Quote from: testerx on December 21, 2014, 05:49:17 AM

Quote from: RodeoX on November 13, 2014, 03:44:47 PM

I would caution anyone trying to convince themselves that there are no taxes on bitcoin in the U.S. That is false. You owe on the appreciation in value of any bitcoin you own. That is to say you owe capitol gains. If your salary is being paid in BTC then you also owe income tax.

It is quite possible that the IRS is behind the learning curve on this and may not be able to determine if you owe. In that case you may be able to stick the bill to those who pay your share of taxes. However, if you are caught do not waste your time and money fighting it. You will owe the back taxes plus penalties and late fees.

The tax situation in the US is a COMPLETE NIGHTMARE. If you get paid 0.5BTC per day as part of your income or whatever when it comes time to do your taxes you have to actually figure out how much BTC cost on every single day to figure out your income and thus your income taxes. Even worse, if you sold it off you have to then calculate out how much you sold it for and whether you're taking a capital loss or a capital gain, which is a complete nightmare.

Even worse than that is that if you run a bitcoin mining business and you hold onto your bitcoins you can end up owing a ton of money in taxes despite not holding bitcoins worth anything close to what you're being taxed for. That is, if you mined 50 bitcoins when they were $1000 but never sold any of them, the IRS will tax you on $50,000 of income, nevermind that you still hold the bitcoins and they're only worth $315 now. This actually *FORCES* miners to sell a large portion of their bitcoins to at least be able to pay their taxes.

And selling the bitcoins themselves is a nightmare because if you keep mining and you are selling let's say, 30% of each day's minings will the IRS force you to use a FIFO accounting method for the capital gains? Because if so, you will NEVER benefit from long term capital gains rates because you're constantly forced to sell off your oldest bitcoins. Since bitcoins are actually trackable and do differ in quality (older coins are spendable without fees whereas newer ones usually require more tx fees) one could make the argument that you can sell specific coins such that this does not apply, but that of course requires you to track a whole other layer of complexity to prove to the IRS that this is legitimate.

The only people who really benefit from this ridiculous taxation scheme are people who bought their bitcoins early on, who'll actually get to use the long term capital gains tax rate if they sell off their bitcoins. That and my accountant who is going to be billing me some serious hours for going through the bitcoin charts and figuring out just how much income the 0.02 bitcoins I mined were worth on what day. That's 365 days of math to add up, and then even more nightmares trying to figure out which bitcoins I spent are which-I'll probably end up paying income taxes but having large capital losses that can't be used against the income but can only be carried forward against future capital gains. This taxation is complete garbage right now and this is WHY THE PRICE IS SO LOW. No business can currently hold bitcoin without being subject to owing tons of income taxes on money they don't even have if the price of bitcoin drops. That is completely insane and the reason why nobody is holding the bitcoins they receive.

Honestly if you want to build a serious bitcoin business I wouldn't even bother to do it in the US, the tax rules are moronic because they're clearly not meant for a digital currency.

I can't understand how the IRS determines that your bitcoins are in the US? They can track only those dollars which are credited to your account. As far as I know the United States still do not recognize bitcoin currency. This means that your savings in bitcoin can not be considered income.