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21 Comments
  1. To Sam Turgeon your post yesterday inspired me to write this about bitcoin and what action I suspect the guvmit will take to harsh our mellow.

  2. Give the government an inch, they'll tax you by the mile. And also regulate you into submission.

  3. Would these laws only apply to US citizens?

  4. It will be interesting to see what happens with BitCoin here. I think BitCoin is truly unique and it stands alone in its implementation as a virtual currency. But to the consumer – all virtual currencies are practically indistinguishable: bitcoins, Linden Dollars, Facebook Credits — If you can pay for stuff with them in the real world, is there really a difference? And what about the "Ven" (http://www.hubculture.com/groups/dev/projects/1046/wiki/)? That's an interesting one.. it's used as currency, but it really seems to be closer to a sort of world-wide fiat/carbon/commodity ETF…

    What I'm dying to know is will the government chose to treat these different implementations of virtual currencies in the same manner? Or will they distinguish between them? Does anyone have a crystal ball?

    How can ordinary, tax-paying consumers and small business owners be held responsible for keeping up with the government's new favorite compliance initiative?

  5. Ok, for the sake of argument: If government can't track illegal drug purchases on the silk road due to anonymous proxies, how would they know about any other Bitcoin transactions? There is no central authority issuing a 1099, right? In addition, if you were hit with a tax lien, wold it be payable in dollars or Bitcoin?

    • Thanks for the share, Sam. I think the bitcoin cat is out of the bag and there is no way to stuff it back in with out getting rid of the entire internet.

    • The first step is getting the clearinghouses to register…

    • I agree. The genie is out of the bottle. Competing currencies will have many unforeseen consequences, just like 3D printing. The game changer I think is the decentralized nature of both.

    • unless you'd like to put something which incurs a paper trail like a house in your name. you wouldn't have to pay taxes. not until you wanted to use it for something larger than 10 grand lets say. maybe.

  6. Don't keep all your bitcoins in one wallet. You shouldn't keep them all in the same wallet anyway for security reasons. Keep them spread out enough to keep their total below the $10000 threshold, I'd say keep them below $5000. Would this satisfy the law, or do they consider all coins held by an individual our group, regardless of number of wallets, one "account?"

    • You would still need to file FBAR, if your aggregate funds outside the US banking system were 10k or more – say you had a foreign bank account with 5000 and 5000 worth of bitcoins, then you must file FBAR.

    • You would still need to file FBAR, if your aggregate funds outside the US banking system were 10k or more – say you had a foreign bank account with 5000 and 5000 worth of bitcoins, then you must file FBAR.

    • Dave — it's value of accounts in the aggregate. So while having many wallets is great for security purposes, it would not get around the FBAR requirement. Assuming of course, my speculation was correct.

  7. There may have been a time in history where a person could earn and spend money is private. As soon as any income or property could be taxed that privacy was lost. That privacy was probably lost in 4000 BC. The rise of credit and debit transactions make tracking a person remarkably easy and anyone one with access to those records can pretty much tell how much you earn and how you spend your money. To the extent that Bitcom becomes currency, then one can expect that government (not only the US) will want to track and tax it.

  8. Mine them and leave the country.

  9. I lived those times you are talking about in a foreign country. A semi of heroin would get you 7 years of jail and US$100 in foreign currency would get you 25 years (15 to show leniency from time to time).
    Terra Haute, Indiana is where you are going to spend your remaining days if they can't break you down otherwise. The Fed has shown terrible weakness lately but in the 70's and 80's you would be typing from jail.

  10. Recent events in the European Union, especially in Greece and Cyprus show the obvious advantage of BitCoin. It is also shows that governments will not permit competition with respect to its currency.

    When we then mix together the blog, the comments that have been posted and experience with governments, it becomes clear that BitCom had better be listed on FBAR and any income resulting from or flowing through BitCom had better be reported.

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