Pete Hendrickson (@LostHorizons)

A Few Observations About Bitcoin, TDS, "Gender Dysphoria" And Section 230 An eclectic mix, I know. But the mind goes where the mind wants to go... BITCOIN HAS BEEN ON a lot of people's minds, lately, especially now that it is trading at $50,000 per coin and "tax time" approaches. Having had some inquiries as to my views of bitcoin's relevance to the income tax, and especially with the IRS trying to pre-emptively characterize apparent (or real) growth in bitcoin value as "capital gains", let me make a few points. First of all, as regards "growth in value" of bitcoin, it is nearly as legitimate a statement of economic reality to say in such cases that bitcoins have not grown in value; rather, the fiat "dollar" has diminished in value. When previously 100 federal reserve notes (FRNs) could buy one bitcoin and now more are needed to make the same purchase (or more can be had in exchange for one bitcoin), it is as much because the FRNs are worth less than they used to be relative to the bitcoins as anything else. No real "gain" is necessarily involved. Of course, bitcoin DOES grow in value relative to FRNs to some extent now and then, because it rides popularity bubbles. But even in this regard, such growth in relative value doesn't qualify as "capital gains" relevant to the income tax. Enjoying a simple growth in the value of something one owns against fiat "dollars" (or anything else) isn't itself an engagement in a taxable activity. Tax-relevance of such growth can only arise if the growth is generated by the performance of inherently-taxable acts (see https://losthorizons.com/Documents/Privilege.htm), and the growth merely serves as a measure of how much activity was conducted in order to determine the proper rate of tax to apply. The rise in value by itself has no tax relevance whatsoever... Continued: https://losthorizons.com/N/135.htm#2