Silk Road forums
Discussion => Newbie discussion => Topic started by: ilovelucyshow on April 11, 2013, 04:13 am
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With the current volatility of bitcoins, many people are buying and selling all day long. I know I'm moving my newbie ass $80,000 in and out of bitcoins as fast as the prices move. Will I have to pay Capital Gains collectively at the end of the year, or must I track gains for each profit/loss.
BTW, this is spam to eventually circumvent the stupidest forum "proving" requirement ever - the need to spam 50+ posts before moving up to the big boy forums. Not that I'm bitter... What F**cking post number is this anyway?
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BTW, this is spam to eventually circumvent the stupidest forum "proving" requirement ever - the need to spam 50+ posts before moving up to the big boy forums. Not that I'm bitter... What F**cking post number is this anyway?
Crap, it was only number 12. I guess this makes #13. Unlucky bastard! I'm never gonna make it...
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With the current volatility of bitcoins, many people are buying and selling all day long. I know I'm moving my newbie ass $80,000 in and out of bitcoins as fast as the prices move. Will I have to pay Capital Gains collectively at the end of the year, or must I track gains for each profit/loss.
BTW, this is spam to eventually circumvent the stupidest forum "proving" requirement ever - the need to spam 50+ posts before moving up to the big boy forums. Not that I'm bitter... What F**cking post number is this anyway?
Laws will very depending on where you live but I will assume you live in the US. Bitcoins are a bit of a legal grey area at the moment, but assuming they would regulate them like they do currency on the FOREX, your short-term gains are taxed at your current tax bracket rate, while long-term gains are taxed at a flat 15%. Currency is considered 40% short-term, 60% long-term regardless of when you sell. And you are taxed only on the gains you make on each trade (hence why its called capitol GAINS), which is compiled for currency at the end of the tax year. If you want to know specifics, Section 1256 deals with the Cap Gains/Losses, and you report them on IRS Form 6781, Section 1256.
Of course the reality is there isnt any laws on the books yet regulating bitcoins, but you can be sure they are coming. Also, with the amount of money you are talking about, it is rather difficult to just gain that type of cash without people asking questions. Try to take that to a bank and they have to report any deposit over $10,000. That size of money leaves a trail once you convert it to USD, and the IRS is probably the most vicious of the govt agencies. Dont fuck with them, they have nearly unlimited power to find out where your money came from. And believe me if you dont have a good explanation for it, they can seize the lot. Remember, these are the guys who brought down Al Capone ;).
Of course it varies by country, and I am no CPA, just a small day-trader of stocks, but if you are really investing and making that sort of money, it will be worth it to hire someone who knows where to put it to keep the most of it. Hint: a nice offshore account that asks no questions ;).
Just my 2¢
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Laws will very depending on where you live but I will assume you live in the US. Bitcoins are a bit of a legal grey area at the moment, but assuming they would regulate them like they do currency on the FOREX,
Actually, the U.S. Treasury just made an initial ruling on virtual currencies. I don't understand all the implications at this point. Perhaps this validates your point that they are regulated as on FOREX.
For the U.S. Treasury ruling, see this link:
http://www.fincen.gov/statutes_regs/guidance/pdf/FIN-2013-G001.pdf
:::: damn you 50 post newbie minimum!!!!! ::::
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Laws will very depending on where you live but I will assume you live in the US. Bitcoins are a bit of a legal grey area at the moment, but assuming they would regulate them like they do currency on the FOREX,
Actually, the U.S. Treasury just made an initial ruling on virtual currencies. I don't understand all the implications at this point. Perhaps this validates your point that they are regulated as on FOREX.
For the U.S. Treasury ruling, see this link:
http://www.fincen.gov/statutes_regs/guidance/pdf/FIN-2013-G001.pdf
:::: damn you 50 post newbie minimum!!!!! ::::
Thanks mate, did not know about that, but ive been out of the currency game for a while, to much pressure ;D. Ill give it a read (as interesting as govt statutes and regs are ::) )and report back with what I find.
Edit: Keeping in mind that it is VERY early in the morning here ;D, here is my impression.
I believe what the guideline is saying is that normal users of the the 'virtual curency' (BTCs) are not identified as MSBs (Money Service Business) and therefore are not regulated under the Treasuries' authority.
A user who obtains convertible virtual currency and uses it to purchase real or virtual goods or services is not an MSB under FinCEN’s regulations. Such activity [...] is not subject to FinCEN’s registration, reporting, and recordkeeping regulations for MSBs.
So just normal users of bitcoins have nothing to fear, from the treasury at least. However, your currency trading would be considered a business under this ruling.
An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency.
And
An administrator or exchanger that [...] (2) buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN’s regulations. [...] The definition of a money transmitter does not differentiate between real currencies and convertible virtual currencies. Accepting and transmitting anything of value that substitutes for currency makes a person a money transmitter under the regulations implementing the BSA.
So under this ruling anyone who is selling and buying virtual currency for real money is basically a business and falls under Federal Statutes and Regs and has to be reported as such. The exact statute is 31 CFR 1010.100(t) (Very fun reading ::) ) and so must report income and is beholden a ton of other Regs like the Bank Secrecy Act, Money Laundering Regulations, and the US PATRIOT Act. Fun stuff...
Of course I suppose there isnt anything stopping you from not reporting your gains, but the govt and IRS in particular is quite good at catching people doing this sort of stuff. Buying and selling small amounts (probably <$10,000) is probably small fish to the IRS, but you never know mate. They very well could be looking to make an example out of someone.
Id advise you to keep on doing what you are doing, use some of your profit to hire an accountant who knows how to hide money, and probably pay the IRS a pittance to keep em off your back. Again though im no CPA and only do this sort of stuff for a hobby, so take everything I say with a grain of salt.