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Bitcoin Government United States

IRS: Bitcoin Is Property, Not Currency 273

An anonymous reader sends this news from Bloomberg: "The U.S. government will treat Bitcoin as property for tax purposes, applying rules it uses to govern stocks and barter transactions, the Internal Revenue Service said in its first substantive ruling on the issue. Today's IRS guidance will provide certainty for investors, along with potential income-tax liability. Under the ruling, purchasing a $2 cup of coffee with Bitcoins bought for $1 would trigger $1 in capital gains for the coffee drinker and $2 of income for the coffee shop. ... Under the IRS ruling, Bitcoin investors would be treated like stock investors. Bitcoins held for more than a year and then sold would pay the lower tax rates applicable to capital gains — a maximum of 23.8 percent compared with the 43.4 percent top rate on property sold within a year of purchase. For investors with losses, U.S. tax law allows taxpayers to subtract capital losses from any capital gains. They can also subtract up to $3,000 of capital losses a year from ordinary income.'"
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IRS: Bitcoin Is Property, Not Currency

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  • by JustNiz ( 692889 ) on Tuesday March 25, 2014 @04:02PM (#46577067) you can offset a drop in the value of your bitcoins as a tax deduction.

  • by Gothmolly ( 148874 ) on Tuesday March 25, 2014 @04:14PM (#46577197)

    Only if you sell them at a loss. So if you want to take a loss in order to deduct part of that loss, knock yourself out. That'll show them.

  • by Primate Pete ( 2773471 ) on Tuesday March 25, 2014 @04:29PM (#46577351)
    I would think this is really bad news in disguise for bitcoin, because it discourages the use of bitcoin for commerce both because of the tax issue and because of the reporting requirements. (Who wants to deal with computing a wash sale just to buy a cup of coffee?) If people are inspired to sit on bitcoin until they cross the 1-year capital gains threshold, that behavior change could move bitcoin one step away from use as a currency, and put it in the same illiquid category as gold or bearer bonds.
  • Money (Score:-1, Interesting)

    by roman_mir ( 125474 ) on Tuesday March 25, 2014 @04:29PM (#46577355) Homepage Journal

    Government cannot declare anything to be money any more than I can declare myself to be a ballerina.

    People decide what things are money, people decided that gold is money for example, it was never a government decision to make. Government tries to control the currency of the state by making it a 'legal tender' (all debts to creditors can be paid legally in government issued fiat). Constitutionally government has the authority to declare weights and measures (this much gold of this purity is required to mint a gold dollar). Government has the authority to offer you mint services (they can mint a coin for you from your own gold even though it may require a small fee, this is useful to have easily recognisable money on you).

    Declaring paper to be money or more correctly - defaulting on the gold dollar has marked the beginning of the end of USA economy. At this point it does not matter what government declares anything to be, currency or property, none of it matters. They are way beyond all of their legal authority anyway. Do not pay any taxes, avoid and evade as much as you can, that's pretty much the only you can do now, you no longer have a Constitutional authorised legal government, there is no rule of law.

    Bitcoins were designed to be money, from my perspective they are not, because they can't store value, so I won't take Bitcoins as payment for goods and services, but I will take gold. Government has declared gold to be 'property' long ago, applying capital gains taxes to it, thus trying to steal your gold from you, because it is the value of the dollar (the perceived value) that is going down relative to the gold, gold is not increasing in size or volume over time, it's the relative perceived value of the dollar that is falling, so government is trying to tax your gold holdings with the nonsensical 'capital gains' taxes that are pure theft. Nothing was gained from gold that was in the vault except for inflation protection.

  • by ArcadeMan ( 2766669 ) on Tuesday March 25, 2014 @05:02PM (#46577697)

    Did they just write "Bitcoin" in the new law or something more general that can include anything? Otherwise, Bitcoin is now regulated but LiteCoin, DogeCoin and all the other coins are not.

Sigmund Freud is alleged to have said that in the last analysis the entire field of psychology may reduce to biological electrochemistry.