Quote from: T.Stuart on March 30, 2014, 09:16:23 PM

I would imagine that being programmable money this fungibility issue could actually be resolved in quite a clever automated way.

What a wallet software needs to do is that every time you receive bitcoins, it prompts you to enter a "fiat cost basis" in other words how much you paid for them. If not entered, it uses a daily average. When you spend bitcoins, you can order it to automatically spend the ones where you pay the least tax. Because bitcoins are NONfungible, the taxman must accept this. You can always review the balance and print out the tax form.

This is actually better than with precious metals, because they are defined fungible, and I must use FIFO accounting. This tailormade accounting is way better

Only way when you must pay a lot of tax is when both of the following are fulfilled:
a) your expenditures are more than your income - otherwise you can spend your income, acquired at about the same price
b) bitcoin price has risen a lot - making great taxable gains for the early purchases

If you think about the situation more carefully, I am sure you agree that it is only fair to be taxed if and only if you are living off your obscene bitcoin gains, and not taxed otherwise.

LOL Cheesy