Quote from: Dalkore on March 19, 2013, 07:15:54 PM

Quote from: SgtSpike on March 19, 2013, 07:11:37 PM

Quote from: Dalkore on March 19, 2013, 07:10:13 PM

Quote from: deathcode on March 19, 2013, 03:29:18 PM

Quote from: SgtSpike on March 19, 2013, 03:18:59 PM

Quote from: deathcode on March 19, 2013, 03:12:00 PM

Quote from: evolve on March 19, 2013, 02:58:35 PM

Quote from: deathcode on March 19, 2013, 02:53:59 PM

How do I avoid uncle sam to stick its hand in my cookie jar and takes the tax share?
What if I don't report it?

Face to face trades.

Of course, not paying your share into a system that you benefit from makes you a freeloader (or at the very least a leech).

I'll gladly pay the transaction fees/withdrawal fees of trading my bitcoins into USD and then transfering USD to my bank account.
I'm paying my share to the system I benefitted from, BTC that is. I didn't benefit from USD.

So you don't use roads? You don't take advantage of the electrical grid? You aren't protected by the US army? You won't receive social security?

/devilsadvocate

Yes, I do... that's why I have a regular job that tax me %28 of my income so, the money that I invest in buying mining equipment or btc has already been taxed...

Now this line of reasoning might actually have some legs. I find myself very sympathetic to it.

But the gain of that investment wouldn't have been taxed yet. And you can (rightfully) deduct the expense of your investment to avoid being taxed twice on it.

Would this be an investment or a method of creating a Bitcoin dividend?

Does Bitcoin has official designation under the tax code? I saw the guidance of the U.S. Treasury calling it a "virtual currency" but does that mean the IRS is treating it as that. Until we have official designation under the tax code, I do not believe he should need to declare it at this time.

It would be taxed as income at the time it is generated. Any increases/decreases in value after generation, if held for less than two years before sold, would be treated as ordinary income, if held for more than two years before sold, would be treated as capital gains/loss.

That is my understanding of the application of existing tax laws as of 4 years ago when I took a tax accounting class. I treat it as capital gains exactly because the IRS hasn't made any official rulings on it - they haven't declared it to be a valid foreign currency, so I don't see treating it as gains on foreign exchange as the correct route to go yet. In my opinion, it cannot be declared as anything other than an asset (and gains/losses on that asset would be treated as such) until further ruling from the IRS.