That seems unlikely to me, since income tax has to be paid by recipients whether payment is in coin or in kind.
BTC is a kind. If I pay you in silver rounds, you are responsible for paying income tax for the convertible value of the silver at the time of payment, but not capital gains at any point.
sales tax, not income tax. someone has to calculate, report, and remit it for all these micro transactions somehow. I thought that is what GP was referring to , may be mistaken.
In that context cap gains vs other sorts of income is irrelevant.
Which, yikes, no wonder running your own business is such a drag, that feels like double-dipping to me. I didn't owe sales tax when I was freelancing, but it is what it is.
Either way though, it's not any sort of headache, because the dollar is still used as unit of account, and what's owed is the value at the time of transaction: what you owe on $500 delivered in BTC is what you owe on $500, presuming you turn it into cash within a year (IANAL, I recall that goods paid in kind become investments after a year, such that gains are owed if sold at a profit).
The problematic tax situation is when someone buys some Bitcoin, and then wants to spend it, since you have to figure out gains on each transaction and report it correctly, that's a huge hassle. I suspect most people who sincerely try to pay capital gains on Bitcoin purchases get it wrong: if you buy 0.1 BTC at 7K and 0.1 BTC at 45K, then spend $1000 worth at 20K, what capital gains do you owe? Does it depend on which wallet you reached into?
I have no idea and, really, feel like I shouldn't have to have any idea. It's the main thing that keeps me from paying in BTC when a vendor likes that form of payment. I could maybe pay a month's rent with the coin in my cushions, I have it because it tickles my fancy to pay for things with magic internet money, but it's just not worth the paperwork to actually do it.
I didn't mean it wasn't income (it is, and they owe income tax) I meant that wasn't the issue that was being pointed out. With microtransactions the sales tax accounting etc. overhead is fixed, but the amounts are tiny...
I may have misread GP.
re: " if you buy 0.1 BTC at 7K and 0.1 BTC at 45K, then spend $1000 worth at 20K, what capital gains do you owe? Does it depend on which wallet you reached into?"
These are not new problems, stock works the same way. You may feel like you shouldn't have to have an idea, but that's not how any of this works in practice.
I understand that argument, but don't think it holds much water in US at least, I suspect all the relevant institutions including courts and congress could care less what El Salvador tries. If it had been a peer country, different story I suppose.
