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BitCoins Tax Issues

Bit Coin Tax Issues"The IRS ruled Tuesday that the embattled virtual currency Bitcoin is “property, not currency,” paving the way for regulation in the U.S. The decision by the Internal Revenue Service subjects the currency and its users to capital gains and income tax and requires that digital currency operators make significant, perhaps costly, updates to abide by strict record-keeping rules." Interesting - so does this change your outlook? http://www.foxbusiness.com/markets/2014/03/25/irs-rules-bitcoin-as-property-subject-to-tax/

Answers

Ken Stumder
Title: Finance Director / Controller
Company: Ken Stumder, CPA
(Finance Director / Controller, Ken Stumder, CPA) |

Doesn't change mine, but I recall in another thread that my view was Bitcoin is too prone to fraud and instability to ever gain "currency" status (not to mention skewed towards black market transactions). Now that the IRS is doing it's usual, I'm sure the zeal will diminish.

Anonymous User
Title: CFO
Company: Local Government Agency
(CFO, Local Government Agency) |

Ken:

Why do you say that Bitcoin is "too prone to fraud"?

Ken Stumder
Title: Finance Director / Controller
Company: Ken Stumder, CPA
(Finance Director / Controller, Ken Stumder, CPA) |

http://www.theguardian.com/technology/2014/mar/18/history-of-bitcoin-hacks-alternative-currency

Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

Answering Wayne first; yes, IRS has to weigh in with this perspective as it is *critical* for a State to declare that currency comes from a State. That's practically one of the definitions. This whole concept has the State actors quite scared, but not just from a currency standpoint. It is very, very powerful.

Ken; that article you sent (one of many, and all quite on target) doesn't address at all the possibility of hacking a coin. It addresses the ability of hacking a website. In parallel, Target, etc get hacked daily. This is an internet disease, not a Bitcoin disease. Fundamentally speaking, Bitcoins themselves are functionally un-hackable*

Cheers,

KP

*The basic protection is the chain. To hack the coin you would need to rehash the chain. That is absolutely possible, and to do it would take more computing power than is known to exist. This is one of the wonders of leaving everything in the clear. You can't get in with a simple password; you need to re-create visible reality, and that is no small trick. So, for the time being, functionally un-hackable.

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