US to Regulate Virtual Currencies

[Rave]

The fact is that some people make withdrawals, even profit. So, being a tax paying US Citizen (or any other income tax paying country) you are obligated to report those funds and pay appropriate taxes on them. If you fail to, you are committing a crime.

With that being said, I don't think most of the player base has to worry. Enjoy pumping your dollars into the virtual casino, gambling addicts not so anonymous.

I was curious about how reporting withdrawn PEDs works. In a casino or lottery situation, its anything above 10,000 USD, I believe. Does that mean that as long as I don't withdraw more than 100k PED in any given fiscal year, I don't have to report it on my taxes? I just made a sizable withdraw, so this is a concern for me. Although, I figure I could just ask my CPA. Anyone in the US who's made large withdraws have this answer already?

 

[aridash]

Why does it need to be converted back to "real currency" to be of any use?? What is a "real currency" anyway? You only need to find someone willing to accept it as payment for a debt. It doesn't matter if it is bitcoins or PED or anything else.

well thats just the point, only other bitcoin users accept bitcoins. to be an effective real currency something needs to be widely recognised and backed. if you can pay a bill, say some web development with PED or bitcoin, thats fine. but if you cant pay your bills and taxes with it, its use is limited. the exchanges exist to convert bitcoin in and out of real currencies and to realise a real world value.

Wasn't the point of bitcoin to be converted to any currency ?

the original point was to be decentralised, secure and a bit techno-utopia.

 

[Dane]

I was curious about how reporting withdrawn PEDs works. In a casino or lottery situation, its anything above 10,000 USD, I believe. Does that mean that as long as I don't withdraw more than 100k PED in any given fiscal year, I don't have to report it on my taxes? I just made a sizable withdraw, so this is a concern for me. Although, I figure I could just ask my CPA. Anyone in the US who's made large withdraws have this answer already?

I live in Canada, but I assume it would vary from state to state in the US.

The reason I refer to EU a casino is because it's all chance. There are certain skills you gain by playing casino games (black jack, poker, slots, roulette) but the bottom line is you're gambling with funds. You go to the casino and pay money to play games. You do the same in EU. There is no 'end game' or guaranteed method of 'breaking even' by participating in any of the main professions. There are ways to manipulate and increase your odds in those professions, just like in a casino, by skilling yourself in those games.

 

[Norm]

I was curious about how reporting withdrawn PEDs works. In a casino or lottery situation, its anything above 10,000 USD, I believe. Does that mean that as long as I don't withdraw more than 100k PED in any given fiscal year, I don't have to report it on my taxes? I just made a sizable withdraw, so this is a concern for me. Although, I figure I could just ask my CPA. Anyone in the US who's made large withdraws have this answer already?

Firstly, regardless of whether the casino reports anything to the IRS, US tax code requires you to report all gambling winnings. You then can deduct all gambling losses up to the amount of winnings by itemizing. Maybe 6 people in all the US actually do this when the casino doesn't report it to the IRS, but that's the law.


Secondly, I haven't withdrawn more than $10k from EU lately, but assuming you mean that you're withdrawing more than you put in, you basically have two options under US tax code: 1) Business income, or 2) Hobby income. If you are operating EU for the purpose of making a profit, you can file EU earnings as business income, but if not, you'll have to file as hobby income.

Filing as hobby income kinda sucks and will likely only add income with no offsetting expenses. I wrote a bunch of crap about it and decided to delete it. If you file as business income (Schedule C if run as a sole proprietor), you can deduct all directly related expenses to running your EU business. However, if you have a loss in 3 or more of the last 5 years, it is very difficult to successfully argue you are running a business.

One might be able to argue that he was simply receiving a refund of prior purchases up to the amount of all prior deposits, perhaps?

Actually, it's a pretty complex topic. Since you already have a CPA, talk to him about it.

 

[uni_corn]

for me that regulatories are a result of the people who always need to overdrive it with using other people.

for instance these new internet services which want to go around and give people tasks in their freetime to profit on that.

like the latest guys which run around inside entropia and want to give people tasks on the internet for peds.........

letting people work in their freetime without work contract for wages which are absolutely unacceptable.

modern internet slavery - fight them where you can!

 

[Rave]

Firstly, regardless of whether the casino reports anything to the IRS, US tax code requires you to report all gambling winnings. You then can deduct all gambling losses up to the amount of winnings by itemizing. Maybe 6 people in all the US actually do this when the casino doesn't report it to the IRS, but that's the law.


Secondly, I haven't withdrawn more than $10k from EU lately, but assuming you mean that you're withdrawing more than you put in, you basically have two options under US tax code: 1) Business income, or 2) Hobby income. If you are operating EU for the purpose of making a profit, you can file EU earnings as business income, but if not, you'll have to file as hobby income.

Filing as hobby income kinda sucks and will likely only add income with no offsetting expenses. I wrote a bunch of crap about it and decided to delete it. If you file as business income (Schedule C if run as a sole proprietor), you can deduct all directly related expenses to running your EU business. However, if you have a loss in 3 or more of the last 5 years, it is very difficult to successfully argue you are running a business.

One might be able to argue that he was simply receiving a refund of prior purchases up to the amount of all prior deposits, perhaps?

Actually, it's a pretty complex topic. Since you already have a CPA, talk to him about it.

How dare you assume my CPA is a "him"! Sexist! Haha jk jk. Well, I'm not withdrawing more than I have put in, as I still have plenty of assets in the game. So, I'm not 'gaining' anything from this withdraw, so yeah I could argue its a "refund". Pretty sure they don't tax refunds ever. Plus, it would be BS for me to pay taxes on money I'm getting back when it's not a gain. Then again, this is the US... I'm a libertarian... I hate taxes...

 

[Bones]

exchanger and administrator are not residents of the us.

It does not apply.

Had wondered about this particular aspect.

So if an administrator or exchanger live in a different part of the world , then transactions to a US user are non taxable ?

Or does it mean that the user outside of US jurisdiction is not subject to tax or banking policy ?




Bones

 

[Farmer Smurf]

MA so, what we really need is to be able to withdraw to paypal. so we can then go to ebay and buy a car or whatever and pay with paypal.

For real^

 

[Uvas]

Is Entropia currency considered a "convertible" virtual currency under the United States Financial Crimes Enforcement guidelines ?

While browsing US Department of Treasury documentation , I stumbled upon a rather interesting regulatory subject document involving transactional information which might impact Entropia considerably at some point.


Criteria to meet the definition of virtual currencies subject to regulation under MSB (Money Services Businesses) regulations , include:

• User - A user who obtains convertible virtual currency and uses it to purchase real or virtual goods or services is not an MSB under FinCEN's regulations.
  
• Exchanger - An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency.
  
• Administrator - An administrator is a person engaged as a business in issuing (putting into circulation) a virtual currency, and who has the authority to redeem (to withdraw from circulation) such virtual currency.

These are the players subject to FinCEN's scrutiny according to this regulatory documentation. The user , does not meet the qualification for scrutiny under these guidelines and is exempt from regulation. However , the Exchanger and Administrator , both fall into this category regulation. How does this regulatory oversight effect the current economy and certainly the growth of Entropia .

With the growth of virtual currency exchanges and virtual currencies in gaming and online community sites , facebook and the like.

A question I am left with , will the growth of Entropia and its eventual notice by the world , lead to regulatory oversight ?

Intelligent discussion can now begin!


Bones

I didn't read the whole thread, so I don't know if this was answered.

Only MA is the administrator, so we can forget that one. It is MA that adds and subtracts currency from the world.

There is no way for us to exchange currencies. Only MA does that. There are no third party exchanges.

All players can be judged as users, aside from planet partners.

 

[Bones]

I didn't read the whole thread, so I don't know if this was answered.

Only MA is the administrator, so we can forget that one. It is MA that adds and subtracts currency from the world.

There is no way for us to exchange currencies. Only MA does that. There are no third party exchanges.

All players can be judged as users, aside from planet partners.

The user (me) , purchases peds from Entropia (exchanger) using US dollars , and Entropia (exchanger) , transfers US dollars to MindArk (Administrator) , MindArk sells US dollars for Swedish SEK which is 1 US dollar to 6.518 Swedish Krona - SEK .

And I can say this is a discussion I was looking to have , Thank You


I cannot see the US having any type of jurisdictional authority on how the peds are created , such as estate deeds , auction trading or owning a planet since it is entirely administrated by MindArk , they would be interested in the investement potential and profits of those investments for US players (users) .

If I were to purchase 25,000 estate deeds @ 1300 peds (130 US) , gaining 24% , 7,800,000 peds (78k US) , and in 4.17 years gaining 38,000,000 peds (3.8 million US). At this point the peds would be profit , not considering the loss of the dollar earning potential which I had lost , I would be then able to earn profit from these deeds.

Would this profit be subject to taxes to US Internal Revenue Service ?


Bones

 

[Norm]

Would this profit be subject to taxes to US Internal Revenue Service ?


Bones

Profit = income. The US tax code requires all citizens to pay taxes on any and all forms of income (even income from illegal activities, though not applicable here), subject to specific exceptions. There is no exception for earning income from EU. Whether or not there is any mechanism by which the IRS is able to track and discover a player has not paid taxes on this income, though, is another story.*


*I am not suggesting that anyone intentionally avoid paying taxes due

 

[forgo]

Profit = income. The US tax code requires all citizens to pay taxes on any and all forms of income (even income from illegal activities, though not applicable here), subject to specific exceptions. There is no exception for earning income from EU. Whether or not there is any mechanism by which the IRS is able to track and discover a player has not paid taxes on this income, though, is another story.*


*I am not suggesting that anyone intentionally avoid paying taxes due

I have not paid taxes for 10 years. IF i win the lottery or gambling...I don't have to list it as work income , thus not taxed either.

Read the laws, find the way.

In the case of EU I withdrew around 16k us in one lump once, nothing ever came of it on a tax basis. I should note also, that if you put that much in...it could easily be considered a refund.

IF MA was in the US, they would be required to send 1099's to each person I believe though.
But they arent )

 

[goodgrief999]

What surprises me most in discussions like these (which pop up every now and then) is how people tend to automatically assume that US regulations are valid for a company which does not fall under US jurisdiction.

What surprises me even more, is that sometimes, some countries actually ACCEPT that the US tends to think that way...

Edit: I suppose I better censor my post - after reading the /Mod note.

 

[Norm]

I have not paid taxes for 10 years. IF i win the lottery or gambling...I don't have to list it as work income , thus not taxed either.

Read the laws, find the way.

In the case of EU I withdrew around 16k us in one lump once, nothing ever came of it on a tax basis. I should note also, that if you put that much in...it could easily be considered a refund.

IF MA was in the US, they would be required to send 1099's to each person I believe though.
But they arent )

I'm not here to be the tax police, but I know a few things about US tax law. If you earn income that intentionally is not reported to the IRS, you may never be caught. However, getting caught means jailtime. That's enough of a threat for some people to just follow the law in the first place. If you're not one of those people, so be it.

To the original point, though: a one-time withdrawal of $10k is not going to be reported to the IRS.

 

[Few Scars]

They would have to prove a profit, all they would see on your bank statements are deposits into a game. If you withdraw less than you deposit then maybe you could claim that your activities in the game are a business and by withdrawing less than you put in you have made a capital loss and negatively gear your tax return! LOL

 

[Naithen]

They would have to prove a profit, all they would see on your bank statements are deposits into a game. If you withdraw less than you deposit then maybe you could claim that your activities in the game are a business and by withdrawing less than you put in you have made a capital loss and negatively gear your tax return! LOL

And since noone profits here theres nothing to worry about

 

[remontoire]

http://www.theverge.com/2013/4/17/4236876/bitcoin-exchange-bitfloor-shuts-doors

Namely they do so because their US account is being closed.

 

[forgo]

I'm not here to be the tax police, but I know a few things about US tax law. If you earn income that intentionally is not reported to the IRS, you may never be caught. However, getting caught means jailtime. That's enough of a threat for some people to just follow the law in the first place. If you're not one of those people, so be it.

To the original point, though: a one-time withdrawal of $10k is not going to be reported to the IRS.

There are without a doubt exceptions. Very limited ones, and not something to say that anyone could just stop taxes for certain. That wouldn't be good in any way. I didnt and would never have believed it myself, until I spent 6 years digging in federal code. And some amount of money for court to challenge it.

There are federal laws that supercede the tax code.
I have earned income all my life, I ceased paying taxes about 10 years ago.
The court found in my favor.

In fact I cant even be taxed for my legal marijuana (in my state), like everyone else.