[ale] [OT] (but computer and cryptography related) Bitcoin, Litecoin

[Ron Frazier (ALE)]

On 3/30/2013 10:45 PM, Alex Carver wrote:
> On 3/30/2013 18:06, Michael B. Trausch wrote:
>> On 03/30/2013 08:36 PM, Alex Carver wrote:
>>> If you were to agree to accept rubber chickens for installing a PBX 
>>> then
>>> the BSA/Treasury/Congress has no claim because the rubber chickens are
>>> not being exchanged for regulated currency, they are being exchanged 
>>> for
>>> goods and services directly.  But if you want US Dollars and I only 
>>> have
>>> rubber chickens then I have to go exchange my rubber chickens for US
>>> Dollars and, boom, BSA steps in.
>>
>> I certainly don't need a license, though, to trade you and then sell the
>> chickens.  After all, a sale is nothing more than a conversion from a
>> good or service to currency.
>
> That's true, you don't need a license to trade me a good or service 
> for the chickens.  And you don't need a license to sell the chickens 
> away so that you can acquire a good or a service for yourself.  You 
> *would* need a license (according to the Treasury's clarification) to 
> convert those chickens directly to US Dollars by an exchange/broker.
>
> The Treasury said that a sale occurring entirely within a particular 
> currency (your PBX for my chickens) without an exchange to US Dollars 
> is free and clear of the BSA requirements.  If you then take those 
> chickens and buy groceries from a store that accepts chickens, you're 
> still free and clear.  But if you wander off to the bank and ask for 
> the US Dollar equivalent for the chickens because the store won't take 
> the chickens, then it's time to tell the Treasury.
>

I'd like to get further clarification on this from anyone who 
understands the treasury and tax laws, if anyone does.

Let's say I intend to comply with the relevant treasury laws and the tax 
laws, and others.

Scenario 1) I create litecoin, bitcoin, gold coin, silver coin (the 
latter by digging it up and melting it)
      On that day, I record the value of the coin on that day.

Scenario 2) I buy litecoin, bitcoin, gold coin, silver coin
      On that day, I record what I paid for the coin.

I think this is called cost basis, but I can't make heads or tails of it 
beyond that.

http://www.investopedia.com/terms/c/costbasis.asp?ModPagespeed=noscript

I do this day after day.  So, 5 years later, I have a bunch of coins of 
whatever type.  We'll say they're all the same type.  Let's say I have 
6000 of them.  Every single coin has a different cost basis.  Note that 
this question applies to either conventional assets or digital currency.

So, when I want to cash them out to US dollars, do I just go to an 
exchange, collect my dollars and that's it?

And, how the ##@#$$# do I figure out what my capital gains are so I can 
pay my taxes, since every coin has a different cost basis?

Sincerely,

Ron


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Ron Frazier
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linuxdude AT techstarship.com