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| The IRS has ruled on bitcoin –and some folks ain't gonna like the rule. |
So listen to me, Mr. Hotshot Wave Of The Future:
You think your stash of bitcoin is money?
You think that all us poor schnooks who stuff our wallets
with paper greenbacks and plastic are relics of a rapidly dimming past, people who
ought to toddle off to the old age home to suck on our false choppers and play
bingo?
You think that by keeping bitcoin on a cloud that you access
with your computer or your smartphone, that you’re outsmarting us?
Have another think on that, Mr. Smartypants.
I’ve been saying all along – well, if not all along, then
at least since I began writing about it in late February – that bitcoin is bad
economic mojo. I likened it to bubonic plague.
I was not so far off. Turns out, that swelling on your head
is a bitcoin bubo in your brain, and that it’s going to give you one hell of a
nasty headache.
That’s because the IRS has just ruled that bitcoin ain’t
money. No sir, pal. It’s property, of the same variety that penny stocks are
property. I suspect that conclusions was arrived at through astute observation
by the IRS
At any rate, say you buy one bitcoin for a buck, watch it
double in value, then buy a buck’s worth of chewing gum with it and get a dollar
change. You now owe the IRS either a buck’s worth of capital gains taxes, or of
ordinary income tax, depending on whether you can prove you owned your bitcoin
for a at least year before you got your yen to chew on something.
Buy a bitcoin for $581.80, the current rate as I write this
afternoon of March 25th, and if the exchange rate falls by $125,
you’re also shafted. And I wouldn't be at all surprised if the shaft is getting sped to you on a high speed train. Bitcoin is as ripe for pump-and-dumpers as a mushy banana.
Now I admit that paper money loses value, too, over time. You can thank inflation for that. Currently, every dollar bill in my wallet loses me roughly three cents a year.
So if I have a buck in my wallet, I know that by this time next year I’ll
still have 97 cents, give or take maybe a penny.
But when you carry bitcoin around in your electronic cloud
in the sky, what have you got? Well, probably either a stunning loss in value and its already limited purchasing power on this
volatile, umm, property, or a capital gains tax bill and higher accountancy
fees for figuring it all out.
True, even after taxes you could make a handsome
profit. But given how volatile bitcoin can be, you could also make a
handsome bankruptcy case.
Long live Ned Lud!
