‘I’m Very Interested To See If We Can Determine the Percentage of Bitcoiners who are Honest Taxpayers’
Chances are, if you’re an early evangelist the idea of a marriage between ‘Bitcoin’ and ‘taxes’ makes you cringe, however, we have to face facts. Extreme changes arise from chaos or time and Bitcoin, as anticipated for the price of the digital store of value, is going the route of stability.
Taxing Bitcoin has become a reality since this spring, and where several have seen an ideological disconnect, Jake Benson from LibraTax has seen an opportunity. You may be familiar with LibraTax from our previous coverage of their unveiling. We’re pleased to share their demo video from CoinSummit London if you’re interested in diving deeper.
US citizens in particular may be interested in using LibraTax due to the official announcement made by the IRS on March 25, 2014 pertaining to transactions involving cryptocurrencies. In this statement, the IRS labeled Bitcoins as taxable and stated that cryptocurrencies will be treated as property, not currency. Our list of implications can be foundhere.
To provide perspective, imagine that every dollar of cash you hold is no longer treated as a medium of exchange but as an investment vehicle. Proceed to imagine that every time you purchase coffee, you would be required to track the dollar exchange rate in real time and report gains on fluctuations. Truly, it is unfortunate that we cannot realize losses in purchasing power due to inflation with similar principles.
Treating cryptocurrencies as property has translated into a notable compliance burden, particularly for daily transactions and mining pool hosts. If a person is found to be using a wallet other than, notably, Coinbase or Blockchain, they may encounter challenges tracking their transactions, leaving people whose records busted with Mt. Gox at the bottom of the barrel.
This post was published at Coin Telegraph on 2014-10-29.