Say Goodbye To Bitcoin

[Green Arrow]

via Politico (http://www.politico.com/story/2014/03/tax-free-bitcoins-united-states-105015.html):


The days of tax-free bitcoin are gone, at least in the United States.

The Internal Revenue Service issued clarifying guidance on Tuesday, saying digital currencies should be treated like property, meaning purchases and payments must be reported, and the capital gains tax rate can be applied to gains or losses if the currency is considered an asset.

"[V]irtual currency operates like 'real' currency -- i.e., the coin and paper money of the United States or of any other country that is designated as legal tender, circulates, and is customarily used and accepted as a medium of exchange in the country of issuance. But it does not have legal tender status in any jurisdiction," the IRS notice said.

Can't have people freely and voluntarily exchanging goods and services for anti-statist currency.

[Bob]

For much of my life, I have received checks printed on ordinary paper as income. Yes, the IRS taxes all of it. If it moves, they tax it.

[Peter1469]

This relies on self reporting, so I imagine many people will ignore it. It will affect brick and motor retail that accept Bitcoin.

Where the article says it will be treated like property- that seems silly. If I trade my tractor for your dirt bike there is no reportable event.


via Politico (http://www.politico.com/story/2014/03/tax-free-bitcoins-united-states-105015.html):



Can't have people freely and voluntarily exchanging goods and services for anti-statist currency.

[Codename Section]

How would they know? They don't know about under the table work people do to the tune of about 3 trillion dollars each year in the US.

[patrickt]

Bitcoin came and went before I even found out what it was.

[Green Arrow]

They probably wouldn't. The point is more or less to show that the state can't resist the urge to control everything. I didn't say they were smart about it :tongue:

[Codename Section]

The state does try to control everything. Name one aspect of your life not regulated.

[Green Arrow]

The state does try to control everything. Name one aspect of your life not regulated.

Well, I can still take a shit without running into government regulations, but that's about it :tongue:

[Codename Section]

Well, I can still take a shit without running into government regulations, but that's about it :tongue:

Nope. Your sewage system is regulated, your well and septic is regulated, and if you shit in the woods in a national park, that's regulated. :D

Can't even drop some friends off at the pool without it being regulated.

[nathanbforrest45]

Well, I can still take a shit without running into government regulations, but that's about it :tongue:

Not true. The toilet you sit on is constructed according to government mandates. If you try building an outhouse that is controlled by zoning regulations. If you, like the big bear, shit in the woods you will encounter the wrath of the EPA.

[Cigar]

I said Good-By the first time I heard of it, and everyone on this Forum jumped all over me for it.

Well ...

[nathanbforrest45]

I don't understand the confusion or even the question of why the IRS wants to tax bitcoin transactions. You pay taxes on income. The regulations don't specify if the income is paid in US dollars, bags of chicken shit or bitcoins. I can certainly understand why you can't hide your income by claiming you weren't paid in US dollars. That's just crazy talk.

[patrickt]

I said Good-By the first time I heard of it, and everyone on this Forum jumped all over me for it.

Well ...

Lying again, I see?

[Green Arrow]

Nope. Your sewage system is regulated, your well and septic is regulated, and if you shit in the woods in a national park, that's regulated. :D

Can't even drop some friends off at the pool without it being regulated.

Well, shit.

[Green Arrow]

I said Good-By the first time I heard of it, and everyone on this Forum jumped all over me for it.

Well ...

How does it make you feel that the state you are so proud of kills innovation and free commerce?

[Cigar]

Lying again, I see?

Naaa ... its a FACT ... they're going no where :wink:

[Germanicus]

Goodbye or hello? It isnt going to work. It is a waste of time.

[Ethereal]

Bitcoin isn't going anywhere.

[Green Arrow]

Bitcoin isn't going anywhere.

It's status as a free currency is, though.

[Ethereal]

It's status as a free currency is, though.

Nah. It's designed to be immune to government control.

[Green Arrow]

Nah. It's designed to be immune to government control.

I'm sure the IRS disagrees.

[Ethereal]

I'm sure the IRS disagrees.

They can disagree all they like, but it won't change anything.

[Max Rockatansky]

Say Goodbye To BitcoinIncorrect. It's simply not labeled as currency. It still have value and can be traded, bartered, etc.

Current value is over $520 per Bit Coin.

[Green Arrow]

Incorrect. It's simply not labeled as currency. It still have value and can be traded, bartered, etc.

Current value is over $520 per Bit Coin.

The point of the OP is that it has lost its status as free, unregulated currency.

[Green Arrow]

They can disagree all they like, but it won't change anything.

No, but regulations sure do.

[nathanbforrest45]

Nah. It's designed to be immune to government control.


LOL, we can see how that's working out. Governments have a vested interest in controlling the monetary system, they aren't going to let Bitcoin become the coin of the realm.

[Ethereal]

No, but regulations sure do.

The regulations can be circumvented easily; that's the whole point of bitcoin, to get around the banking cartel and their lackeys in government. As long as you follow a certain protocol, bitcoin transactions are virtually untraceable.

[Green Arrow]

The regulations can be circumvented easily; that's the whole point of bitcoin, to get around the banking cartel and their lackeys in government. As long as you follow a certain protocol, bitcoin transactions are virtually untraceable.

The existence of regulations take the freedom out of it. Sure, you could circumvent them...for awhile. But do you really think the government that reads your emails and listens to your phone calls won't figure it out and catch you eventually? Especially since they are now flying spy drones in U.S. airspace?

[Ethereal]

LOL, we can see how that's working out. Governments have a vested interest in controlling the monetary system, they aren't going to let Bitcoin become the coin of the realm.

I'm sure they'll try their best to stop it. Just don't see how they'll do it. Even if bitcoin failed tomorrow, there would be hundreds of other digital currencies to take its place.

[Ethereal]

The existence of regulations take the freedom out of it. Sure, you could circumvent them...for awhile. But do you really think the government that reads your emails and listens to your phone calls won't figure it out and catch you eventually? Especially since they are now flying spy drones in U.S. airspace?

There are projects right now that are developing end-to-end cryptographic protocols for email, phone calls, and bitcoin wallets. Combine those with the TOR network, and virtually everything you do digitally will be private, secure, and anonymous. The crypto-anarchists aren't just going to give up in their quest for digital freedom.

[Max Rockatansky]

The point of the OP is that it has lost its status as free, unregulated currency.

It's still a free, unregulated currency. However, if you are a citizen in the US, you must pay taxes on it.

If you are in another country, the laws of that country, if any, apply. If you are in the middle of the ocean, no rules apply just like with pirate radio stations.

You seem to want the US to recognize it as a currency, but since it is a free and unregulated currency, how can that request be honored?

[sachem]

Goodbye, Bitcoin.

[Cthulhu]

Not to worried about the federal government's ability to stifle it.

They are still losing the drug war after all.

Besides, there are alternatives too bitcoin as well.

http://media-cache-ec0.pinimg.com/736x/dc/e1/b3/dce1b3c33c4dbb11694cc4c8f0adf50b.jpg

And as was mentioned by Codename, there is currently 3 trillion bucks - USD's that are currently unaccounted for. And they want to chase after digital phantoms like bitcoin?

Mixed up priorities combined with ineptitude? Nah, not to worried about the future of bitcoin. My question is how would you even pay taxes in it any ways? Is the government going to open it's own bitcoin wallet and accept payments? Would they issue tax refunds in bitcoins?

Good luck Uncle Sam.

[Green Arrow]

It's still a free, unregulated currency. However, if you are a citizen in the US, you must pay taxes on it.

If you are in another country, the laws of that country, if any, apply. If you are in the middle of the ocean, no rules apply just like with pirate radio stations.

You seem to want the US to recognize it as a currency, but since it is a free and unregulated currency, how can that request be honored?

I don't want the US to do anything with Bitcoin. I want them to leave it alone.

[The Xl]

Not to worried about the federal government's ability to stifle it.

They are still losing the drug war after all.

Besides, there are alternatives too bitcoin as well.

http://media-cache-ec0.pinimg.com/736x/dc/e1/b3/dce1b3c33c4dbb11694cc4c8f0adf50b.jpg

And as was mentioned by Codename, there is currently 3 trillion bucks - USD's that are currently unaccounted for. And they want to chase after digital phantoms like bitcoin?

Mixed up priorities combined with ineptitude? Nah, not to worried about the future of bitcoin. My question is how would you even pay taxes in it any ways? Is the government going to open it's own bitcoin wallet and accept payments? Would they issue tax refunds in bitcoins?

Good luck Uncle Sam.

Huh? They're losing the drug war? They have multiple agencies massively subsidized and have furthered the police state.

Sounds like they're winning it to me.

[Green Arrow]

Huh? They're losing the drug war? They have multiple agencies massively subsidized and have furthered the police state.

Sounds like they're winning it to me.

Saint Mike loved to use that argument, but as we pointed out to him, two states have now legalized recreational marijuana and more will be right behind them.

They're losing.

[The Xl]

Saint Mike loved to use that argument, but as we pointed out to him, two states have now legalized recreational marijuana and more will be right behind them.

They're losing.

Saint Mike was wrong about the morality and Constitutionality of the drug war, but he wasn't wrong that they're winning it, even if the tide is turning slowly.

Ask all the cops, attorneys, the prison industrial complex, and others if they're losing. They're still getting paid and young black men are still in a cell disproportionately for doing absolutely nothing wrong.

I don't know enough about Bitcoin or the governments efforts to stifle it, but I do know that in regards to the drug war, the government has overall won it, sheerly because the purpose wasn't to actually lower illegal drug use and sales.

I'd guess if the gov really wants to wage war on Bitcoin, they'll win it or at least damage it. Hope I'm wrong, though.

[Max Rockatansky]

I don't want the US to do anything with Bitcoin. I want them to leave it alone.

The US can't control what happens with Bitcoin in other countries. It only controls the commerce inside its own borders. I fail to see the issue here.

[Green Arrow]

The US can't control what happens with Bitcoin in other countries. It only controls the commerce inside its own borders. I fail to see the issue here.

The issue is that the federal government should not be regulating or taxing Bitcoin within its own borders unless it wants to adopt Bitcoin as official U.S. currency.

[Max Rockatansky]

The issue is that the federal government should not be regulating or taxing Bitcoin within its own borders unless it wants to adopt Bitcoin as official U.S. currency.

Ummmm, incorrect. If it was a foreign currency and you and I were trading it for profit, those profits are covered in US tax law. If you and I were trading it as a commodity like pork bellies and frozen concentrated orange juice, that too would be covered by tax law. I fail to see why you think the US should make an exception for bitcoin.

[Green Arrow]

Ummmm, incorrect. If it was a foreign currency and you and I were trading it for profit, those profits are covered in US tax law. If you and I were trading it as a commodity like pork bellies and frozen concentrated orange juice, that too would be covered by tax law. I fail to see why you think the US should make an exception for bitcoin.

Because I'm an anarchist, therefore against government control of anything. It's not incorrect. I didn't say they didn't, I said shouldn't.

[Max Rockatansky]

Because I'm an anarchist, therefore against government control of anything.

Good luck with that.

[Newpublius]

If I trade my tractor for your dirt bike there is no reportable event.

Its just difficult to trace of course, but in theory barter is reportable.

[Newpublius]

The regulations can be circumvented easily; that's the whole point of bitcoin, to get around the banking cartel and their lackeys in government. As long as you follow a certain protocol, bitcoin transactions are virtually untraceable.

Very true, but you still may have difficulty funding or defunding, ie. when you want to convert it to cash. That's where things start to become more potentially traceable....

[Peter1469]

Its just difficult to trace of course, but in theory barter is reportable.

Which tax form covers barter?

Also, why self report?

[Alyosha]

Good luck with that.

http://www.usatoday.com/story/money/business/2013/05/12/2-trillion-dollar-underground-economy-recovery-savior/2144279/

People already avoid the IRS and government to the tune of 2 trillion dollars a year. They work in cash.

[Cthulhu]

Saint Mike was wrong about the morality and Constitutionality of the drug war, but he wasn't wrong that they're winning it, even if the tide is turning slowly.

Ask all the cops, attorneys, the prison industrial complex, and others if they're losing. They're still getting paid and young black men are still in a cell disproportionately for doing absolutely nothing wrong.

Yet there are tons of people out there still getting blazed. And as Green Arrow mentioned, it is slowly becoming legal. They may have great assets, but they are losing the war.



I don't know enough about Bitcoin or the governments efforts to stifle it, but I do know that in regards to the drug war, the government has overall won it, sheerly because the purpose wasn't to actually lower illegal drug use and sales.

I'd guess if the gov really wants to wage war on Bitcoin, they'll win it or at least damage it. Hope I'm wrong, though.

If the government really wanted to throw a wrench in teh bitcoin system to shut it down they would need to open up massive mining rigs in order to dominate the hash power of the network, if they could mount a 50% hash power attack on the network, bitcoin could in theory be in trouble.

That and they would be forced to produce more bitcoins by doing the hash power - contributing to the problem they are trying to eliminate.

Fighting bitcoin is nigh pointless as a government, they stand to gain more by participating in it and eventually dominating the hash power to halt network transactions.

[Ethereal]

Very true, but you still may have difficulty funding or defunding, ie. when you want to convert it to cash. That's where things start to become more potentially traceable....

Ideally, bitcoin will give rise to its own internal, self-sustaining economy where such conversions won't be necessary.

[Ethereal]

Which tax form covers barter?

Also, why self report?

http://www.irs.gov/taxtopics/tc420.html

[Heyduke]

When all is said and done, we'll look back and see that Bitcoin (and all things digital) was a net-positive for the Babylon System. Get people accustomed to using digital money, crack all codes with quantum computing, and tax all peer-to-peer transactions automatically.

Here's a Heyduke parable that applies to all digital technology;
A hunter loved to feast on wild pigs. He set up an enclosure in the forest, and he left the gate wide open. Each day he chummed the enclosure with a pile of corn. And each day, more and more pigs came inside to eat the free corn. On that day when the hunter became satisfied with his quarry, he slammed the gate shut, trapping most of the pigs of the forest inside. Thereafter, he harvested pigs at his leisure. And for sport, he picked off one by one the few remaining pigs of the forest who had resisted temptation.

[Peter1469]

http://www.irs.gov/taxtopics/tc420.html

Thanks that is the first I saw that one. And I ran a tax center! It is a total self report thing, so I doubt many tax forms include this.

So if you have no business, the IRS wants you to use the schedule C?

[Newpublius]

Which tax form covers barter?

Also, why self report?

Well, obviously relying on self reporting with respect to barter isn't going to be that effective unless the items exchanged are large and titled, like cars and houses where the government has some chance of tracking it. Not that it happens too often of course. Many people obviously engage in small scale bartering precisely because they have no intention of reporting it, ie. I'll wash your car if you watch my kid for two hours.....

apparently there's a 1099-b though I've never used it.

A businesses cash sales are essentially self reported too.....

[Ethereal]

When all is said and done, we'll look back and see that Bitcoin (and all things digital) was a net-positive for the Babylon System. Get people accustomed to using digital money, crack all codes with quantum computing, and tax all peer-to-peer transactions automatically.

Here's a Heyduke parable that applies to all digital technology;
A hunter loved to feast on wild pigs. He set up an enclosure in the forest, and he left the gate wide open. Each day he chummed the enclosure with a pile of corn. And each day, more and more pigs came inside to eat the free corn. On that day when the hunter became satisfied with his quarry, he slammed the gate shut, trapping most of the pigs of the forest inside. Thereafter, he harvested pigs at his leisure. And for sport, he picked off one by one the few remaining pigs of the forest who had resisted temptation.

How will quantum computing de-anonymize the transactions? It can be used to break encryption, but the anonymity of the TOR network arises from a different operating principle than modern encryption.

And if they can use quantum computing to break classical encryption, perhaps quantum computing will give rise to quantum cryptography.

[Cthulhu]

If iGolder (http://www.igolder.com/pgp/encryption/) is shutting down. I'm not worried about bitcoin.

[Heyduke]

How will quantum computing de-anonymize the transactions? It can be used to break encryption, but the anonymity of the TOR network arises from a different operating principle than modern encryption.

And if they can use quantum computing to break classical encryption, perhaps quantum computing will give rise to quantum cryptography.

My quip about quantum computing was a time-saving stand-in for a broad range of methods which could be used to identify bitcoin users. If the NSAs Penetrating Hard Targets program doesn't pan out, more conventional methods could be used.

Exchanges could be regulated, required to report any USD that's been converted from bitcoin.

Mobile wallets are stored on your phone. The next generation iPhone and Droid could ID you when you do the QR scan thing. I mean, why do iPhones and Droids need to log your timestamped coordinates to a database? They don't. But, with the demise of BlackBerry, you can't really buy a smartphone that doesn't keep tabs on you.