US taxes on winning big using Bitcoin

KJoff4u

KJoff4u

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Question: If you enter a tournament and win big, and the payout is in Bitcoin, do you have to declare it as income at that point? Or only when you cash them or spend them?

Someone said Bitcoin "income" is treated as property and thought you only have to declare when you spend it.

Anyone know for sure?
 
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forest_leaves

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You should probably contact an accountant, since btc is relatively new there probably is a lot of legal stuff to consider
 
onione6ix

onione6ix

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contact a lawyer and an accountant . Never get legal or financial advice on a forum.
 
KJoff4u

KJoff4u

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contact a lawyer and an accountant . Never get legal or financial advice on a forum.


Well sure. I did ask a tax accountant and it seems they aren't really prepared for this question unless they have a client that has come to them about it already.
 
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EuropeanManiac

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I thought that the whole point of getting payment in bitcoin would be to not report it to the authorities. Unless you are thinking about buying a house. There are lots of providers that let you spend bitcoin with a visa card. I would use that card for anything from grocery shopping to travel expenses.
 
kraemer

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Bitcoin is treated just like money. That’s why the bitcoin sites must follow the Same regulations as banks today.
So it probably iS taxable Income.

The more interesting question is: Can you openly declare your illegal gambling profits as income?
 
Collin Moshman

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IANAL but I believe it's as follows:

From a tax perspective, your profit from the tournament is like profit from any other tournament It doesn't matter if they pay cash, bitcoin, chips, etc -- it's taxable like normal.

You will then separately owe capital gains taxes if you hold and sell the bitcoin (or you'd offset other capital gains if your sale was at a loss). This tax would of course be $0 if you instantly sold the bitcoin after winning the tourney. If you held the bitcoin you won for a month and sold for a $100 profit, for example, you'd owe short-term capital gains on $100 in addition to the income from winning the tourney.
 
Inequitas

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I understand it that if your bank can not count your money then they also can not give an account of your money to the Tax man, that's down to you... Bitcoin hmmmmm do you need to bank it or ewallet good enough? Can tax man ask to see your ewallet if so which one, "hold on I got it around here some where, I'm sure I did... Oops sorry I can't seem to find it, bloody memory sticks jeees..." lol maybe I got it all wrong... I always thought it had to be accounted for before the tax could be demanded
 
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Pokerguy6666

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Not only is weed legal in canada but also gambling winnings are non-taxable, I LOVE CANADA!
 
Inequitas

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Not only is weed legal in Canada but also gambling winnings are non-taxable, I LOVE CANADA!
I love Canada too... All that whoha about exporting toxic waste around the world can't be all that bad lol well not bad enough for some little, small, insignificant country to declare war over lol... ;) haha I do love Canada and I'm not being sarcastic in saying that... They have a great greencard program too... I'd love to make use of that treat... But I have a criminal record in UK for being concerned with the supply of Cannabis and class A namely Cocain lol 😁 so my hopes are dashed...
 
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kkonicke

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For me personally, it would take a pretty massive win for me to considering paying taxes on it. If I won something like 10 grand, I would slowly withdraw into my bank account over a handful of years and not report it. The IRS only audits something like 1% of individual tax payers per year...and they are more inclined to look at rich people and people who have unusual stuff going on. If you're Joe Schmo with $40-80k a year combined income and taking the standard deduction, odds of the IRS looking at you is very very low.

I also like European Maniacs response, if you can find ways to get it in a format like a visa debit card...that's best case scenario.
 
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