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Yes 100% pay the taxes you owe. It is the correct, ethical and legal thing to do. To do anything otherwise is stupid. Do it.
Having said that... Bitcoin is supposed to be Peer-to-Peer money. I believe that vision, as incredible, extraordinary, and universal as it is can be realized at least in part by the Lightning Network.
However under the current rules, every Zap, every tip, every Satoshi is a taxable event...
Want to provide liquidity for Boltz/Atomic Swaps? Taxable Event.
Run a routing node and receive 1 sat in routing fees? Taxable Event.
Receive 10 sats, no 1 sat on Stacker News or Nostr... that has to be tracked for the exchange rate at the time received vs the time you 'sold it' (sent it? gifted it? spent it on Nostr????)... Taxable Event.
Capital Gains on that Zap baby.
Question: Is each lightning channel a 'different wallet' - for the purpose of defining 'cost basis'? Or maybe it's based solely on the "Lightning Node" itself, regardless of the number of channels within?
What if you're using Bip-85 Seeds (as some Lightning Wallets do) or Bip-85 on-chain... is that a separate wallet or considered part of the same one?
What of the account function, clearly a design element of Bip-39 useful for privacy, record keeping, or separation... Is that a different 'wallet' for accounting or tax purposes? Or is it considered the "same one" in a different 'account'??? Cost basis is wallet-by-wallet after-all?
Then when it comes to tracking 'individual UTXOs' (for cost basis and capital gains) well what if they are consolidated? What if part of a UTXO is spent to open a Lightning Channel? How is Cost Basis figured then? Doesn't that UTXO practically constitute the new 'cost basis' for a new Lightning Channel? Or is it the average of the Lightning Node and its "cost" from multiple 'UTXO openings'?
And if multiple UTXOs are used to open 'multiple channels' on ONE Lightning Node... isn't that separate costs basses for each UTXO? So it would be "per channel" instead of "per node"? And what if 'sats are received' individually to each channel over time... considering how volatile Bitcoin's exchange rate can be?
Does that make any sense? Doesn't anyone see how ridiculous this is?
Now take into account a 'CoinJoin', UTXO splits and consolidations, Lightning Channel opens, purchasing Lightning Channels, earning Sats (minuscule amounts of money) via Nostr or Stacker News... Swapping to Liquid, closing channels (with the fees subtracted from Cost Basis)... Simultaneously receiving Sats on Stacker News as a part of a community, global and world-wide...
In addition to buying the occasional coffee and there aren't that many places to get Bitcoin Coffee but Bitcoin has to work somehow...
How the hell is anyone supposed to 'calculate' this stuff? And it's 'per UTXO'? 'Per Wallet'? That Satscard with ~50000 sats on it + private key... is a 'wallet' right? Does that have to be documented/screen-shotted and time-stamped? It has a cost-basis too right? But it's just a card?
Did anyone think through these rules and how it makes 'Money Better' for millions of people? Isn't that the purpose of Government, to better people's lives???

Let's be honest: The new IRS rules are designed for one thing - to have the 'user' buy coins on a KYC exchange, hold them in an "unhosted" wallet, never move them or do anything with them save look at them (like that does anything???) and then....
Sell them on that same exchange after the price goes up for 'fiat' money (dollars euros etc). That's it. Done. Finished.
When the next "greater fool" buys in and the price goes up... sell them on an exchange and since the UTXOs haven't done anything, moved, or changed in any way then the "cost basis" for each UTXO should be easy to calculate. It's 'exactly the same' as when he/she bought it on an exchange right? Safe Harbor right?
The divisibility, immutability, censor-ship resistance, global digital money that 'cannot be hacked'... none of those qualities are important. Buy from an exchange, put it all on one 'wallet', do absolutely nothing (because the accounting is too complicated), then sell when someone... the 'Wall Street People' want Bitcoin to go up.
Is that it? And Bitcoiners are OK with that???

The last 15 years of Bitcoin development, real development on the Lightning Network, on Bip-39, on Self-Custody on node software for Plebs... has been overwhelmingly dedicated to making Bitcoin "better money" and WOW Bitcoin is an incredible idea.
But to the government it's just a... plaything. Buy it, document it, announce it, hold it (never move it) don't transact in it generally speaking even if you are a developer... and then wait for the "greater fool" to come in and buy it off you on the exchange. That's good-ole Bitcoin (TM) the investment. Hey why not just buy the ETF we don't need Nodes or Developers or Innovation anyway.
Done... Complete... That's it. No need for Lightning. No need for Privacy. No Need for Payjoins, Silent Payments, Onion Routing... or the zillions of software solutions available to Bitcoin users worldwide still in development today to make Bitcoin better money to all nope.
And If you are a developer, every single sat, every single 1-sat Lightning Transaction, is a taxable event so of course you're keeping records of every one.
And since every transaction (regardless of how small) has 'transaction fees' which (as I understand it?) can and should be subtracted from your "cost basis"... then every transaction should be 'tracked' and the transaction fee recorded for every transaction...
And don't worry about the 'privacy' of such a document recording every UTXO and every transaction you've ever touched.
Save it on your computer - or better 'save it to the cloud' what's the worst that could happen? It's not like this stuff is valuable and there are bad people in the world anyway right? The government will protect you after all... just like they protect the rest of their IT Systems???

I don't know why more people aren't talking about this. Some people are putting their head in the sand (and I guess I can understand why). However it's like hoping the Bear will somehow 'eat someone else first'. It is, in my opinion, a tremendous attack on Bitcoin not to meet the taxpayers, developers, and Bitcoin community half-way... and the absolute absence of debate, the 'deafening silence' towards this greater issue of "Bitcoin the Money" I cannot for the life of me explain.
Bitcoin in my opinion has a very limited future as a database entry you trade with exchanges. It has an incredible future as freedom-oriented money, the best of its kind, revolutionary and a tool for hope and better savings for millions or Billions through layers and clever solutions.
I want better money. I am here for 'quality money'. I am not here for 'get rich quick' and you know what? Bitcoin the exchange-database entry will be worthless anyway so in the end it won't matter I guess people get the money they deserve.
Bitcoin was created so that you wouldn't have to comply with the dictates of authority.
If you think you still do, either fix it or use fiat.
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I'm right there with you friend
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"Yes 100% pay the taxes you owe. It is the correct, ethical and legal thing to do. To do anything otherwise is stupid. Do it."
Tell that to Alexander Hamilton, George Washington or Thomas Jefferson.
Your premise is so wrong, mate.
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Please see the other comment I made in reference to this. Thanks
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Yes 100% pay the taxes you owe. It is the correct, ethical and legal thing to do. To do anything otherwise is stupid. Do it.

HAVE FUN PAYING YOUR TAXES YOU STATIST CUCK

smile and wave boys, smile and wave
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You clearly don't understand the nuance... of typing or posting things on an 'anonymous' forum.
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i don't, can you provide more detail?
wink wink
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The point is Bitcoin has been very effectively and slyly obstructed from ever becoming a widely used P2P payments protocol.
And you did not even seem to notice.
Get it yet?
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sell all your btc then
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That does not solve the problem. It would be a defeatists approach. An alternative more constructive approach is to acknowledge the problem, and draw attention to it whenever possible.
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You can't fix the corrupt state system. The only approach is to stop following politicians orders and stop paying taxes.
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You are NEVER going to live without some form of government. If the current regime was removed within days people would be organising into groups in order to protect themselves and their security.
I agree. Acknowledge the problem, discuss it, bring people together, look at collaborative solutions, and come up with some sort of compromise that everyone can agree on.
At least that's what works in other industries.
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This, lol
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Glad we can get the whole team involved. You know, group encouragement.
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I zapped you for this post. I wanted to zap you 21 sats for it, but I thought I would do it one sat at a time, 21 times. I started zapping 1 sat, but did so intentionally slowly because I was hoping that the rhythm would make me get drowsy so I could fall asleep. It was going according to plan. I was watching the bitcoin price fluctuate between every sat sent. I started getting tired. Yay, my plan was working! But then I realized that I zapped one too many times, so I ended up sending you 22 instead. I'm also too tired now to record the price point for each zap. I need to wake up tomorrow to spend more time trying to figure out why the IRS won't let me make a payment on the back taxes I owe. Tried, but their website gave some cryptic error. Meanwhile, when I can't get my payment to them to go through their broken system, the penalties on my unpaid taxes continue to grow in amount owed. Seems scammy...
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HAHAHAHHAHA
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See. This is the response I was looking for
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keep up the good work!
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Most Bitcoiners just don't care because this is a small road block, If you are living the bitcoin ethos, don't reuse addresses, run your own on chain and lightning nodes, use p2p to buy and sell and most importantly understand that you as a private person don't owe the government anything you don't specifically report to them.
Laws are made for their system, public entities and the rest, you as a person don't have to be part of that. And their system has to be viewed as a separate world which it is.
We have all the tools ready to defy anyone.
In the end it does not matter what other people say or do, you create your own rules amd future.
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thank you for your comment.
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Here's a question - if you open 5 lightning channel with 5 UTXOs, each with a different 'cost basis' themselves and you start receiving sats (say from Stacker News...)
Do you have to keep track of individual sats going to each individual channel? Sometimes if you generate a receive invoice you don't know where exactly the sats are going, the (Lightning) wallet software does this for you.
And remember that the tax authorities want cost basis 'per utxo' but... Lightning is based on channels not UTXOs. So you have to track each channel, take a screenshot, for each one for record-keeping?
Why aren't people asking these types of questions? Why isn't there clear guidance?
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Bitcoin is only valuable if it can be exchanged for goods and services. I try to get people to accept bitcoin when I buy goods or services. Hopefully it will take off more as more people start acquiring it.
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Every time I spend it (even the 1 sat to comment or 100 sats gasp to post...) it's a taxable event.
Sometimes we just want our money to work and are too tired to get out a spreadsheet and record the time, date, and current exchange rate.
Just to get a coffee. Or to zap a post.
And it can put people, especially if they're high-profile, in incredible legal liability especially if the government doesn't like them or 'what they say'. We should acknowledge this situation imo.
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I am not with you. There is a difference between being brave... and being dumb.
Having said that, we need a serious and honest discussion about the current situation because it is unworkable.
Lawmakers and policymakers need to understand that Bitcoin is money, not an 'investment' like a stock or bond and that conversation desperately needs to take place.
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I guess your only option is to vote harder. GL
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See we are having a conversation.
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We could all write to our representatives and senators and tell them that the law needs to change. We should not be paying capital taxes when we spend money, and Bitcoin is money.
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imagine being such a cuck that you decide to tell the IRS about every 1 cent zap you did on SN and then thinking you were morally superior and correct for doing so.
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Precisely my thoughts on this post. Uh-hu.
All this shit goes away, man
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The post was designed to drive conversation and awareness... And it's doing that.
Still, I'm not sure what the 'group takeaway' is. When does this get fixed? And what do we have to do to fix it?
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Probably nothing much. Keep care of your setup, ignore the powers-that-be.
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I think you also need to understand it’s not a taxable event everywhere, it’s actually specific to us only and maybe couple other countries with similar systems.
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You are correct.
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0 sats \ 1 reply \ @000w2 1 Jan
However under the current rules, every Zap, every tip, every Satoshi is a taxable event...
in some countries and for Americans. There are plenty of other places with no cap gains on bitcoin transactions. These places will attract the bitcoiners and the bitcoins. Nation states are in competition with one another.
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one thing i notice... is that tax software almost always revolves around 'trading' and 'transacting' (trading?) on centralized exchanges. people talk about 'connecting your wallet' and 'uploading your records' from your trades from coinbase or something.
real bitcoin usage in my experience doesn't involve any of these things though
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Go woke: go broke. Bring on another Boston tea party! Bitcoin doesn't belong to any nation state, it's a borderless empire for us all. We don't owe the state taxes, we pay transaction fees. The best forms of government unite people, Bitcoin did a perfect job of uniting computers.
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What are the laws around foreign legal tender and small spends? Is Bitcoin still legal tender in El Salvador?
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mu understanding is that it's 'optional' now per imf guidance.
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and the absolute absence of debate, the 'deafening silence' towards this greater issue of "Bitcoin the Money" I cannot for the life of me explain.
Where do you expect the 'debate' to occur? Is any debate even needed? You've laid it out pretty well: the rules of the state make using btc legally and fully practically impossible. So now the options are clear:
  1. use btc illegally, and face the consequence when they come
  2. or accommodate your usage and behavior to state mandates, which is more restrictive than you want
It's possible that eventually the thing becomes so unmanageable that the idea of "illegal" basically disappears, sort of like jaywalking laws. If btc isn't wholly captured by NGU forces, that seems like where things will wind up.
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in my humble opinion... it is already 'unmanageable'... for sophisticated, realistic usage especially around lightning.
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I meant "unmanageable" from the perspective of the state taking action -- if almost everybody is breaking the law, including important people, then enforcing the law is basically impossible, even in a "sending a message" kind of way. I don't think we're there yet.
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i think unmanageable has another meaning too. all the current development and bips make it easier to transact, more seamless and generally more private.
there are tons of cool things and apps built on bitcoin. however tax software for daily spending/transactions/small regular use underdeveloped or nonexistent.
when bitcoin is used regularly and intelligently the sats flow everywhere... it is a living breathing organism and perhaps that's what the ptb don't really understand yet.
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Capital Gains on that Zap baby.
Capital gains tax on the dime you threw into the cardboard box of some stranger you passed appealing for donations on the street.
It's all well within the rights of the sovereign individual living in a civilized society. What is the alternative, dystopia? No thank you.
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We need to spread far and wide the understanding... that honest and transparent money is better for society. And that's what Bitcoin is.
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i get you.
Oddly, maybe what made me respond in that way was the lack of awareness of the average person seeking some donation that I have seen. I happened to be in a city that had performers (performing in the street) as part of a festival.
I saw many appeals for donations using stuff like Googlepay, Applepay, etc. You can lead a horse to water ...
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agree 100% i would happily donate a few sats to those truly, really in need. but the education isn't there yet despite the obvious value
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The governments have no incentive to let you be more free. They have incentive to give you the illusion of letting you do things. There is absolutely no government under the sun that benefits from Bitcoin's true purpose of p2p money. Its only a matter of time before SN itself is marked as a terrorist organization because it facilitated free transfer of sats without rigorous kyc and aml enforcement and tax reporting.
But it doesn't have to be this way.
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I like Stacker News. There are good people here.
What is the solution then - what do you mean 'it doesn't have to be this way'? Isn't Stacker giving up 'custodial control' of sats or whatever-the-**** it's called? That will protect them right?
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Protect them from what? Current piece of paper and its interpretation that the latest round of cunts that we somehow willingly submit ourselves in their slavery says is the law?
Any company exists purely because someone allowed it to. Permission can always be taken away. Hopefully SN has a long and thriving future, but thinking that it is safe from the always overreaching ambitions of state is an illusion. Paper doesn't protect against violence.
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I fear only the mind reading Yetis of the Himalayas!
To bad I'll (hopefully) be back up there soon, those seed phrases won't be safe even in my mind...
Yeah I used to have my own boats too, doing insane, dangerous things, but no accidents as it was. Gotta push that risk harder!
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I wish you the best friend.
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The fiat powers quite understandably don't want any competition with their MoE monopoly-hegemony that is the basis of their power and wealth. They have very carefully and slyly managed the narrative and defined Bitcoin as a speculative commodity and so taxable on every transaction and so impractical for use for payments. You think this is an accident? Without viability and actuality as a p2p MoE Bitcoin is no serious threat to the fiat powers- and they have made it so.
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If all that Bitcoin does is 'sit there' like a pet rock to be 'sold' on an exchange at some later date...
It is a shadow of what it could/should be. It gives credence to the central banker/Federal Reserve explanation that says it has "no use case" in society which is total utter nonsense.
The fact that I can transact here on SN... to provide for a better forum experience alone gives it value.
But if the accounting is too complicated to do anything but buy, withdraw, hold, and sell later from the very same addresses... the vast majority of the value and utility is hidden IMO.
Shinobi had a great article on this which says the same thing.
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Bitcoin as a P2P payments protocol has been very successfully obstructed. As you point out the central bankers disingenuously suggest it has no use case when in fact they have deliberately and very cleverly prevented its use case from being developed by obstructing MoE utility...via tax rules and other strategies. And nearly all Bitcoiners have not even noticed, or just don't care...distracted perhaps by the NGU speculative gains.
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It is a sad situation friend.
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