(1) Launch a Bitcoin capital gains/losses tax approximation application (the "App") in beta. User keys in their Bitcoin addresses. App searches the block chain for the user's entry and exit times. App searches exchanges for the most favourable pricing source. App then returns an approximation of taxes owed/to be credited (e.g. in case of coins lost at Mt. Gox). App has a prominent disclaimer across the top warning against using it as tax advice.
(2) Bring on board a senior CPA with policy-making experience. Clean up the tax logic of the App under their guidance. Call buddies in the IRS and New York State Department of Taxation and Finance. Ask them to look over the tax logic of the App in exchange for dinner, drinks and equity. Move the disclaimer from the top of the app to the bottom.
(3) Call TurboTax and small accounting firms with any public posts about Bitcoin. Meet to discuss a partnership. Parlay into an acquisition.
App searches exchanges for the most favourable pricing source.
The taxpayer has to be consistent with how they determine the price of bitcoins, generally meaning that they have to use the same method unless they have a good reason for switching. Deliberately choosing the most favorable pricing source is fine the first year--but they'd have to stick with the same source in subsequent years.
Also, the app would be enabling tax fraud. A "prominent disclaimer" isn't going to be much protection. If anything, it's likely to be used against the appmaker to demonstrate willful blindness.
A taxpayer has to be internally consistent in picking their pricing source. It does not follow that the pricing source must be consistent between tax payers. Different situations could merit different pricing sources. It is not wrong to advise different people in different situations on how their differing needs may merit different pricing sources.
> (1) [...] User keys in their Bitcoin addresses. App searches the block chain for the user's entry and exit times.
How will you know which output is spent on purchasing something for bitcoins (a taxable event), and which is change, sent back to the user?
You'll see a bunch of transactions like these:
Redeem 3.4784 BTC from output 1 from tx 23e23f23f23be52bef98a8b...
Send 0.879 BTC to 1CjPR7Z5ZSyWk6WtXvSFgkptmpoi4UM9BC
Send 2.5993 BTC to 1NxaBCFQwejSZbQfWcYNwgqML5wWoE3rK4
Has the user spent 0.879 or 2.5993 BTC on something?
Or has he just sent money to another wallet, or deposited with an exchange?
The index number of the non-change output in a transaction is intentionally randomized, so it can't be figured out, from blockchain data, which is the payment and which is change.
(1) Launch a Bitcoin capital gains/losses tax approximation application (the "App") in beta. User keys in their Bitcoin addresses. App searches the block chain for the user's entry and exit times. App searches exchanges for the most favourable pricing source. App then returns an approximation of taxes owed/to be credited (e.g. in case of coins lost at Mt. Gox). App has a prominent disclaimer across the top warning against using it as tax advice.
(2) Bring on board a senior CPA with policy-making experience. Clean up the tax logic of the App under their guidance. Call buddies in the IRS and New York State Department of Taxation and Finance. Ask them to look over the tax logic of the App in exchange for dinner, drinks and equity. Move the disclaimer from the top of the app to the bottom.
(3) Call TurboTax and small accounting firms with any public posts about Bitcoin. Meet to discuss a partnership. Parlay into an acquisition.