IRS Ruling Could Have Big Impact for Bitcoin Traders

In a ruling that could have significant impact on the tax status of bitcoin holders, the U.S. Internal Revenue Service has ruled that, at least for tax purposes, it considers bitcoin to be property. In a March 25 news release, the IRS stated, “General tax principles that apply to property transactions apply to transactions using virtual currency.”
The agency also said that wages and other payments in bitcoin or other virtual currencies are taxable and subject to the same reporting requirements as payments in any other sort of property.
The ruling is a good news/bad news situation for bitcoiners, depending on where their activity falls. One immediate benefit is that since it’s considered property, bitcoin is no longer subject to the complicated rules of foreign currency gains and losses. This can have a significant impact since many bitcoin holdings are in offshore exchanges that would be subject to the foreign currency rules prior to the ruling. It also avoids the complicated currency taxation in which 60% of profits are taxed as capital gains and 40% are considered ordinary income for most taxpayers.
Because bitcoin is property, its change in value is considered a capital gain or loss and taxed at the appropriate long- or short-term rate. Given the dramatic rise in bitcoin value over the course of 2013, this could means substantial tax savings for an investor who held the currency for a longer period. It could also be beneficial for those who bought at the top of the market and suffered substantial losses.
The news isn’t all good, though, depending on how you spend or hold bitcoins.
Because it’s property and subject to capital gains tax, if you had acquired $5,000 in bitcoin value, for instance, and it doubled in value to $10,000 while you held it, when you spend it, you might be subject to capital gains tax on the $5,000 gain. Because this technically applies to even small transactions (buying a sandwich at Subway, for instance), complying with the letter of the law could be a nightmare.
If you pay or receive wages in bitcoin, those payments are subject to reporting and withholding requirements like any other payroll payments and are considered ordinary income to the receiver.
The property ruling also has impact on those who acquire bitcoins as a business or hobby. The first consideration is whether your activity qualifies as a business. The IRS generally requires that a business must have profit as an objective and have expectations of making a profit in three of the ensuing five years. Otherwise, the activity is considered a hobby.
For a hobby, losses and expenses are only deductible to the extent that they offset gains. A business may show an ongoing net loss for tax purposes, and legitimate business expenses are deductible. This includes expenses for bitcoin mining equipment (which may need to be capitalized), office space, and operating expenses. At the same time, you may be subject to self-employment tax, depending on how the business is structured.
For U.S. taxpayers, it is important to understand how this ruling affects their filings. Not all accountants and tax services will have the knowledge to navigate this new terrain, so for bitcoin traders, it’s important to find one that does.
The final bit of good/bad news is that for those hoping to see bitcoin and other virtual currencies go mainstream, this ruling and similar ones in countries like Brazil may be a major validation. The bad news, of course, is that as the currency gains recognition, the taxman is paying increasing attention.

Single on Valentine's Day?

Last month we were inspired to talk about the kind of love we show our stacks of gold and silver, after receiving this humorous review on our website:
“On the upside, it [gold bar] was delivered quickly with zero hassles, the bar is in fantastic quality and exactly what I expected, and all in all was yet another great experience with Amagi Metals. On the downside, my wife wont let me sleep with the bar next to my pillow at night, and its causing friction in the family.
Have you slept next to your gold bars before? Maybe a few Silver Eagles under the pillow for good luck?
This Valentine’s Day, per usual, the corporate world is everywhere telling us to have a date this Friday and to make sure you buy that overpriced box of crappy chocolates. I’ve never been a big fan of the holiday, but here at Amagi Metals we’d like to take the time to let our loyal customers and social media audience know that you don’t have to be “alone” on Valentine’s Day. Being single doesn’t mean your Friday night is going to be a drag. In fact, one of my favorite quotes highlights the best part about being a stacker and being single on Valentine’s Day:
“When you’re single, your pockets jingle.”
That’s a Valentine’s Day message I can get behind! So, cheer up and take on this weekend like any other great weekend – the bonus being, you know your savings will not be eaten by inflation. Celebrate! No work, Spring is on the way, and not to mention Amagi has some killer deals for stackers through the entire month of February!
We decided to help fulfill a desire from the customer mentioned above. Don’t hesitate to show your stack some love this weekend. It’s like a great teddy bear, but instead of being really fluffy and cute, it preserves your wealth. That kind of company in bed can relax the mind and hopefully facilitate in a great night’s sleep!
snuggle with silver
If you do have a significant other and you want to snuggle with your silver on Valentine’s Day*…well…good luck!
*Amagi is not responsible for any friction within customer’s personal relationships.
 

Amagi Reveals Custom "End the Fed" Round

After being in business for over four years, this month, Amagi has taken a step many bullion dealers dream of taking: We’ve created our very own custom silver round.

Reverse end the fed roundObverse end the fed round

It’s no secret, if you’ve listened to interviews or met the crew at Amagi Metals, that the philosophy of liberty flows freely within the confines of the warehouse and office space. The company is built on the notion that financial responsibility is a top priority and one of the pillars to achieving liberty in one’s lifetime. CEO, Stephen Macaskill, has a list of entrepreneurial ventures in his life, but has settled comfortably into dealing gold and silver bullion, because investing in gold and silver is one of the best ways to preserve wealth and protect yourself against inflation…one of the biggest woes to the financially responsible.
This is why we have taken the opportunity and the lime-light to talk more about these inflationary measures and the guilty culprit: The Federal Reserve. The Federal Reserve has existed for over 100 years and is the third attempt at a central bank in the United States. The first two were very unpopular for many of the same reasons people loathe the Fed today, including ourselves. In fact, the President who signed the Federal Reserve Act of 1913, Woodrow Wilson, regretted his decision saying:

“I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of  credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most  completely controlled and dominated Governments in the civilized world no longer a  Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men.”

Amagi Metals has created not only a beautiful piece of custom silver, but a powerful message against corruption within the financial system. Holding one of our End the Fed rounds means you are supporting the free market, our company and, most importantly, your own financial future.
Thank you to Rob Nair for the design! He brilliantly suggested we replace the eagle that is proudly used in the Federal Reserve logo with a more appropriate bird, the vulture. We’ll be offering contests on cooperating blogs and through social media to promote our new, custom round so be sure to keep an eye out for a way to win one of your very own. You can also pre-order one today here. Our first order should be arriving at the warehouse in 1.5 weeks!
Keep stacking friends!

Amagi Metals Celebrates 4-Year Anniversary with Specials on Silver

For immediate release:
Contact: Megan Duffield, [email protected]
800-882-8496 x107

Denver, CO – After pulling just under $1 million in Bitcoin sales during the holiday promotion of Bitcoin Black Friday, Amagi Metals has skyrocketed to a household name among bullion dealers. Prior to Gyft.com and Overstock.com accepting Bitcoin, Amagi shared a top position among online retailers worldwide with Bitcoin payment capabilities. This calls for a celebration, so the 4-year anniversary of the company couldn’t have come at a better time!
Through February, Amagi will be rewarding their loyal customers with four, week-long specials! Whether you have ordered in the past, or you’re a first-timer, the month of February will offer many ways to jump into the sound money community. Offers like free shipping, discounts on popular silver coins, Amagi’s first-ever custom round and FREE silver will be enjoyed by all. Amagi will also be showing off photos from their new location along with previews of new products. (Follow Amagi on Instagram @AmagiMetals)

“We’re excited to offer some great deals during our 4th anniversary. We have such awesome customers…we want to keep our them happy! What better way than celebrating our success with giveaways and some fun!?” – Stephen Macaskill, CEO

Here’s a breakdown of the weekly specials:

Feb. 2-8th: Buy three or more silver rounds/coins and receive a free 1g heart-shaped bar – a great way to say “I love you” on Valentine’s Day. Use promo code: ILUVSILVER at checkout. (will arrive by 2/14, while supplies last)

Feb. 9-15th: Free shipping on $10 or more FV of junk silver! Discount automatically added at checkout.

Feb. 16-21st: Sound Money Soap Box Challenge: This contest encourages followers on Facebook and Twitter to put together a response to the following question:

If you were sitting in a room in 1913 with the crooked banksters who created the Federal Reserve Bank, what would you say to them?

Entries must be made in the form of a Facebook status on your own personal page and you must tag the @AmagiMetals fan page to qualify.  Entries must be posted by Feb. 21st at 4pm EST (6pm MST) The Amagi Team will evaluate each entry and decide on a winner and a runner-up. The winner will receive 4 ozts. of silver and the runner up, 1 ozt! You’re encouraged to invite your friends to Amagi’s fan page! Facebook.com/AmagiMetals

Feb. 23-28th: Bulk pricing on 1 ozt. Silver Eagles! The exact premium: $2.80. Either way, it will be an unbeatable price on a best-seller!

2014 is going to be a BIG year for Amagi Metals…with a new office, new team members, new products, and new website features! Join Amagi as they dedicate the month to their fantastic customers. Prizes, contests and behind the scenes photos to come – for more information visit AmagiMetals.com.