Crypto-cash souk Coinbase forced to rat out its high rollers to probing US taxmen

Re: Bitquestions

I asked this of my tax guy a year ago.... the answer is "it depends" but most likely falls under capital gain or loss rules as there's some gray area according to him. I'll have to check again with him when I do my taxes for this year. But a gain is "income" and will be taxed.

Re: Bitquestions

It would almost certainly be taxed as normal income - gold is because the IRS accepts the argument that it is interchangeable with currency and is thus classified as such for taxation, as opposed to say copper which is classified as a commodity and thus taxed as a capital gain. If bitcoin supporters want to claim it is a currency, then they have to accept the consequences of that classification.

Re: Bitquestions

The position in the UK is:

If the bitcoins are held for business purposes, eg like a business bank account, it goes to “exchange gains / losses” in the accounts, and “loan relationship income” in the tax return, and it is taxed as income.

If a customer pays you in bitcoin, you convert it to pounds at the rate applicable on the date of transaction, record that amount as sales, and pay tax on it as if you received pounds. Same if you pay a supplier in bitcoin, convert to pounds and claim that as your business expense in the usual manner. Any change in value between sale / purchase / conversion, see above.

Basically the rules are the same as if you were trading in Euros / USD etc.

If it is held for personal purposes - to fund personal expenditure or as an investment, then it is taxed as a capital gain. The first £11,300 per year is covered by your annual CGT allowance.

Re: Bitquestions

This is where HK wins.

once you have paid tax on any of your money, you are free to invest it for "free"

so if you paid tax on your $14USD to buy a bit coin....

then cash it out at $10,000USD, your tax is zero.

Re: Bitquestions

would the money be taxed as capital gains or some other form of taxation

It should be. But I somehow doubt whether is it..

You do realise all the Cayman banks would also give this information to the IRS if they asked.

You want them in a Delaware shell corporation, not as pleasant weather there though.

They are not, unless you are, they are located wherever your wallet software is running.

Re: So fundamentally

Wrong, if you invest £100 / $100 and you made £200 / $200 you are not affected, but still a bloody good return on investment.

Re: I am surprised its taken so long

Nail. Head Hit.

Because.....

*spreads arms slowly wide*

The internet (hushed whisper).

Re: I am surprised its taken so long

Yeah, this is puzzling. It's been several years since brokerages have been required to record and report basis info too. But as recently as three years ago, CC were unclassified as assets for the IRS. I guess that was the "first they ignore you stage." Now we are even beyond "then they laugh."

Bitcoins want to be free!

In which case, I'll give a good (albeit temporary) home to 200 of the free-range Bitcoins.

Of course, they'll pretty soon become barbecue^W cashed but they were happy while I looked after them..

I think you'll find that this is the IRS' opening offer and those 480,000 accounts are not safe either. They are likely fishing but with a fair estimation of how successful they will be. If, after investigating these details, they can then persuade the next judge that there is rampant tax evasion going on in this area or with this company based on what they found under this warrant then the flood gates will open. They do have some clue as to what they're up to.

NSA, FBI work on a similar basis. First the overly broad catch-all warrant request. When that is denied refine your criteria to focus in on the information you need but try to still be overly broad to get more information on where to go next. Repeat until warrant is obtained. Use any criminal activity found to show how you were "right all along" and use it to persuade the next judge the activity is rampant and the next warrant needs to be far more all encompassing else they are implicitly condoning the behaviour etc. etc.