Bitcoins

j0n posted mt gox source code on twitter

I guess it depends to what extent they want to "accept" them. Currently no businesses (that I know of) actually keep any coins - they just use a service like Bitpay to convert them to $$$ immediately. If they actually do for whatever reason decide to keep Bitcoins they're now looking at reporting taxes on all that and they could get massively boned from year to year should the price ever take a sharp dive (as it's been known to do)

― frogbs, Tuesday, March 25, 2014 4:36 PM Bookmark Flag Post Permalink

I don't think this is correct. They would have to pay taxes (to the extent there is profit in the business) on the value regardless of whether it was treated as "property" or "currency." There are already complex tax rules for treatment of paper gains/losses in the value of an asset, so again I don't know why this would be any different.

There's a good Q&A here that gives better answers than I can obv:
http://dealbook.nytimes.com/2014/03/25/i-r-s-says-bitcoin-should-be-considered-property-not-currency/?_php=true&_type=blogs&_r=0

yeah maybe "harder" isn't the word, but it certainly seems much less attractive now. you never know when the price is going to massively crash and as I understand it if you take in a bunch of BTC at $600 and the next year they're only $300 you still have to pay taxes on the $600 price.

I think more importantly, this makes mining even more terribly unprofitable, since you still have to spend cash on the equipment and tons on electricity and when you finally get the bit you gotta pay taxes on it, in dirty fiat no less! (as of now would be like $200 per)

of course, like only .5% of these dudes are actually gonna report, so whatever

If you buy a bunch of bitcoins at $600 and they fall to $300 you don't pay taxes on anything

But yeah if you made one and when you made it it was $600 you'd have to pay taxes on that $600

I think it'd be a little more complicated than that. You could probably deduct the expenses of mining.

Only if you didn't take the standard deduction and most people can't since their deductible expenses don't rise above the 2% AGI floor so it doesn't make sense

A lot of miners today are businesses, not individuals.

If you buy a bunch of bitcoins at $600 and they fall to $300 you don't pay taxes on anything

right, but say you get paid in them. you sell something for 10 BTC @ $600, then next year the bits are at $300. so essentially you have $3000 worth of bits but you have to pay taxes on $6000.

Presumably you had purchased whatever you sold with after-tax dollars so it wouldn't really be income to you therefore you wouldn't have to pay tax on the bitcoins

Business taxes are more complicated than that. First of all, you don't pay taxes on your gross, you pay on your net. Second, you could probably write off the valuation loss of the bitcoins if you actually held them.

I don't think you could depreciate bitcoin value loss over time but you could definitely deduct the loss when you sell them, but you'd have to sell them first

http://www.businessinsider.com/irs-bitcoin-is-property-not-currency-full-release-2014-3

I think you're correct -- losses would only be written down when they are realized, i.e. when the bitcoin is used to pay for something or sold. Still, one assumes that would occur eventually.

You don't realize the loss when you sell it you recognize it

Actually you do both but the recognition is what you're after

not sure what you mean. that's what a realized loss is.

sry xp that got all garbled

you realize the loss when you sell it, you recognize it when you report it

we're basically saying the same thing

You can realize a loss but if you have something that would offset it then you would never recognize the loss even though you realized it

this is getting more technical than it needs to be for the conversation and veering off track, but I believe you would recognize the loss, but the offset would just change the net impact to your taxes.

You can realize a loss but if you have something that would offset it then you would never recognize the loss even though you realized it

we're not talking about bitcoins anymore, are we

Nah you'd realize the loss, not recognize it xp

What I'm trying to say is that, taxes are more fun than bitcoins

Where's sarahell???

i.e. you have a realized $3000 loss when you take bitcoins you bought for $7K and sell them for 4K. You also sold a lot of magic the gathering cards that you purchased for $4K for $9K, a gain of $5k. Your capital gain of $5K may "offset" your capital loss of $4K, giving you a net gain of $1K. That doesn't mean you don't "recognize" the $4K loss, it just means that your gains exceeded your losses and you don't wind up having anything to write off. I could be wrong, I'm no accountant.

the result is the same so we're just talking terminology.

ha no I meant like "loss" as in emotional or personal loss in that paragraph kinda works similarly? thus my 'joke'

If you sold two things during the tax year and had a loss of 99 on one but a gain of 100 on the other, you'd realize both the gain and the loss but you'd only recognize a gain of 1, that's the amount you'd pay tax on

again, result is the same, we're just talking terminology

Yeah but your terminology is wrong

Real eyes realize real gains and losses, is what I'm saying

I'll have to dig up an adequate source a little later when I get the chance, but I'm p sure YOUR terminology is wrong B-)

i.e., the fact that you have other gains that "offset" your losses doesn't mean that you don't "recognize" the loss, it just changes the net amount that's taxable or write-off-able.

my co-worker who took an accounting class in college says he thinks I'm right so ha

i hate you all

get the FASB on this motherfucker asap

can bitcoin loss debt be forgiven >?
with a 1099?

poetry

Seems like Bitcoin enthusiasts are trying to put on a brave face on this IRS ruling, but the more I read about it the less favorable it sounds:

http://marginalrevolution.com/marginalrevolution/2014/03/did-bitcoins-just-become-less-fungible.html

wow the comments. These people are so motherfucking STUPID

This sounds like a pretty serious strike against Bitcoin, but then again it seems like the kind of thing where people should have planned in advance for no help from the IRS. Is there international internet wizardry they can just do to sidestep this stuff?

price def appears to be hurting since the ruling. But I don't understand, did people think the IRS would just, like, do nothing?

Dan Weber March 27, 2014 at 5:04 pm
Yes, the market should define tax law.

https://www.youtube.com/watch?v=mjiX7xiFD-o

Last November, in what he later described as a drunken state, a Redditor by the username, Anndddyyyy, wrote a post claiming that if Bitcoin was below $1000 come January 1, he'd do exactly that. "I may be an idiot," he wrote in an update to the original post, "But I like to think I'm an idiot with integrity."

FORTY 6 MINUTES LONG

In b4 "fuck eating a hat"

If anyone wants to read something by a more level-headed, skeptical but hopeful bitcoin enthusiast who doesn't sound batshit or dumb:

https://medium.com/p/a9d53ce3688a

Werner Herzog ate his shoe - is that healthier? Seems a bad idea any way.

xxxxp - was the hat a fedora?