Curious about the community's thoughts on a scenario involving bitcoin payment strategies and their tax implications.
The scenario:
Someone earns primarily bitcoin from their business
They have limited fiat cash flow
Need to cover regular business expenses (supplies, shipping, operational costs)
Fiat reserves are getting low
Option 1: Strike Bill Pay
Use credit card for fiat purchases
Pay off credit card with bitcoin through Strike
Tax concern: Each bitcoin payment likely creates a taxable event
Option 2: Bitcoin-backed loan (Ledn)
50% LTV, 12.3% annual interest, 1-year term with refinancing option
Get fiat cash upfront using bitcoin as collateral
Tax concern: Would need fiat income to service interest payments; selling bitcoin to pay loan interest would create taxable events
Key question:
In this scenario, which approach would be more tax-efficient?
The loan option seems attractive for tax deferral, but there's a practical challenge of servicing 12.3% annual interest without sufficient fiat income.
What are your thoughts on navigating this type of situation? Has anyone encountered similar scenarios or have insights on the tax implications and cash flow considerations?
