IRS Bitcoin Guidelines released

[Gerry]

From WIRED magazine:

Q-6: Does a taxpayer have gain or loss upon an exchange of virtual currency for
other property?
A-6: Yes. If the fair market value of property received in exchange for virtual currency
exceeds the taxpayer’s adjusted basis of the virtual currency, the taxpayer has taxable
gain. The taxpayer has a loss if the fair market value of the property received is less
than the adjusted basis of the virtual currency.

So under the IRS’s rules, if you bought a bitcoin for $10, and then used it to buy a 1 BTC television when bitcoin was trading at $600, you need to pay a capital gain tax on the $590 difference. In other words, you now need to keep track of the value of bitcoins, in U.S. dollars, both when you acquire them and when you spend them, and report the difference on your taxes.

 

[Focus]

If it's not US currency how are they a party to the transaction is my question not that I use BTC nor have I ever spent any..

 

[Biggie]

If it's not US currency how are they a party to the transaction is my question not that I use BTC nor have I ever spent any..

it's not legal tender, so exchanges are considered as "trades".


as such, when you trade, you have to capture value and document +/- gains/losses for that transaction.


I think that the concept


imo....

 

[Focus]

Value is far too subjective unless you are dealing with quantified commodities, i.e. value of a domain name or a painting...it's worth what someone is willing to pay for it basically. Yes paintings can be appraised and insured and domain names can be appraised but it does not have an exact taxable value imho

Seems like some shaky ground they can lasso anyone they want with. Honestly the entire tax code is a broken concept I think, we need a flat tax duh!

 

[Biggie]

Value is far too subjective unless you are dealing with quantified commodities,

the current 'value' would be based on "BTC index price" for that day.


say you bought dem coins at $500 per btc last month, then value went up to $800 per btc today.

if you traded those ciz-zoins today for goods or services.....you'd have to report $300 gain.


if you waited and traded them when value was $300, then you could report loss of $200.

at least that's my understanding...

 

[Theo]

Obviously, I will be declaring all of my BTC transactions, totaling 0.00000000000000000000 BTC.

 

[katherine]

Obviously, I will be declaring all of my BTC transactions, totaling 0.00000000000000000000 BTC.

I hope the IRS computers will crash with an underflow error while processing your return :smilewinkgrin:

 

[Theo]

Division by zero