IRS Requests Bitcoin Buyer Records in Broad Tax Evasion Case

This was just a matter of time. Welcome to the reality of being involved in the money business in the USA. Coinbase is concerned with the breadth of the request. That is actually kind of cute considering that your bank has to report any transaction over $10000 to the US Dept of Treasury and people are actively prosecuted on suspicion of making transactions under this threshold to avoid reporting requirements [1].<p>Whenever I hear someone talk about the dream of anonymous currency. I kind of laugh to myself because I know how far the government currently goes to monitor every little piece of your financial life to make sure you are paying what you owe in taxes.<p>[1] <a href="https:&#x2F;&#x2F;www.washingtonpost.com&#x2F;news&#x2F;the-watch&#x2F;wp&#x2F;2014&#x2F;03&#x2F;24&#x2F;the-federal-structuring-laws-are-smurfin-ridiculous&#x2F;?utm_term=.40575f1e297f" rel="nofollow">https:&#x2F;&#x2F;www.washingtonpost.com&#x2F;news&#x2F;the-watch&#x2F;wp&#x2F;2014&#x2F;03&#x2F;24&#x2F;...</a>

I buy a small amount (about $20 worth) every paycheck, so I&#x27;m really not sure how to even report that reasonably. With such a volatile price, I don&#x27;t really know how much it&#x27;s gone up or down without some serious calculations. I&#x27;m not really sure what to do about that.<p>I was just about to sell some of it too, to help cover some recent expenses.

It&#x27;s really tempting to say that the IRS won&#x27;t be able to do anything - you can&#x27;t prove I spent&#x2F;received this for &lt;x&gt; type of activity.... but that&#x27;s not how the IRS works. Once the IRS decides to audit, you are guilty until proven innocent. They will be elbow-deep into your figurative financial rectum, and you will (almost always) lose.

I think this is a pretty reasonable request if they only want Americans who traded bitcoin.<p>The IRS and SEC have the power to compel brokerages to turn over trading records for people who bought&#x2F;sold stocks on the stock market so the precedent is not only set but well established long, long, long ago.<p>I mean if you traded bitcoin but didn&#x27;t claim the income on your taxes, then you just blatantly and almost certainly knowingly&#x2F;intentionally lied on your taxes.<p>I&#x27;m not certain what there is to argue about or push back on here.<p>It&#x27;s not like you can create something new like bitcoin and then with a straight face claim that its not an equity or currency so the law doesn&#x27;t apply to you.<p>Capital gains are taxable, full stop, unless there is a specific law to override that, like selling your primary residence.<p>Can someone make the case that this isn&#x27;t just a cut and dry issue?

What&#x27;s interesting here is that bitcoin is both an &quot;investment&quot; and &quot;currency&quot; (since you can pay for [some] goods and services with btc directly).<p>From the &quot;currency&quot; point of view - exchange rate (FX) gains&#x2F;losses technically only apply to officially recognized foreign currencies.<p>So that is an interesting can of worms. If I buy bitcoin at price point X, it goes up to X+Y, but instead of selling it I use that Y to pay for something - was that Y a taxable gain?

I made a whole $50 on Coinbase. I expected some tax form to arrive, and it never came. Honestly I completely forgot about it until I saw this.<p>I wonder if that $50 will end up being hundreds owed in some kind of late fees&#x2F;etc.

I would bet that unless you&#x27;re a person who willfully hid large capital gains in bitcoin or faked some kind of large tax deductible expenses by purchase of Bitcoin you probably will have anything to worry about. If you are among those two group then you&#x27;ve probably been worrying anyway.

Well, that was kind of inevitable.

I wonder if this in response to the recent launch of zcash: <a href="http:&#x2F;&#x2F;z.cash" rel="nofollow">http:&#x2F;&#x2F;z.cash</a>

I have always reported my virtual currency earnings by providing my deposits to Coinbase at tax time. Then again, I use Coinbase strictly to buy things with bitcoin, not as an investment tool.

remembering that time, we saw BTC spoke to the ~1000$us mark. my thoughts about his at the time was that the price spike was largely driven by Chinese demand for BTC.<p>Note that the price crashed after Beijing halted BTC exchanges with their state banks.<p>It could be part of some larger plan to leverage info against the sorts of folks who have enough RMB to help drive the price of BTC to +$1000.

thats why on some level it is better to run your own wallet.

This should be a good one.