Re: capital gains taxes forces everyone to pay the price of inflation
Um - thats exactly what I am saying. Forget bitcoin and pretend that you have $1 million in copper futures which you paid $100k. You trade them for a rental unit that would have sold for $1 million. My understanding is that no CGT is payable.
Unless the US treats bitcoin as a currency, it will be treated as a commodity and thus the same rules apply.
Feel free to tell me I am wrong. I've read your www.bitcointax.info link and it leads to http://www.law.cornell.edu/uscode/text/26/988 which seems to say the same thing as me but you may know better.
Unless the US treats bitcoin as a currency, it will be treated as a commodity and thus the same rules apply.
Feel free to tell me I am wrong. I've read your www.bitcointax.info link and it leads to http://www.law.cornell.edu/uscode/text/26/988 which seems to say the same thing as me but you may know better.
Interesting.
Firstly, I don't believe it, because it's too good to be true. I simply don't believe that the IRS is going to let someone avoid capital gains taxes simply because they've skipped the "cash out for fiat" part of the equation. It just sounds silly.
That and you are the first person who is telling me otherwise.
Here is some possible relevant reading: http://www.irs.gov/publications/p17/ch14.html
Specifically see sections titled "What is a sale or trade?" and "Nontaxable trades". Finally see the section titled "Capital or Ordinary Gain or Loss" where it states: "Generally, a sale or trade of a capital asset (defined next) results in a capital gain or loss." Capital asset is defined next as: "For the most part, everything you own and use for personal purposes, pleasure, or investment is a capital asset." They go on to give examples of "capital assets" and examples of "non-capital assets". The entire question hinges on how the IRS defines Bitcoin and I'd guess that they (will) define it as a "capital asset".
Trust me, I would very much love to be wrong on this.
This is the second time you have directed me to links that say the opposite of what you say. Instead of posting links why not jsut take a moment to think about it? The tax man does not want to charge you CGT in Bitcoin - he wants to charge you in Dollars. http://www.irs.gov/publications/p17/ch14.html is packed with examples and definitions all of what relate to Dollars. Until you convert your Bitcoin to Dollars, you don't have a capital gain and therefore can't be charged CGT.