Hot answers tagged

8

What prevents Bitcoins for being used by criminals to avoid taxation? nothing. thats the price of anonymity: it can be used for good and for bad. In a Bitcoin world, how can a state tax its citizens when it's impossible to check their transactions? in a hypothetical purely bitcoin world, the state would have to find different ways of funding ...


7

You can issue gift-in-kind receipts, the same sort you would issue for any other non-cash donation. (e.g. Thank you for your generous gift of 7 Bitcoins which we received on _(Date)_. Your generous contribution will help to further the important work of our organization.)


5

I think your premise is flawed - when trading on Mtgox or other exchanges, there will only be transfers between you and Mtgox. If you're a day trader most trades will be internal on Mtgox and not be settled by the banks at all. Even if they do "send a notice to anti-laundering authorities", it doesn't mean the next day they will show up at your doorstep to ...


5

You might not like this answer but the correct approach for figuring out taxes related to Bitcoin earnings is to ask the question to your local tax authority, in written form and get an answer that your local tax administration legally commits to. I can speak only for France, but I assume the same kind of thing is possible anywhere. In France you can ask ...


5

Just a few thoughts from someone with no experience with lawyers: since very few lawyers will have experience with Bitcoin, I personally would look for a lawyer familiar with (1) tax law, (2) currency trading and/or commodities trading, and (3) technology in general. Familiarity with technology may be the least important, and may actually not matter at all, ...


4

The IRS just issued a preliminary ruling on this and it will be treated as property. The Q&A portion is particularly useful. SECTION 4. FREQUENTLY ASKED QUESTIONS Q-1: How is virtual currency treated for federal tax purposes? A-1: For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property ...


4

I recently (as in April 18, 2013) asked the Swedish Tax Agency how they view Bitcoins. This is the answer I got (the original swedish answer is at the end): --- ENGLISH TRANSLATION ---- I short, Bitcoin is not considered a currency, but rather a commodity. Taxation on the commodity value is 30%. You you create bitcoins and the sell them, you make a capital ...


4

As is, the US has a voluntary income tax. You fill out forms, determine how much you owe, and pay it. If the government suspects that you're wrong, you get audited. So with bitcoins, it would be the same. You would determine your income and pay Uncle Sam his due. But you have to pay in USD, not BTC. Cash transactions and bartering income already have ...


4

Taxes are paid on profits, not revenues. If their mining operation was profitable before, it will remain so even after the tax increase. Also, depending on the kind of tax it could increase equally to any alternative occupation they might have, so there would be no reason it should make any miner operation go out of business; definitely not enough to warrant ...


4

HR 3708, which was introduced in the House of Representatives in September 2017, would do exactly that, with a threshold of $600 (to be adjusted for inflation). It has five cosponsors. It was referred to the Committee on Ways and Means, and there is no record of further action, so apparently the Committee decided not to move forward with it.


4

Bitcoin doesn't use RSA and there is no encryption or cryptography that hides transaction details. Bitcoin is pseudonymous, not anonymous. There are unique identifers for every participant in Bitcoin, the somewhat hard part is tying those identifiers to actual people. So there is no RSA, number theory, or ECC involved in what the IRS is doing because none of ...


3

I think it works like stock profits or losses. But consult your accountant.


3

Using a Bitcoin payment processor like BitPay can make collecting donations as a charity much easier. BitPay will value the bitcoin at the time of the transaction, and charities can choose to take the payment as Bitcoin or have it converted to a number of other currencies and deposited directly in a bank account. Of note, BitPay processes transactions for ...


3

They tax the exact same things as if you'd done those things in Thai Baht, or Nigerian Dollars, or British Pounds. If you view ads, that's income. If you buy gold, and it appreciates, that's capital gains. If you buy a mining contract, the income minus depreciation is capital gains.


3

Considering that the US dollar has lost 90% of its purchasing power over the last 100 years you should be worried regardless of cryptocurrencies.


2

I think it would be fantastic if my tax jurisdiction were to accept payment in bitcoins. Every additional way bitcoins can be used adds to bitcoin's value -- it accelerates the network effect. When they do begin accepting bitcoins, each jurisdiction could be asked to supply the totals (via FOIA request, at a minimum). Some organization or individual could ...


2

None do now and none likely will anytime soon. This will vary per-tax jurisdiction and per individual circumstances because income taxes are based on profit not on revenue. This is the very first inquiry I've seen where this feature has been requested, incidentally.


2

To help make it possible for your donor to prove that the funds were indeed sent to your organization, a new feature known as the Bitcoin payment protocol, planned for release in version v0.9, will help with that. The payment request can include information that alone could likely serve as the receipt for the donor.


2

In the US income is taxed so I would expect income from Bitcoin to be taxed in some manner. Usually the tax occurs when there is an increase in USD but not in virtual currencies such as the Second Life Linden. Bitcoin is a little different and it's place is still unknown, it is somewhat virtual and moving into the real world, real things can be bought and ...


2

While treating income from buying and selling bitcoins as investment income (i.e. like stocks) would be nice, it's not what I would recommend. The advantage would be that capital gains taxes are cheaper than standard income. The downside is that if the IRS rules that bitcoins are a currency instead of an asset, then the taxes are higher and if that's how ...


2

The IRS has not ruled on this yet. So I plan to treat Bitcoins as an asset for now. This means keeping track of your cost basis (purchase price + fees) and deducting this from your net sell (sell price - fees) to determine the capital gain or loss. Since you have no control over the specific coins you sell, you should probably use the FIFO (first-in first-...


2

In the USA, Bitcoin earnings are treated like property. The full announcement is here: Virtual Currency Is Treated as Property for U.S. Federal Tax Purposes; General Rules for Property Transactions Apply IR-2014-36, March. 25, 2014 WASHINGTON — The Internal Revenue Service today issued a notice providing answers to frequently asked questions (FAQs) on ...


2

Bitcoin is generally accepted in France however the government seems to be very willing to prosecute anybody who is in breach of reporting or other laws. Somewhat recent proof: http://www.reuters.com/article/2014/07/07/us-france-bitcoin-idUSKBN0FC19220140707 There is not much legislation on Bitcoin, however it is clear that you can not use new technology to ...


2

This is probably better for Money.SE as it doesn't really have anything to do with Bitcoin; it would be the same for any sort of income. However, my understanding of tax law with respect to gifts is roughly this: Money, goods or services that you earn from working, business or investing are taxable income to you. If you decide to give some of that money ...


2

That's correct. You have no taxes and no need to report them if you have not sold/spent any of the coins in the tax year. You do need to keep records of your purchases, because when you do come to sell, you'll need to work out the potential gains you've made. If you do need to work out your gains, you can use https://bitcoin.tax or other capital gains ...


2

This seems rather odd to me. I try to time my purchases with Bitcoins for times when the price is high. And I try to time my purchases of Bitcoins for times when the price is low. If I use a service like this, I'll either be buying high or selling low, which is not my personal preference.


2

I would go to localbitcoins.com open an account and find a trusted seller with a reputation of 100% and 100plus customers to buy them from a local agent. Be smart about the price of the agent vrs others and exchanges to get the best price.. Bitcoin is not physical it is an encrypted ledger that derives it's price in the power to maintain the encryption(...


2

Bitcoin is taxed as capital property (see IRS Notice 2014-21), and a tax event occurs any time it is converted into fiat (e.g. USD) or other assets. You would have to record each transaction and include it in 1040 Schedule D. This is the difference between how much USD you received less the value of those BTC when bought/acquired them. If you had owned ...


2

No. Assuming you are not a miner or receiving bitcoin in exchange for services, there are no taxes that you need to pay on the bitcoins until you sell or transfer them. When you sell or transfer them, you need to pay taxes on the difference between the value of the bitcoins and your tax basis in the bitcoins. The value of the bitcoins would be what you sold ...


2

Governments can set up laws and regulations and then set up "departments" to monitor and enforce. Whether it is successful or not is another question. No doubt they will have to skill up and understand how digital currencies really work, maybe monitor a few people, monitor the flow of their btc's and audit them, create some "high profile" cases to be made ...


Only top voted, non community-wiki answers of a minimum length are eligible