Question: What might it mean for tax purposes if Bitcoin is labeled a commodity by the IRS?
The CFTC says that Bitcoin is a commodity, what does that mean going forward?
For years now the IRS has labeled bitcoin and virtual currencies as property.
However, with several recent court cases where judges ruled bitcoin a commodity as well as the CFTC coming out yesterday and calling bitcoin a commodity, perhaps the IRS is about to change their stance...
More about that can be found here:
https://www.ccn.com/cryptocurrency-is-here-to-stay-cftc-chairman-giancarlo/
My question is.... what does that mean for US tax payers?
(Source: https://www.ccn.com/cryptocurrency-is-here-to-stay-cftc-chairman-giancarlo/)
Some specifics:
If bitcoin is considered property then one must pay taxes on its market value at the time he receives it. As would be the case if someone was paid for the work they did in bitcoin.
Then, when they went to sell that bitcoin, they would also need to figure out the gain or loss that took place over the time they held the "property".
In most cases up until this year, people who had held bitcoin and then sold it had capital gains to calculate and then pay.
(Source: https://www.istockphoto.com/photo/question-mark-gm503451949-44144520)
However, what happens if the IRS decides to take the side of several courts and the CFTC?
What kind of changes would that imply for US tax payers, if any?
If bitcoin is classified as a commodity instead of property what will that mean for tax purposes exactly?
I am unclear on this currently and look forward to hearing some thoughts in the comment section below.
Stay informed my friends.
Image Source:
https://thehackernews.com/2015/09/bitcoin-commodity.html
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A commodity ? like water, electricity, wheat...and bitcoin !!!
I think that this is a good thing for the crypto market
Why do you think that? I do agree though that some clarity and cooperation among regulators would be welcome development.
Confusing 😝
I’d love for some more clarity on taxes. It’s so hard to keep track of cost basis since it’s treated as property. Every time you buy something you not only need to know the price of the item you buy calculate the cost basis of the currency at that purchase time. There is so much burden right now which causes so many people not to report.
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It pretty much makes it impossible to use as a currency.
So true. Until that changes and it’s treated like normal currency mass adoption is not likely.
I agree completely. No matter how good the technology, if you still have to track capital gains every time you transact with it, it won't catch on.
Well put.
I'm not a tax professional, although I do study the stuff. (Paging @cryptotax) My layman's impression is that there's not necessarily a category of "commodity" in the tax code--there's just property, with subcategories of collectables and the like. Capital gains still apply, just with different taxes. Of course, I'm not speaking with authority, here.
Here's an article by someone who actually knows what he's talking about: https://www.forbes.com/sites/baldwin/2017/06/13/how-are-commodities-and-commodity-funds-taxed/
Yes, I actually read that before posting. :) It sounds like it might mean capital gains are still taxed, but possibly at different rates.
Would it still be the same if you received it as compensation, like receiving bitcoin as compensation for work? Or, steem for blogging on steemit?
I just want to know what the tax implications are. I want to know how to properly file my taxes and thats it.
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I am not sure what this means...