/Bitcoin/comments/1uccfz/i_am_a_tax_a...
- socillion 13y agoHere's another document on the topic: http://www.bitcointax.info/ http://www.bitcointax.info/
- MarkMc 13y agoSo basically: Yes, you must calculate your capital gain when you buy something with Bitcoin.
- oafitupa 13y agoIf you are a US citizen or live in the US, where you pay taxes for breathing.
- mikeash 13y agoRight, because the US is the only country with a capital gains tax.
- oafitupa 13y agoI'm just saying the answer is not "basically yes" as the comment I replied to said. Unless you are a US citizen (even if you don't live in the US), where yes, the answer is always "yes, you have to pay".
- peteretep 13y agoIf you're trying to imply that the US isn't completely crazy town about tax, you seem to have missed the enforced citizen tax returns for salaried employees and the fact that citizenship makes you liable for US tax regardless of residence and income origin.
- deleted 13y ago[deleted]
- samolang 13y agoHopefully bitcoin is another straw on the camel's back moving the US towards consumption based taxation.
- benjarrell 13y agoI think you will find that it will be in addition to income and all the other taxes.
- samolang 13y agoIt's not an addition. Capital gains taxes already exist. But the more complicated calculating your taxes gets, the more incentive there is for tax reform.
- gnaritas 13y ago> moving the US towards consumption based taxation Why would we want such an unfair regressive tax that hurts the poor and middle class?
- samolang 13y agoA consumption tax doesn't need to be regressive. There are already exemptions in state sales taxes for some "necessities" (i.e. food, internet, electricity). If the basket of exemptions is large enough, then the poor would pay basically no sales tax.
- gnaritas 13y agoThat doesn't make it not regressive, it simply makes it easier on the bottom few. A consumption tax by its very nature is regressive, you pay taxes only on what you spend and rich people by definition spend far less than they earn while non rich people spend far more of their earnings. A consumption tax is a huge massive tax cut for the people who need it least, the rich, no thanks.
- 13y ago
- zaroth 13y agoI wonder if at some point Coinbase will have to start filing 1099s (or forex equivalent) any time someone pays for an item with Bitcoin. Treating Bitcoin as an asset that has a basis and carries capital gains is a good way to make buying things with Bitcoin unpalatable. It would be like having to send your credit card statements to the IRS. (As if they don't already have those) Credit card processors must report proceeds paid to merchant accounts, but with Bitcoin I could see someone like Coinbase eventually having to report both sides.
- MarkMc 13y agoGood point. This seems to be the killer argument against Bitcoin. Why would someone choose to significantly complicate their tax return (or break the law by not declaring the capital gain) when they could simply pay in dollars?