10 sats \ 6 replies \ @Undisciplined 5 May 2023 \ on: Using Bitcoin has legal consequences bitcoin
Great topic!
As frustrating as it might be, Bitcoin doesn't have to primarily benefit Americans. It's fine if other parts of the world are the main beneficiaries, for the time being, and if innovations in Bitcoin are primarily serving them. A huge part of the case for Bitcoin is this sort of global arbitrage.
Another thought I had while reading this, is that presumably someone could develop an app that tracks the capital gains for you and even selectively uses the units with the lowest tax burden for transactions.
I also think you're overstating how much the "normal" person cares about legality. Everyone speeds, after all, and there's always an enormous shortfall in tax receipts by the IRS. If social norms form around spending bitcoin "under the table", people will go with it.
Thanks.
I think speeding is not comparable. You have a pretty high chance you will not get caught if u speed and the punishment is trivial. With taxes it could get expensive, gov't can see your finances + it is just time consuming. However, who knows:). Let's keep jugging along. I feel better after posting this.
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From what I know about tax enforcement, I would argue that speeding is not a terrible analogy. Aside from politically motivated audits, the IRS seldom comes after people unless they think there is a very large sum of money to be extracted. It would be a huge pain for them to prove what you owe on the particular Bitcoin used in a transaction, particularly on lightning transactions.
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You are probably right.
Just one thing, it is not the tax office that needs to prove it. The tax payer needs to prove if tax office says you owe.
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We might be talking past each other, a bit. The IRS pursues cases where they can easily gather revenue. Cases that either involve small sums or could lead to messy legal challenges are typically avoided. The later is why they would care about being able to prove what the capital gains are on a transaction.
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You are right. They could care less about sats here and there.
I was just saying that if they say you owe capital gains tax, it is up to u to either pay it or prove you do not owe. So the burden of proof lies with the tax payer.
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Except that if you challenge their claim, the burden of proof would switch. I'm a little out of my depth on the technicalities of the LN, but my understanding is that it would be ambiguous what the actual buy and sell prices are for the bitcoin that ultimately gets used to settle a transaction.
You might argue the capital gains were lower than the IRS is claiming, by identifying different monetary units as the ones that were used and the IRS would then have to demonstrate that your claim is false.
Even if I have some of the details wrong, that's the kind of messiness I'm talking about.
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