How Bitcoin Is Taxed - Forbes

This subreddit is for users of Bitcoin in Australia.

This subreddit is for users of Bitcoin in Australia.
[link]

Bitcoin Tax Attorney here. I am around for discussion or questions related to Bitcoin Tax treatment, including tax planning opportunities for businesses and individuals.

Anyone have issues with their tax returns due to lots of Bitcoin usage or from the sale and disposition of Bitcoin? Anyone looking for any tax favorable planning opportunities? Either as an individual who sold a bunch for profit or for a business who has begun accepting Bitcoin for the first time.
My practice has focused on helping both individuals and businesses for Bitcoin tax related matters for much of this year. I am available for discussion here in the comments, and for more specific matters, please PM me.
I'm a tax attorney based in Los Angeles and big bitcoin fan and miner going way back. I've been lurking hear on bitcoin for years. I was a miner back in 2011-2013, build my own custom rigs with 6 Radeon 7970s.
Then I was among the first to receive a couple of BFL's 5 gh/s cubes and then one of the first 50 Gh/s. (I knew that was a lawsuit waiting to happen against BFL. Scoundrels) Good memories all around. I still have my spreadsheets keeping track of what I mined. Altogether, with the pools, I mined over 100 bitcoin. Alas, I sold many of them when the price was $300 or less.
All this time I was focusing on tax law, finishing Tax LLM courses in Los Angeles. So, it was inevitable that the two interests would merge. I ended up writing a proposal to treat Bitcoin as currency as opposed to property.
Here is a link to my paper on this which Tax Notes published as their cover story a few months back, which was completely unexpected but kinda cool to see this niche interest rewarded.
Paper: "Bitcoin: Property or Currency?" http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2708188
Got to go on a State Bar Delegation to DC to enlighten folks with the power to actually do something about it. Delegation met with IRS Chief Counsel, including people who drafted the Notice treating Bitcoin as property. Also folks from Treasury Dept, Senate Finance Committee, House Ways & Means, etc.
I urged for currency treatment (as opposed to property treatment) of Bitcoin and other cryptocurrencies, in fact anything built on the basis of the Blockchain meant as a mode to transact money.
If any of you guys had to do your taxes this year, and have bought and spent a lot of Bitcoin, or even just mined and sold, you probably know some of the difficulties I'm alluding to without even mentioning.
Should we really have to calculate capital gains/loss on the purchase of a cup of coffee at your neighborhood cryptocurrency friendly coffee shop, for example? Even with purchases at Overstock.com or Dell, you were technically supposed to calculate capital gains and losses and provide supporting backup on your tax returns this year.
What a practical and administrative nightmare for both taxpayers and for the IRS who has to wade through this. I feel like some of what I wrote got through to them. As we all know, government lags far behind emerging technologies. But they did seem genuinely interested, and I do not believe my paper and proposal fell upon deaf ears.
I have my own law office these days and work with or for many attorneys on various matters, just as I have a number of attorneys assist me. No such thing as a pure solo practitioner these days. No man can afford to be an island.
This tax year has been very rewarding and helped a great many tax clients with Bitcoin issues from anything to bookkeeping to strategic planning for the short-term as well as long-term.
Any accountant knows the terms LIFO and FIFO, but there's seemingly no hard and fast rules for measurement for when a particular bitcoin was bought and sold for purposes of calculating gains/losses. Also, no hard and fast rules as to where the particular market price of Bitcoin is found on a particular day.
Everything is loose, open to interpretation by the tax payer, and with strategic guidance, can prove incredibly tax favorable ultimately. It is wise for a business to accept Bitcoin for many reasons, including that broad opportunity for interpretation while staying true to the property guidance.
So, it is ultimately very taxpayer friendly due to this broad leeway. More than that, treating bitcoin and cryptocurrencies as property rather than currency is also taxpayer friendly by definition. Your bitcoin gains will only be taxed at your capital gains rate instead of as ordinary income, a higher rate.
I assisted a lot of individuals and even businesses who accepted bitcoin for the first time this year. I intended to post on /bitcoin before to offer my services and to also just allow people to send me questions, which I am happy to discuss in private for free.
I got pretty slammed up to tax day, but I'm free now. Just hit me up by private message or shoot me an email at thebitcoinlawyer at g mail.
Any questions or thoughts, I'll be around. I'm often around /bitcoin anyway. Love this community. And if I can serve as help for any of you, all the better. Thanks.
TL;DR Bitcoin Tax Attorney available for discussion on tax issues here in comments, or for more personalized issues, hit me up by PM
submitted by BitcoinTaxAttorney to Bitcoin [link] [comments]

Bitcoin tax treatment in Canada

Does anyone know how gains in Bitcoin are treated in Canada? does it have to be reported as a capital gains and as such are taxed?
submitted by JT7777 to Bitcoin [link] [comments]

Bitcoin tax treatment on Radio 4's Moneybox

Bitcoin tax treatment on Radio 4's Moneybox submitted by PumpkinFeet to BitcoinUK [link] [comments]

Bitcoin tax treatment in Canada /r/Bitcoin

Bitcoin tax treatment in Canada /Bitcoin submitted by BitcoinAllBot to BitcoinAll [link] [comments]

Bitcoin Tax Attorney here. I am around for discussion or questions related to Bitcoin Tax treatment, including tax planning opportunities for businesses and individuals. /r/Bitcoin

Bitcoin Tax Attorney here. I am around for discussion or questions related to Bitcoin Tax treatment, including tax planning opportunities for businesses and individuals. /Bitcoin submitted by BitcoinAllBot to BitcoinAll [link] [comments]

[change.org] ATO giving out misleading and confusing information on Bitcoin tax treatment.

[change.org] ATO giving out misleading and confusing information on Bitcoin tax treatment. submitted by b_lumenkraft to Bitcoin [link] [comments]

Australian Tax Law and Crypto

Crypto and Tax Australia - Date: 26 March 2018
I was sent this by the tax office:
We have just updated our website and cemented our position on cryptocurrencies. For more information see Tax treatment of cryptocurrencies or go to ato.gov.au and search for QC 42159.
Capital Gains Tax
When does it apply?
Currently individual Cryptocurrencies are a Capital Gains Tax (CGT) Asset..
When you sell or otherwise dispose of an asset it's called a capital gains tax (CGT) event. This is the point at which you make a capital gain or loss.
Therefore, a CGT event applies each time crypto currencies are traded (sold or converted) - whether they are traded for another currency or cashed out. - regardless if there is no exchange of funds (AUD$).
For every capital gains tax (CGT) event that happens to your assets during the year, you need to work out your capital gain or loss.
If you have both capital gains and capital losses, you also have to work out your net capital gain or net capital loss for the year.
When working out your capital gains or losses, include the transaction conversion in Australian dollars at the time of trading on your spreadsheet.
How do you record Capital gains or losses to your Income tax return?
At the end of the financial year your capital gains can be reduced by the capital losses. This is then added to your income. Capital Gains and or losses are recorded in your income tax return, under the Capital Gains section.
Capital gains discount
Capital gain can be reduced by 50% for individuals if held for 12 months or more.
For information see Capital gains tax or go to ato.gov.au and search for QC 22147
————————————————————
What I have learnt about ATO laws and crypto in Australia in my own words:
Ok- so I have now had about 2 hours discussion with the Tax Office and want to outline what I have learnt - for good and bad. If you want to be legal this is what you have to do. I submitted these points to a tax office rep. who verified they are correct as at 26th March 2018.
  1. Every single sale is a taxable event- that means coin to coin and coin to AUD - every single one! That is a shock to most of us - but unfortunately true.
  2. Every time you make a gain you have to record it and it is a taxable event. EG- you buy ETH with AUD- then buy NEO - if this took 1 hr and in that time ETH went up by $10 before u bought the NEO you just made $10 taxable dollars on the ETH as u buy the NEO!
  3. The tax office does not concern itself with what we call "profit," that our folio app may show, it is concerned with net gain or losses on individual transactions.
  4. So EVERY transaction (buy and sell) has to be logged with the corresponding AUD value so gains and losses can be determined.
  5. Blockfolio app is perfectly set up for tracking all of this - If you diligently add each transaction accurately, it will log the info you need in AUD. You can look at a purchase price for a coin in AUD - the sell value in AUD and determine gain or loss on each sale- and log it.
  6. I am also using a second ledger in an excel doc. as another record in case the app dies for whatever reason. I will transfer the details from blockfolio into this file on each transaction.
  7. The tracking headers for the excel doc would be something like:
Coin
Date
Amount
AUD buy
AUD Sell
Profit or loss:
  1. If you sell a coin at a loss- it comes off your taxable total at end June 30- as do all your fees and other expenses- eg's a Ledger, PC, ISP fees, backup HDD, etc (some may have to be depreciated over a few years).
  2. Some good news is that if you sell an alt coin into BTC or ETH at a profit (attracting CGT) and then into AUD, (it will be approx. the same value if done quickly), the change into AUD is also potentially taxable but there will usually be next to no change in value- if done quickly. You can thus cash out and not have to use something like USD Tether and rebuy whenever you like. The CGT will have applied to the gain as you exited crypto into AUD via ETH or BTC.
  3. Turning crypto into AUD is not the crux of what attracts CGT- it is every single coin or cash exchange that results in a gain or loss.
  4. Coins you bought at any given time do not attract CGT as they appreciate- only when you sell them. So if you made 500% gains in your portfolio no CGT is attracted until you sell for another coin or AUD.
  5. CGT gains are added to your personal income- so most will be in higher tax brackets.
  6. There is no $10,000 "get out of CGT" clause that applies to crypto.
  7. If you have a partner in life, and purchase crypto currency with joint funds, you have to share the CGT across both of your tax returns. It can be a nominated percentage for this Join Tenant arrangement, but you must be consistent. The percentage you choose at your first return (EG 60/40%) has to be maintained for the entire time you are into crypto.
  8. The tax office has developed and is improving on a tool to help you work out your CGT obligations- it isn't mandatory you use it and should be able to be found on the ATO website.
  9. Coins bought and held for 12 months attract the benefit of a 50% discount in CGT. This applies to specific coins and not "your crypto in general" It does not mean you can buy and sell crypto all year and then turn it into AUD after a year and pay tax on your profit that you cash out.
————————
This process is complex for crypto investors- especially if you are an active day or swing trader- To be compliant with Australian Tax law this is how to do it. Essentially, it is fair as losses and costs are deducted from profit. This process gets hard for crypto traders to bear when we may have bought at one price, made gains then our portfolio drops. In practice, you could be liable for more gains that have attracted CGT than "profit" you show in your portfolio when there is a crash. It's hard to take but it's the way the Aust. Govt. is approaching crypto and all investing actually. At this stage, the ATO is treating crypto like all other investments and some of the differences may, in my opinion, not be fully appreciated by law makers and potentially may change in the future. I expect this would be a slow process.
———————
I realise ppl may say "Well, the tax office doesn't know what I'm up to and I will just declare any taxable gain when I cash out." That is your prerogative- I'm just passing on what the legal approach to this is FYI. Do with this info what you may- I hope it is helpful in some way.
submitted by dmarthick to CryptoCurrency [link] [comments]

Current IRS treatment of Bitcoin is like charging an obscene property/capital gain tax on owners of Tesla cars and stock, taking out the smart features of the car, and limiting the Tesla’s velocity and 0-60 time.

Instead Tesla gets subsidized. IRS tax laws make it risky to plan your life with Bitcoin, when it should be encouraged in a supposedly “free” country.
Our country’s politicians keep promising the people a better life, but it never comes to be.
Bitcoin comes along and solves a whole host of problems, and governments view it as a threat and call it a “fraud”.
But Tesla gets subsidized to go explore the solar system.
But we won’t give people the tools they need on Earth to live peacefully with one another??
Makes no sense.
submitted by the420chronicler to Bitcoin [link] [comments]

Legal tender and tax laws unfairly restrict Bitcoin’s use as a medium of exchange. Bitcoin can’t be seriously compared to USD until it receives equal treatment under the law. Any advocate for Liberty should understand this.

submitted by the420chronicler to Bitcoin [link] [comments]

Current IRS treatment of Bitcoin is like charging an obscene property/capital gain tax on owners of Tesla cars and stock, taking out the smart features of the car, and limiting the Tesla’s velocity and 0-60 time. (x-post from /r/Bitcoin)

submitted by ASICmachine to CryptoCurrencyClassic [link] [comments]

Update on Bitcoin Tax status in Australia

Hi Everyone,
Thought I would copy/paste the ATO's response to my query as I believe many of you have been waiting on the tax ruling. The ruling was supposed to come out today but unfortunately that isn't going to happen.
In my view this is a good thing to happen as it means they arn't rushing out a ruling without thinking of the effect on all bitcoin users.
Hi John,
The ATO received numerous submissions from stakeholder about the taxation treatment of crypto-currencies. We have also received representations from industry bodies seeking to provide us with further information. To ensure our advice to the community is comprehensive and robust we have sought further advice from external legal counsel.
These factors will delay the release of our final guidance paper on the taxation treatment of crypto-currencies a little and we have not yet fixed a firm revised date, although it remains our priority to provide the community with the final guidance paper in time for people to complete their 2013-14 income tax returns.
The key information that a taxpayer will need about each transaction or event with bitcoin is the date, the amount in $A, what it was for and who the other party was, even if it’s just their bitcoin address.
I hope this helps. Once the guidance paper is released, we can alert you about it.
Regards,
If anyone needs any advice or just wants a chat to discuss the future of bitcoin tax treatment in Australia let me know as I'm happy to help out. (I'm an accountant based in Adelaide).
submitted by speedyjonzalas to BitcoinMarkets [link] [comments]

Update on Bitcoin Tax status in Australia

Hi Everyone,
Thought I would copy/paste the ATO's response to my query as I believe many of you have been waiting on the tax ruling. The ruling was supposed to come out today but unfortunately that isn't going to happen.
In my view this is a good thing to happen as it means they arn't rushing out a ruling without thinking of the effect on all bitcoin users.
Hi John,
The ATO received numerous submissions from stakeholder about the taxation treatment of crypto-currencies. We have also received representations from industry bodies seeking to provide us with further information. To ensure our advice to the community is comprehensive and robust we have sought further advice from external legal counsel.
These factors will delay the release of our final guidance paper on the taxation treatment of crypto-currencies a little and we have not yet fixed a firm revised date, although it remains our priority to provide the community with the final guidance paper in time for people to complete their 2013-14 income tax returns.
The key information that a taxpayer will need about each transaction or event with bitcoin is the date, the amount in $A, what it was for and who the other party was, even if it’s just their bitcoin address.
I hope this helps. Once the guidance paper is released, we can alert you about it.
Regards,
If anyone needs any advice or just wants a chat to discuss the future of bitcoin tax treatment in Australia let me know as I'm happy to help out. (I'm an accountant based in Adelaide).
submitted by speedyjonzalas to Bitcoin [link] [comments]

IRS Confirms Tax Treatment Of Bitcoin Charitable Donations

IRS Confirms Tax Treatment Of Bitcoin Charitable Donations submitted by Alex-S-Wilson to Bitcoin [link] [comments]

Thanks from a new Bitcoin blogger! (2013 Review)

Wow. Just wow.
Thank you for a terrific end to 2013. My own personal bitcoin journey started on November 5 of this year, and the first "Daily Bit" was written on November 25. The past eight weeks have been a whirlwind for me and hopefully instructive: this market is so wild and so young that even a two-bit idiot can make some waves.
In November, I wrote about Coinbase's financial profile in a piece that proved prophetic when the trailblazer raised $25mm from a16z. I speculated on Bitcoin's tax treatment, the biggest regulatory issue I think US investors will need to monitor in 2014. In early December, I told you about the ballers that you should follow within the Bitcoin community based on my experience at the Inside Bitcoins conference. I was fairly successful at wrapping my arms around the initial Bitcoin China situation and then what it all meant after the dust settled. I gave you a look at the Inner Circle when I scooped Jeremy Allaire's startup last week. And today, I helped a major VC/PE financial blogger break a massive story about a new major Bitcoin fund created by Fortress Investment Group.
I'm not looking for a pat on the back; I give you this summary to demonstrate how fast Bitcoin is growing in the international financial community's consciousness. In addition, I hope this will inspire you to take a closer look at bitcoin as a personal tool and a professional option. But mostly, I simply hope you are enjoying my content as much as I enjoy writing it.
Bitcoin is a worthy obsession. It is democratic. It could break things that deserve to be broken, like banking monoliths and central banks. It is quasi-anonymous and protects consumers' sensitive financial information in a way that credit cards never will. It has the potential to save important professions like journalism (and porn?) because of its ability to aggregate micro-transactions and promote meritorious content. It can spawn countless long-term innovations and industries. It can even bank the under-banked and undermine exploitative institutions in developing countries. After all, power is money. And by its very nature as programmable money, Bitcoin gives power to the powerless.
Bitcoin for me is philosophically and morally pure. The majority of its proponents are a new financial generation of Steve Jobsian misfits that can positively change the global economy. And it's exciting as hell for anyone that loves entrepreneurship. This is the happiest I have been in my entire career, and I'm looking forward to a roaring 2014. Thank you for following me and implicitly feeding my worthy obsession.
Now go tell your friends about your buddy the Two-Bit Idiot. Because I want to keep writing for you and them indefinitely.
Happy New Year!
Cheers, TBI
@twobitidiot +1 to [email protected] for the Daily Bit
Referenced links above:
1) A look at Coinbase's financial profile http://www.reddit.com/Bitcoin/comments/1r2e5y/why_coinbase_might_already_be_a_billion_dolla
2) Bitcoin's tax treatment http://www.reddit.com/Bitcoin/comments/1s049a/bitcoin_and_the_individual_tax_game/
3) The ballers from the Inside Bitcoins conference http://www.reddit.com/Bitcoin/comments/1sszj9/the_top_ten_movers_and_shakers_from_inside/
4a) China 1: http://two-bit-idiot.tumblr.com/post/69082601415/china-does-btc-china-a-huge-favor
4b) China 2: http://two-bit-idiot.tumblr.com/post/70312056859/weve-officially-lost-china-a-potential-bitcoin
5) A look at the Inner Circle. http://www.reddit.com/Bitcoin/comments/1tk65q/the_inner_circle_a_look_at_coinbases_fast_followe
6) Fortress creates a new Bitcoin fund. http://www.reddit.com/Bitcoin/comments/1u3l83/fortress_and_pantera_invest_in_new_bitcoin_fund/
submitted by twobitidiot to Bitcoin [link] [comments]

Guidance paper by ATO (Nov 2017 update): "Tax treatment of crypto-currencies in Australia - specifically bitcoin"

submitted by quietgrowth to AusFinance [link] [comments]

From the ATO - "Do you deal in cryptocurrency? We want your input on the tax treatment of cryptocurrency including Bitcoin." This is our chance to contribute our opinions and help shape how australia tax laws handle crypto

submitted by Camsy34 to BitcoinAUS [link] [comments]

The higher bitcoin goes, the more pressure will be on the IRD to release guidance on the tax treatment in NZ

I hope this happens sooner rather than later
submitted by FredrickFreeman to NZBitcoin [link] [comments]

Sadly, Living Room of Satoshi (Australia) closes. GST tax treatment makes bitcoin unviable.

Sadly, Living Room of Satoshi (Australia) closes. GST tax treatment makes bitcoin unviable. submitted by braid_guy to Bitcoin [link] [comments]

Tax treatment of a small bitcoin operation

So I am starting a bitcoin mine for some side income with a group, and was wondering about the tax treatment. We would form an LLC and each member would invest have 25% of the company. My question is are coins mined treated revenue with electricity cost as the only expenses except maintenance fees. And would the appreciation of the coins value be treated the same as Forex gains? Obviously record keeping is key for but what else would I need to best help my accountant get the proper tax payments? Also I believe that All mining equipment would have to be capitalized as well. Does anyone know what kind of depreciation life they would have? I assume its the same as a laptop.
submitted by gmac2790 to taxpros [link] [comments]

More clarity on tax treatment of bitcoin, but…

More clarity on tax treatment of bitcoin, but… submitted by iBleedWhenIpoop to southafrica [link] [comments]

Tax treatment for bitcoin gifts

I am a US resident. - I bought some bitcoin - I made a big unrealized profit because bitcoin price rose - I gifted bitcoin to father who is a foreigner (within the tax free annual IRS limit for gifts) - Father sold bitcoin and inherited tax basis, but there were no taxes due in his jurisdiction - Father bought back bitcoins at market value and gifted to me via blockchain, within his local gift allowance - I inherited the tax cost basis, which was the same as the market price, then sold the bitcoins and no tax was due. - I did not owe any tax. - Is this too good to be true? I'm not trying to exploit a loop hole here. I'm just doing what a rational player would do. Am i missing something? Should i be paying taxes on my situation. If not I'm going to continue doing this. My dad doesn't pay any taxes because his jurisdiction treats cryptos as gambling (and they don't tax gambling P&L), so upon his sale there is no tax due.
submitted by ctjunior to Bitcoin [link] [comments]

The Tax Treatment Of Bitcoin And Other Cryptocurrencies

The Tax Treatment Of Bitcoin And Other Cryptocurrencies submitted by CCNewsBot to CryptoCurrency [link] [comments]

Cryptocurrency Tax Webinar: How to Avoid the IRS  CoinTracker How to treat Bitcoin and other cryptocurrencies when paying tax. IRS sends letters to US residents Will Coinbase Report My Bitcoin Tax Gains To The IRS? SLP183 Accointing - Bitcoin Tax Strategies What Tax Forms Should Crypto Users File?

Bitcoin.Tax allows users to compare capital gains/losses using different cost-basis methodologies, including FIFO, LIFO, and averaging/adjusted cost basis with or without like-kind treatment. Please note, as of 2018, calculating crypto-currency trades using like-kind treatment is no longer allowed in the United States. An Example of Capital Gains Tax . Let's assume that you purchased Bitcoin for $30,000. You then sell it for $50,000, so you have a $20,000 capital gain.This would be a short-term gain if you held the Bitcoin for a year or less, so it's taxed as ordinary income according to your tax bracket. The Tax Treatment Of Bitcoin And Other Cryptocurrencies. David John Marotta Contributor. Opinions expressed by Forbes Contributors are their own. Wealth Management. I write on the small changes ... Canadian Income Tax – Tax Treatment of Bitcoins – Canadian Tax Lawyer Analysis . Introduction. Bitcoins and other cryptocurrencies such as Litecoin, Dogecoin and Mazacoin are attracting more attention from the media and from Canadian taxpayers. Due to their nature Bitcoins are in use throughout various jurisdictions, however, not all countries treat Bitcoins in the same way when it comes ... For the tax treatment of Bitcoins this means that they must be treated as ordinary intangible assets – at least for purposes of income tax law. The specific tax questions of Bitcoin transactions continue to be dependent on whether the transactions are made in the private domain or in the business sphere.

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Cryptocurrency Tax Webinar: How to Avoid the IRS CoinTracker

In this video, I am going through the tax forms (Schedule 1, Form 8949, Schedule A, Schedule B, Schedule C & Schedule D) you should file if you have crypto. How Staking Tezos May Generate ... This is not tax or legal advise. Simon Dixon discusses his thoughts around How to treat Bitcoin and other crypto currencies when paying your tax. US tax payers receive letters. How to treat Bitcoin and other cryptocurrencies when paying tax. IRS sends letters to US residents ... Form 8949, FBAR, Bitcoin Tax - Clinton Donnelly - Duration: 25:25. Ivan on Tech 10,990 views ... HMRC has released new guidance around the tax treatment of cryptocurrencies for British invesors. There are no huge surprises there, but there are some additions and extra clarity around tax ... Dennis Wohlfarth of Accointing & Clinton Donnelly of Donnelly Tax Law join me to talk about Bitcoin tax treatment, and strategies to employ to minimise tax. We chat about: Current tax treatment ...

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