4 replies to this topic

[Rogerdodger]

What I did not know about Bitcoin and Gold ETF tax rates surprised me.

Can crypto be taxed like gold? Is regulation the real threat to bitcoin's $1 trillion market cap?

IRS considers gold and other precious metals as collectibles." "Unlike a corporate share or a bond, for example, an investment in gold itself is taxed as a collectible (like investing in art or furniture), so rather than a top 20% rate, gold is taxed at a top 28% rate. If the investor earns more than 200K (individual return) or 250K (joint return), an excise tax also applies, so the final tax rate is 31.8%."Another way gold can be taxed is if an investor owns a publicly-traded futures contract, he added. "Futures are so-called '1256 contracts' which means they're taxed once a year regardless of whether they're sold, and they're taxed 60% as long-term capital gains (21%, plus the excise tax as applicable) and 40% as short term capital gains (37%, plus the excise tax)."

How is bitcoin taxed?
Important to note that bitcoin is not considered a currency in the U.S. and doesn't have any special tax rules applied to it yet. For tax purposes, the IRS currently treats bitcoin as property and not legal tender.

"If you tried to pay for something with Bitcoin, from a tax perspective, you'd be bartering - exchanging a good for a good. That's like selling your bitcoins for a gain or loss and then using the proceeds for the thing that you're buying," said Andrew Silverman, Bloomberg Intelligence government analyst specializing in tax law. "Your gain on sale is the difference between the price you paid for the bitcoin and for how much you've sold it. Most investors will get capital gains treatment for the sale of Bitcoin. If the investor has held it for longer than one year, the maximum rate is 21% (plus the 3.8% excise tax, as applicable)."

Can bitcoin be taxed like gold?

The big question investors have is if bitcoin continues to trade like "digital gold," will it be taxed like gold as well?

This question is important because gold is taxed at a higher rate in the U.S. since the IRS considers gold and other precious metals as "collectibles."

It all comes down to how one is invested in gold. If an investor owns shares in a mining company, it is the same as buying or selling any other corporate share from a tax-perspective. But if an investor chooses to buy physical or gold-backed ETFs, then the tax implications change quite drastically.

"Buying into a gold ETF is akin to investing in gold itself," said Silverman. "Unlike a corporate share or a bond, for example, an investment in gold itself is taxed as a collectible (like investing in art or furniture), so rather than a top 20% rate, gold is taxed at a top 28% rate. If the investor earns more than 200K (individual return) or 250K (joint return), an excise tax also applies, so the final tax rate is 31.8%."

Another way gold can be taxed is if an investor owns a publicly-traded futures contract, he added. "Futures are so-called '1256 contracts' which means they're taxed once a year regardless of whether they're sold, and they're taxed 60% as long-term capital gains (21%, plus the excise tax as applicable) and 40% as short term capital gains (37%, plus the excise tax)."

What this means for bitcoin is that if the IRS changes its definition in the future, investors could be at risk of facing a higher tax rate.

Edited by Rogerdodger, 24 February 2021 - 05:48 PM.

[Rogerdodger]

Is it Bit CON? Like Bernie made-OFF... or End Run?

What is the current price and dividend on Tulips?

 

Kitco: Why Bitcoin will ‘death spiral’ to $0 and Fed Chair Powell is ‘delusional’ - Steve Hanke

It's only a matter of time before Bitcoin "death spirals" down to its true intrinsic value, which is $0, said Steve Hanke, professor of applied economics at Johns Hopkins University.

“What’s the fundamental value of Bitcoin? The fundamental value is zero,” Hanke said. “The flow of [income generated by Bitcoin] is zero. It’s not like money. Money, broadly defined, most fiat monies have a fundamental value because they pay interest. If you look at the fourteen components of M4, that’s the broadest measure of money in the United States, ten of those components, like Treasury bills, pay interest. Bitcoin doesn’t pay interest.”

Speaking on Federal Reserve Chair Jerome Powell’s testimony to Congress this week, Hanke doesn’t agree with Powell’s remarks that the growth of the money supply would not contribute to economic expansion or inflation.

Powell, in his testimony, had said that “there was a time when monetary policy aggregates were important determinants of inflation and that has not been the case for a long time,” adding that “the correlation between different aggregates [like] M2 and inflation is just very, very low, and you see that now where inflation is at 1.4% for this year.”

“Chairman Powell is clearly delusional. I can’t believe the chairman of a central bank actually said that,” Hanke said. “Broad money measures are linked very closely to nominal GDP [gross domestic product], and nominal GDP includes real economic growth plus inflation.”

Edited by Rogerdodger, 24 February 2021 - 09:50 PM.

[Russ]

[brucekeller]

Is it Bit CON? Like Bernie made-OFF... or End Run?

What is the current price and dividend on Tulips?

 

Kitco: Why Bitcoin will ‘death spiral’ to $0 and Fed Chair Powell is ‘delusional’ - Steve Hanke

It's only a matter of time before Bitcoin "death spirals" down to its true intrinsic value, which is $0, said Steve Hanke, professor of applied economics at Johns Hopkins University.

“What’s the fundamental value of Bitcoin? The fundamental value is zero,” Hanke said. “The flow of [income generated by Bitcoin] is zero. It’s not like money. Money, broadly defined, most fiat monies have a fundamental value because they pay interest. If you look at the fourteen components of M4, that’s the broadest measure of money in the United States, ten of those components, like Treasury bills, pay interest. Bitcoin doesn’t pay interest.”

Speaking on Federal Reserve Chair Jerome Powell’s testimony to Congress this week, Hanke doesn’t agree with Powell’s remarks that the growth of the money supply would not contribute to economic expansion or inflation.

Powell, in his testimony, had said that “there was a time when monetary policy aggregates were important determinants of inflation and that has not been the case for a long time,” adding that “the correlation between different aggregates [like] M2 and inflation is just very, very low, and you see that now where inflation is at 1.4% for this year.”

“Chairman Powell is clearly delusional. I can’t believe the chairman of a central bank actually said that,” Hanke said. “Broad money measures are linked very closely to nominal GDP [gross domestic product], and nominal GDP includes real economic growth plus inflation.”

There are a few cryptos that pay 5-7.5% interest for 'staking'. Not too bad. BitCoin is pretty crappy compared to the newer stuff, it was just the original. Will eventually go the way of myspace. 

[brucekeller]

Ripple's being sued by the SEC which is pretty tough.