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IRS Slams Bitcoin With Retroactive Tax Rules... Is Gold Next?
Submitted by Simon Black of Sovereign Man blog,
Bitcoin tax rules finally came to the Land of the Free yesterday. And I have to imagine there are some not-too-happy campers this morning, if they even know about it.
Bitcoin taxes were inevitable. I’ve written about this numerous times, and have even gone so far as to predict that the government will probably mandate special Bitcoin reporting on foreign disclosure forms.
A number of other countries, from Germany to Singapore, have already issued their own tax rules on Bitcoin and related virtual currency transactions. And yesterday the IRS finally issued their own.
Here’s the quick summary:
1) While a number of governments (including the United States to a degree) have officially pronounced Bitcoin to be a ‘currency alternative,’ the IRS disagrees.
2) According to the IRS, Bitcoin is -property- and should be taxed as such… similar to, for example, a piece of rental property or collection of fine wine.
3) This means that the sale of Bitcoins is taxable based on capital gains. If you bought Bitcoins at $1 and sold them at $501 several years later, you would have to pay long-term capital gains tax on the $500 difference, currently 23.8%.
4) If you hold Bitcoins for shorter periods of less than 1-year, you can be taxed at ordinary income tax rates on your gains.
5) To the extent that you mine Bitcoins as a trade or business, the Bitcoin income from mining activity is not only subject to income tax, but also self-employment tax.
6) If you trade your Bitcoins for some other property that exceeds your cost basis, you are subject to tax. This is a huge ruling that effects all the ‘Bitcoin millionaires’ out there– early adopters who purchased Bitcoins at a dollar or less.
So let’s say you were one of the first Bitcoin adopters and bought 5,000 bitcoins at $0.05. Last year when Bitcoin was valued at roughly $1,000 in paper currency, you traded 250 of them for a brand new Lamborghini.
The IRS would say that you had a cost basis of $12.50 for those 250 coins. But you traded them for other property with a fair market value of $250,000. This means you have a taxable gain of $249,987.50.
Naturally, the US government is happy to go back in time and thrust all sorts of interest and penalties upon you if you didn’t comply with the law.
According to their ruling, “failure to timely or correctly report virtual currency transactions when required to do so may be subject to information reporting penalties under section 6721 and 6722.”
What’s most interesting about this new set of rules is what they might mean for gold.
If you’ve ever read Currency Wars (a fantastic book by my colleague Jim Rickards), you may recall early in the book when Jim suggests a potential outcome for gold.
Imagine– paper currencies go into freefall. Gold soars. Anyone who bought gold early sees sizeable profits (in paper currency)… at which point the government steps in after the fact and sets up new tax rules to confiscate a substantial portion of those gains.
Think it can’t happen? These Bitcoin rules certainly establish a precedent.
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Every post on this website lives forever, somewhere in the NSA cloud.
When the time is right, it will be mined for "evidence."
So who is crazy enough to post here with an ID that matches their real world indentity..... and I am not even an American!
Last time I sold a little gold because I ran short of cash during a vacation I advertised it on Craigslist and sold it in a McDonalds at lunch time. Tax that.
Duh. Gold is a capital asset (if you're lucky) and Bitcoins are a capital asset (if you're lucky) and real estate is a capital asset (if you're lucky) and shares in Apple are a capital asset (if you are lucky).
If you are an American resident and you sell anyone of them for a nominal dollar gain then you are going to get taxed on the gain as a capital gain (unless you are unlucky and it gets treated as a trading profit and you get taxed as income.) You decide to evade taxes by not reporting the nominal gain and you are running the risk of prison.
There is nothing new or surprising here. What made the libertarian morons think that Bitcoins weren't taxable as a matter of law?
>>>There is nothing new or surprising here. What made the libertarian morons think that Bitcoins weren't taxable as a matter of law?
Well, someone with the gift o' gab said that Bitcoin was a currency.
And maybe it is. Still, someone who trades in Bitcoin (like a US person trading AUD) has to mark their gain or loss back into USD, and then render USD tribute unto Caesar, according to Caesar's rulez.
Anything with a weekly price fluctuation of +/- 25% will never be a currency, because a currency is by definition a) widely accepted for the purchase of goods and services (bitcoin is not...yet) and b) a stable store of (relative) longterm value (bitcoin is not....yet).
Sure they can do lots of things to gold. But then again they have done a lot to the citizens of the USA from body searches to scans, loss of privacy through spying, the right to put you away and throw away the key and so on.
Gold has a history of thousands of years and can take care of itself. I suggest we put an emphasis on retaining our rights and freedoms and everything else will fall into place.
What we see on TV is simply a facade of a very nervous, fragile and corrupt system. The government of the people is in hibernation until the winter of discontent gives way to the free spirit of man.
Lost my wallet in a boating accident. Not the first time I've done that. Whoops.
do you really think they haven't thought this all out for years and years? tax or confiscate - choose your poison.
Gold is already taxed. So no, gold is not next.
What is next is taxes on money in bank accounts. In case you missed the whole bail-in thing, or maybe don't understand how Socialism works, I assure you, they are taxing your bank account next.
You get around this by buying and keeping US silver coinage. It is still money at its face value absent a "FDR move" and so can only be "marked to market" at its face value. The current regulations only effect the "value" when the bitcoins are exchanged for something else in any event. Mark to market is not in the current regulations.
Yep and that is why I buy 1964 or earlier Washington quarters, Roosevelt dimes and when I can get them 1964 Kennedy half dollar coins because they are still legal tender.
Also my understanding is you can also get around capital gains tax for gold and silver coins if you have residence in Utah where gold and silver bullion are considered legal tender. The only question is does it have to be a primary residence and secondly if you set up an company or self directed IRA can you get around the tax as long as it is based out of Utah?
Why do they tax us if they can just inflate the currency?
Don't answer that I already know why. It's the same reason governments are so hostile to crime families. They don't like competition.
I thought Bitcoin was the sovereign legal tender of Bitcoinia, a small island republic somewhere.
They can't tax it if it is a foreign currency.
Yeah as beautiful as they may be... I need to stop instagramming my gold.
My gold is already currency with a face value determined by the Gov of the US.
the obvious solution is to become a nomad
and walk the desert eating rattle snakes
and such till the aliens come to deliver
us from this psychotic mutant human species.
let me go fix a go pack.......
either that or organise and confront the
lies and flawed logic and control memes of
the squid like predators.
sure there are other options but seriously,
who cares?
the entire money system and accounting is a total fraud
and no one cares. taxes? they don't need your
stinking taxes, they print money and spend it
like it was something of value, as if the people
will work to give it value when they have no idea
what the hell is going on and have no direction
from above or below to direct their efforts in any sustainable
or functional, efficient or productive manner.
....
this entire psycho value power tax money babble universe
can go and be crushed in the black hole it came from.
fraudulent induction is no basis for any power that
will be upheld or survive.
there are no harmonics in this current anti-dynamic.
it fails the smell test, it fails the math test, it
just plain fails. it makes people sick and want to jump
off a frickin' roof onto the next roof as has been
happening lately.
It is difficult to collect taxes while hanging from a tree
+10000 Awesome!
Now we're talkin'.
Open your own BTC dark wallet, and buy BTC with cash. When selling BTC use something like Local Bitcoins and sell for cash. Good luck tracking that I.R.S. pukes. I don't personally trade BTC but do study it.
This is meaningless, because they cannot collect.
Who in their right mind would pay this tax? I'm sure as hell not going to pay it.
Fuck off, IRS.
My gold and guns are like inseparable siblings--You want one, you will have to deal with the other.
"A-tisket a-tasket, a bankster's head in a basket."
This is a welcome decision: it brings bitcoin owners into the honest-money fold, which is hereby declared property of the US Government, unless you submit, to AUTHORI-TAY! Bitches!
So-called 'capital gains' taxes on gold, silver have ostensibly been required by IRS for as long as I can remember.
And as Sherry Peel Jackson (former IRS agent, and political prisoner) has said: if a taxpayer said they had inherited gold, she would tell them to "go dig it up!"
But since when has IRS respected the Coinage Act of April 2, 1792, or any other law, for that matter.
Fuckin' hell Black. Don't give them ideas. The idiots 'in power' eventually come to ZH to find out what is what. Hi Larry Fuck Fink.
Sorry ZHers ... when you make a profit in 'anything' you owe the tax in fiat, so if you buy gold, hold it, gift it to heirs, just don't trade it for fiat ... if you are looking to make a buck on it, then you owe the tax in bucks, why would it be any different than anyting else priced in fiat.
Because gold is money. If I walk into a bank and buy a $20 bill with two tens, I don't generate a taxable event.
The IMF did try to tax a bank exchange of a $20. for 2X $10.'s.
By all the QE's money in "Their" system they are inflating money and removing value. The Fed soon will remove all
Currency (fiat) they can and the scramble for cash will cause a world depression such as never before seen.
The debt on loans will still need to returned.......Just there is not enough printed fiat to pay much of the outstanding debt , (even if interest is charged for these loans). Again, it, doesn't smell right. Too much power given to the Bankers which are an unproductive part of the System.
Please...
Comparing bitcoin to gold is blasphemy.
Bitcoin is a beanie baby, gold has real/intrinsic value.
well, is there a distinction with a difference
between gold and bit coin?
one held in the hand and seen with the eye, the other .....?
al gore owns it?
that's not right but seriously?
but taxes , where do they begin and end?
sovereigns only need them to enslave the many
for the gain of the few and if they are insufficient
the sovereign just CREATES, of itself, that which
it sees fit to CREATE. today, you get the bill(or your
children) and the value is distributed ELSEWHERE.
everyone take the fifth, avoid, delay everything & finally do not comply to these enemies of America now part of ovomits politicial destruction manchine. Will they throw hundreds of thousands in jail? Basically F@#$ them
At what percentage do the masses consider taxation as theft?
The masses don't worry too much about taxes I suppose.
My US gold coin says $50.00.
Now they are going to tax their own currency that appreciates?
I'm confused.
Is Fonestar not only broke but now a slave for the IRS?
We know that this is your homework, Larry.... They're going to cut your dick off Larry....
Anything can happen with precious metals. Silver was handled differently than gold by FDR. He called in silver (1934 Silver Purchase Act) and chared a seniorage/coinage charge of 61%. So you took in your silver and got 39% back. He then varied the charges for many years.
Anything can happen by fiat. They even published the names of large "hoarders" of silver in the paper.
Executive Order 6814 - Requiring the Delivery of All Silver to the United States for Coinage August 9, 1934Franklin D. Roosevelt 1934
By virtue of the authority vested in me by the Silver Purchase Act of 1934 and of all other authority vested in me, I, Franklin D. Roosevelt, President of the United States of America, do hereby require the delivery of all silver situated in the continental United States on the effective date hereof, by any and all persons owning, possessing, or controlling any such silver, and do hereby require any and all persons owning, possessing, or controlling any such silver to deliver the same in the manner, upon the conditions and subject to the exceptions herein contained, such action being in my judgment necessary to effectuate the policy of the Silver Purchase Act of 1934. . . .
I like to read the comments in the articles and see how many comments it takes to find one which matches my opinion. I think two is the new record. Soverign man compared gold to bitcoin??? To easy...
No tracing gold transactions bitch.
Nice ladder, wrong wall: They care about TAXES, not tracking.
They won't "track" gold. They'll just tax its sale. EVENTUALLY, you gotta sell it via an official business channel and that's where they get you.
Like "the smart guys in the room" have said: you need to stop being Obummer's fudge-packing 'donkey', and the vassal serf to the IRS. And if you can't beat them on Principle, you do what trial lawyers do: beat 'em on Procedure. Use your imagination and cunning, or borrow someone else's.
"EVENTUALLY, you gotta sell it via an official business channel and that's where they get you."
Why would you have to do that rather than bartering it directly for what you want?
Because very few people outside us goldbugs are interested in holding gold.
"Think it can’t happen? These Bitcoin rules certainly establish a precedent."
lol...certainly establishes a precedent for ELECTRONIC transfers of this & that...fo sho.
Its only a part of what we've been saying, fortunately, I don't have to worry about any of it, after the boating accident.
Dumbasses.
Use gold and silver to buy directly without converting to dollars. If you need to convert, do it with cash with private parties and then use cash to pay off secured debt. YUP! been savin cash in the mattress for years. Grandpa died 20 years ago and gave me a pile of hundred dollar bills. Gifts to a certain point are not reported, nor are they taxed. When it all collapses, there will be rich people here and there that will seek to preserve their wealth. Trading dollars for gold under the table should be easy. As everyone runs for the exit, I think the holders of PM's will ask and get what they want.The IRS? Just who is going to pay these freaks and with what when the almighty buck goes to zero? It is probable that much of government will get shut down in the chaos.
Fuck the tax code and fuck the IRS. Let the games begin
What really scares the SHIT out of TPTB, is the COMBINATION of Gold+Bitcoin.
If people (and a few knuckleheads) finally figure out to use one for transactions, and the other as a Store of Value, then King Fiat is fucked and DOA . Check mate, game over.
But they don't want you to even "look" in that direction (get the Epiphany), which is why they have plenty of trolls here, to deflect and redirect the talking points -- either via humor, sarcasm, etc.
Which is not too difficult, since most 'Mericans are not deep thinkers or can handle more than two variables. If I were to say "Multi-domain, multi-varable optimization, and stochastic simulations", even most ZHers (who pride themselves for being "in the know") would get a vacant stare. Yet this is child's play for the "smart guys" that Wall St and the DOD have on hand for their Sim games.
What if you traded a certain amount of gold/silver for a dream property. Does that solve anything?
You can have my gold when you pry it... you know the rest.
FYI, Gold is already a taxable asset.
If you mine your own gold, nobody else needs to know about it.
but when you try to sell it you will have to tell where did you get it from and
you will get taxed accordingly
I thought no law, fine, tax or ruling could be retroactive except where a new law could negate a previous laws judgment or punishment.
this capital gains tax is not new! therefore, it is not "retroactive".
the capital gains tax have been on the books.
Mazacoin Bitchez.
there's nothing reteroactive in the IRS announcement
I lost all my gold off a ship,
It fell overboard when I tripped,
My bitcoins were nicked,
When by Gox I was tricked,
So IRS, eat shit.
if you want your Bitcoint - you can have your bitcoin
but
no matter what you do you will always pay taxes to us
at a friend's company....they just shit canned the entire IT department (12 people) who basically turned the company IT system into a bitcoin mining operation without permission.
LOL!
The IRS is a collection Agency for the Fed. A Private bank that gambled for their Profit with your Tax money and they Lost. While still giving the Banksters huge bonuses.
Whats wrong with this......American Dream.............All thats missing is the hangmans noose. what a turnout that would be.....a Country United, come on..............Unite the States.
NO RULE OF LAW or PROPERTY RIGHTS
it's a free for all make it up as you go along
I THOUGHT TAXES HAD TO ORIGINATE IN THE HOUSE OF REPRESENTATIVES..... ah that's just that constitutional shit... you know .......THE LAW OF THE LAND
NOT IN SOME IRS BUREAUCRAT'S WET DREAM
compare today's libtard morons to the founding fathers genius... and you get some insight as to why things are so fucked up and we have a Constitutional crisis...
congress is letting an unknown unproven empty suit failure trample the CONSTITUTION and Bill of Rights..... and get away with it
it was a coverup that took nixon down... how many coverups does obama get .... or is that ///RACIST///???????
The author is wrong. These aren't after the fact rules. They are standard tax rules for capital gains.
It seems to me that there is one quite evil alternative method of disposing of bitcoin ill-gotten gains that would cause the IRS a difficult time to find any target and would fuck over evil banksters.
Any early adopter of bitcoin that made a huge windfall should make it their mission in life to reach out to any family and friends and PAY OFF ALL OF THE DEBTS of said family/friends to banks.
Collapse the fuckers, collapse them hard.
My account got hacked and I lost all .02 BTC that fonstar told me to buy at $1200 I guess I can declare that a lost for my tax year? Gonna sell it on Craigslist anonymously first. Lol
If you buy Euro for $1.38 and sell them for $1.50 is there not a taxable gain on the transaction? What's the difference?
Bitcoin will be $0.50 not $500 by the time this story is over anyway.
$515 and falling.
"and soon are your coins of bit,
will be worth less than a pile of shit."
When politicians get paid to steal from all of us, are they taxed of their profits of such theft?