[Akujin]

What bothers me about this whole thing is that I never bought it like a stock. I mined it YEARS ago when it was worthless.

Now all of a sudden I have to pay tax on something I already own? Seems like the government is double dipping. After all I already paid tax on the hardware, the internet connection, the electricity, and countless other market products that allowed me to mine said coin.

I have a couple of choices now.

I can either sign up for Coinbase and sell it and kiss 15% of it good bye or I can go on Newegg and buy stuff directly with Bitcoin.... or go to a bitcoin meetup and sell with cash in-person..... or go on vacation in Europe and get Euro and again keep it off the books.

Which do you think I'm gonna end up doing?

PS: My address has never been tied to an IRL transaction.

PPS: God damn it's easy to troll HN. More salt than the dead sea.

[andrewla]

If someone raises chickens from eggs; pays for feed and cares for them until they are full-size, and then sells them, he has to pay taxes on that income, even though he already paid for the food and the upkeep. There's no double dipping here.

You can find an accountant who can give you advice on how to account for the cost of mining the bitcoin to reflect your effective cost basis (or wing it; the IRS has reasonably good instructions for this sort of thing).

If you go to Newegg and buy stuff, you are obligated under US tax law to pay the capital gains taxes based on the fair market value of the products purchased. If you go to a bitcoin meetup and sell with cash, you are still obligated to pay taxes.

Your legal obligations are clear; whether you can commit the perfect crime or not and get away with it is another matter.

[grosswait]

Except it is double dipping, we've just come to see it as the norm. Somewhat similar to Comcast wanting to charge Netflix for the data you've already paid for.

[Akujin]

> If you go to Newegg and buy stuff, you are obligated under US tax law to pay the capital gains taxes based on the fair market value of the products purchased. If you go to a bitcoin meetup and sell with cash, you are still obligated to pay taxes.

I recently bought a GTX 1080 TI with USD

Amazon wanted to charge me 7%. Newegg charged me no state tax.

Which do you think I went with?

Like our president said.

> "I'm smart for not paying taxes." - The president Source: https://www.cnn.com/2016/09/26/politics/donald-trump-federal...

This is also why people shop in Delaware. I wonder how many of those people reported their purchases to Pennsylvania.

[koolba]

Newegg is not obligated to collect sales take from you if they don't have a nexus in your state. Amazon has a nexus almost everywhere and thus collects sales tax from you regardless of where you order from. That's only true for orders place with Amazon itself; independent sellers at Amazon are responsible for specifying their own taxes that will be collected.

None of this, whether it's collected or not, eliminates your requirement to pay the sales or excise tax of your home State. In fact, if you go out of your way to order something or perform a transaction in a way that explicitly evades sales tax then you could be in legal trouble with your State's tax agency.

They might not care about a $200 graphics card but they do go after large offenders. Here's an example: http://www.nj.com/mercer/index.ssf/2017/05/broker_from_princ...

> > "I'm smart for not paying taxes." - The president Source: https://www.cnn.com/2016/09/26/politics/donald-trump-federal....

> This is also why people shop in Delaware. I wonder how many of those people reported their purchases to Pennsylvania.

Avoiding paying taxes through legal means is smart. Evading paying taxes is illegal.

[Akujin]

Yea.... I'm sure you report all your purchases at the duty free as soon as you get to American soil.

[toyg]

Duty-free goods have special dedicated legislation in most countries, I assume in the US too.

[dmoy]

Up to like $800 or something, unless I'm confusing it with yet-another-limit in the tax code.

[UncleMeat]

Why do you think we are supposed to have sympathy for tax evaders? The debt is shared. I have to pay to cover your evasion.

[toomuchtodo]

> Amazon wanted to charge me 7%. Newegg charged me no state tax.

You're legally obligated to remit that sales tax to your state Newegg didn't collect, and if you don't you're breaking the law.

Avoiding taxes is legal, evading them is illegal.

Edit: Announcing you’re evading taxes in a public forum that will eventually be archived just seems like a bad idea.

[maxerickson]

In my state goods purchased from out of state are subject to use tax which has some differences with sales tax.

(like you can pay an income based amount to cover small purchases up to some total rather than calculating the exact tax due)

[koolba]

> What bothers me about this whole thing is that I never bought it like a stock. I mined it YEARS ago when it was worthless.

If you mined gold, planted corn, or raised chickens and then subsequently sold any of them you'd pay taxes on the proceeds as well.

> PS: My address has never been tied to an IRL transaction.

Short of using a tumbler to anonymize your source bitcoins and fraudulently declaring a different or fake person as the recipient of the purchase, I don't see how this is possible if you're buying something online.

[colanderman]

You don't have to pay any tax on Bitcoins you own. You have to pay tax on the USD proceeds you make from their sale. This is no different from any other source of income in the US. Even bartering you have to pay taxes on: https://www.irs.gov/taxtopics/tc420

You can of course disagree with the concept of income tax, but Bitcoin is no special goose in that regard.

[lostboys67]

Depends if its treated as coinage or as a good - I don't pay CGT if I buy gold coins and sell it for a gain when it goes up in the UK for example

[JumpCrisscross]

> or go to a bitcoin meetup and sell with cash in-person..... or go on vacation in Europe and get Euro and again keep it off the books

Just to be clear, you're unironically proposing to meet to participate in commercial exchange with someone you can trust not to kill or rob you on account of publicly-funded security, get to the airport on publicly-funded roads or trains, burn energy financed or outright subsidized by public infrastructure, fly out of an airport paid for with public funds and transit safely across the Atlantic using air traffic control and radar services provided by your fellow citizens to get to Europe to enjoy a vacation many Americans can't afford. All to avoid paying taxes on speculative gains.

[ckastner]

> Now all of a sudden I have to pay tax on something I already own?

That's why it's called a capital gains tax -- it's collected at the time of sale (when/if you realize a profit), not at the time of purchase.

[dboreham]

I think the parent is surprised/upset at being asked to pay tax on a capital gain and to some degree I sympathize. It seems somehow unfair to tax what can feel like an existing possession. However, as I understand it a big reason for having capital gains tax is that without it rich people find ingenious ways to turn what is really income into capital gains and hence avoid taxes altogether. For this reason there are usually some thresholds and exceptions to allow some amount of capital gain to be tax free, and/or to tier the tax rate on gains.

[Dangeranger]

Well, a traditional gold mining operation has to pay taxes on the literal gold they take out of the ground and sell on the open market.

They also had to pay taxes on the equipment that they used to mine the gold, and probably taxes on the people they had to pay to manage the operation.

So it could be seen as 'unfair' for someone who mines information to get a pass and only have to pay some of the taxes that a precious metal mining operation pays.

[bringtheaction]

Well if your intention is to do what you seem to imply maybe stop talking about it?

[Akujin]

My intention is to HODL and have a discussion. These are all hypotheticals.

[sliverstorm]

What bothers me about this whole thing is that I never bought it like a stock. I mined it YEARS ago when it was worthless.

Now all of a sudden I have to pay tax on something I already own?

If you're subject to this ruling, aka you've by happy accident suddenly realized $20k in profit- consider that whether or not you like how things are working, you've still got nothing to complain about.

[alanpca]

Like a stock, you pay taxes when selling for a profit. You don't owe anything until then.