An contributor on Forbes discusses how the popular fad of “Hidden Cash” has now been adopted for bitcoins, and can have tax implications.
Hidden Cash, or @HiddenCash on Twitter, has over 400,000 followers. The mysterious individual leaves a treasure of cash in an undisclosed location and drops hints via twitter to those hunting for it. The game has expanded to multiple cities, and even to the UK where “@HiddenCash_UK has left envelopes filled with £50 or more in London, Sheffield, Manchester and other cities.”
It therefore not surprising that San Fransisco, the home to many Bitcoin startups and where many locals would have no qualms classifying Bitcoin as money or better, has become the focal point for the Bitcoin edition.
The Best PSPs for Forex Brokers in One UTIP App Go to article >>
At first the physical hiding on bitcoins may seem tough to conceptualize. Hence, the operator leaves a “paper” (really aluminum) wallet with a QR code, bitcoin address and @SFHiddenBitcoin twitter handle. The finder cashes in.
And when it comes to taxes, the IRS still takes its share independent of whether Bitcoin is considered property or currency. The difference is only realized for capital gains/losses. All other forms of income are taxable, and finding cash is considered taxable income, as opposed to gifts which are not considered taxable.
Cases of interest include a California couple who found $10 million of rare gold coins buried on their property, but with a face value of $28,000. The IRS taxed them for the full value. Another case involved a man who purchased an old piano for $15 and found $5000 inside. The IRS ruled that he’s obligated to pay up, and won a subsequent appeal.
While it may be hard to prove where the funds came from, the high profile of these competitions and the audit trail left behind from celebrations of exuberant winners around the web can make them easy pickings for the IRS.