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100 sats \ 4 replies \ @super_testnet 10 Jun 2023 \ parent \ on: How do you use your sats? bitcoin
Only if the gain you accrue exceeds $200. There is a "de minimus" exemption for foreign currencies, which bitcoin counts as, despite the IRS saying (in a non-binding opinion) that it doesn't
Whoa seriously? Do you have any links for further reading? Is there a limit on the number of transactions per year?
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Whoa seriously?
Yeah
Do you have any links for further reading?
The law that exempts foreign currencies from capital gains is here: https://www.law.cornell.edu/uscode/text/26/988
Look for the part called "Exclusion for certain personal transactions"
There's a bit of legalese to sift through. It calls foreign currencies "non-functional currencies" a lot because they don't function as currency in the USA. Also, the exemption only covers "personal transactions" which are distinguished in other parts of the law from e.g. business transactions.
Is there a limit on the number of transactions per year?
No
Re: "links for further reading" it is also worth pointing out the IRS explicitly says bitcoin does not count as foreign currency in its opinion:
Digital assets are not real currency (also known as “fiat”) because they are not the coin and paper money of the United States or a foreign country and are not digitally issued by a government’s central bank. source
But their opinion is not law. Taxpayers who judge that bitcoin is a foreign currency (e.g. because some foreign countries have made it legal tender) are perfectly allowed to treat it as such for tax purposes. If the IRS wants to sue you for that, they would have to prove to get a judge to agree with them that bitcoin is not a foreign currency and that you knowingly broke a law by treating it as such.
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This deserves its own SN post! 🤠
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Thanks!
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