Quote from: J_Dubbs on December 19, 2013, 03:47:28 PM

Quote from: The00Dustin on December 19, 2013, 11:01:09 AM

Quote from: J_Dubbs on December 19, 2013, 05:47:03 AM

I'm impressed you got your certification but I'm puzzled by your position. I mean, most CPAs err on the side of caution so that might explain; and I mean no disrespect by that, it's not a bad thing. My problem with your position is that there is no "taxable event" happening. It's not currency, yet, and we honestly don't know if it ever really will be in the eyes of our Uncle Sam.

I wasn't trying to give the CPA guy a hard time or pretend I'm the expert, apologies if I came off that way, seriously to the guy I originally quoted no disrespect. I just think there is more than one way to handle it right now, and just because someone is a CPA doesn't mean they've filed BTC on a return yet, reasonable doubt- this is the internet afterall... Unless they set clear guidance there's no way I'll be reporting my toy bitcoins on my income taxes, just not gonna happen, at all. I love this shit, seriously, BTC is the coolest and I have a ton of fun setting up my miners, reading about it, chatting about it, the community is great, I truly believe in it: BUT, right now only a small amount of people (most users here) view it as a "currency". Personally, I view it as a collectible right now; and just like all the other collectibles (if) sold at a profit there is a request that you claim it (when/if you SELL it) using purchase price as cost basis and sale proceeds as gross.

No disrespect taken, nor intended by me. This is a grey area of tax in which multiple approaches have reasonable support, and I am not the only tax preparer sometimes active here. Hopefully discussion here is improving the quality of the accounting we are all involved with and I am very interested in other perspectives, from preparers or taxpayers, particularly things I might have missed. I also hope these discussions and my comments give insight to those whose past tax experience has been in less controversial areas.

I am licensed and have helped clients resolve tax litigation and enforcement matters ranging from USD 10K to 100M. Every tax return is to some extent a conflict between the interests of the taxpayer and the interests of the government, and my guide in this is the IRC, court cases, treasury regulations, private letter rulings etc. (but not Pub17 which is not as authoritative). I have duty to clients, to the authorities, and to my profession, and I try not to "err" on either side, though sometimes the rules are grey and judgment is needed to find the rules on which to hang our hats.

Consider tax on stock options ("property" in IRC83 below). Usually a stock option option is granted at the money, but if it is in the money we pay tax on when we receive the rights, not just when the stock is finally exercised or sold. This rule is Code Sec. 83. on "Property transferred in connection with performance of services
(a) General rule
If, in connection with the performance of services, property is transferred to any person other than the person for whom such services are performed, the excess of -
(1) the fair market value of such property (determined without regard to any restriction other than a restriction which by its terms will never lapse) at the first time the rights of the person having the beneficial interest in such property are transferable or are not subject to a substantial risk of forfeiture, whichever occurs earlier, over
(2) the amount (if any) paid for such property, shall be included in the gross income of the person who performed such services in the first taxable year in which the rights of the person having the beneficial interest in such property are transferable or are not subject to a substantial risk of forfeiture, whichever is applicable. The preceding sentence shall not apply if such person sells or otherwise disposes of such property in an arm's length transaction before his rights in such property become transferable or not subject to a substantial risk of forfeiture. "

While I am not convinced that Bitcoin would fall into this rule on "services", many of the other theories I have looked at (and briefly mentioned in a previous post) also involve paying tax when rights are received. I think that when the dust settles 6 years from now (the statute of limitations on foreign currency returns), tax will be due at the time of mining, not just at time of sale, and people who have 2013 returns deducting expenses but with zero taxable income will be at risk for audit, interest and penalties.

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