taxes on bitcoins

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Taxes on Bitcoins

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By www.ProfitableInvestingTips.com

Byhttp://profitabletradingtips.com/Taxes on Bitcoinshttp://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

The United States Internal Revenue Service, IRS, has ruled that Bitcoins are property and not a currency. http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

This means that there will be taxes on Bitcoins when they are sold, providing the sale is a realized capital gain.

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http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

Prior to the new era of taxes on Bitcoins, one could purchase Bitcoins with dollars, receive Bitcoins from a patron at your restaurant, or trade bitcoins on a Bitcoin exchange. http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

This option was recently in the news as Mt. Gox, the Bitcoin exchange located in Tokyo, went belly up and declared bankruptcy a few weeks ago.http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

The issue for the IRS is that some folks managed to buy Bitcoins for a few cents and eventually get rid of them for a thousand dollar each and not pay any taxes.http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

The IRS figures that Bitcoins should be treated like any other investment or traded asset. http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

If a trader buys IBM stock when it is low and sells IBM stock when it is high the trader pays capital gains. http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

The tax may by on short term gains if the stock was held for a year or long term gains if the stock was held for more than a year. http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

Now there will be taxes on Bitcoins following similar rules, when they are sold.

http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

Trading Bitcoins

http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

One of the attractive aspects of Bitcoins was that one could, theoretically, buy, sell and make a profit under the radar. http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

After all, one was simply buying and selling a currency. http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

However, when you convert one currency into another and then back as a currency trader you are liable for taxes on the gains that you have made and are able to write off losses against other income. http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

Taxes on Bitcoins will likely follow similar rules. http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

Technical analysis can lead to profits in trading and that could include Bitcoins.http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

There are some who say that the IRS ruling just means that Bitcoins have grown up and entered the adult investing and trading world. http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

The opposing view is thatthe world of Bitcoins is unregulated and simply amounts to a big Ponzi scheme and a story that is simply too good to be true. http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

However, traders can make money in good and bad markets. http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

Many who saw the dot com bubble coming or accurately anticipated the 2008 crash made money by purchasing puts on stocks or shorting stocks.http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

There are lots of profitable day trading strategies that could be applied to trading Bitcoins in a transparent market. http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

The trick is not to fall for the free lunch concepts that Bitcoins will go up in value forever or that there are not taxes on Bitcoins in the end.

http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

Bitcoins in Trade

http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

One of the ideas behind Bitcoins was that one could use them to buy things just like with other currencies. http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

To the extent that Bitcoins could be used as an international currency this was an attractive idea. http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

However, now the IRS says that Bitcoins are property.http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

This means that each time you pay for something with Bitcoins you need to calculate what your Bitcoins were worth in US dollars when you got them. http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

Then you need to calculate what your Bitcoins were worth in US dollars when you used them for a purchase. http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

The difference will be your capital gain on your Bitcoin property. http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

Obviously you will need to check with the IRS on the particulars. http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

But our point is that the taxability of Bitcoins complicates their use in commercial transactions even while it may legitimize their tradability as property.http://profitabletradingtips.com/profitable-trading-tips/taxes-on-bitcoins

The idea of a contrarian approach to day trading certainly applies to using or trading Bitcoins for the foreseeable future.