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IRS Requests Bitcoin Buyer Records in Broad Tax Evasion Case

fortune.com

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Re: IRS Requests Bitcoin Buyer Records in Broad Tax Evasion Case

#21

Post by derekp7 »

tyingq wrote: post #12
chollida1 wrote: post #4

I think this is a pretty reasonable request if they only want Americans who traded bitcoin. The IRS and SEC have the power to compel brokerages to turn over trading records for people who bought/sold stocks on the stock market so the precedent is not only set but well established long, long, long ago. I mean if you traded bitcoin but didn't claim the income on your taxes, then you just blatantly and almost certainly…

Conflating coinbase with a brokerage seems a stretch to me. Many people used it more like Paypal, a conduit to make or receive payments for sales of goods or services. With the conversion of bitcoin to regular currency happening very quickly. No buy/hold/trade activity, etc.

How does it work if you sold a service for bitcoin, and the value of the bitcoin changed befor converting to cash? I would think that regular taxes (income) would be owed on the initial cash value, then capital gains tax would be owed on the float. Same as selling something in a foreign currency?

Re: IRS Requests Bitcoin Buyer Records in Broad Tax Evasion Case

#22

Post by tyingq »

derekp7 wrote: post #21
tyingq wrote: post #12

Earlier quoted context omitted.

Conflating coinbase with a brokerage seems a stretch to me. Many people used it more like Paypal, a conduit to make or receive payments for sales of goods or services. With the conversion of bitcoin to regular currency happening very quickly. No buy/hold/trade activity, etc.

How does it work if you sold a service for bitcoin, and the value of the bitcoin changed befor converting to cash? I would think that regular taxes (income) would be owed on the initial cash value, then capital gains tax would be owed on the float. Same as selling something in a foreign currency?

That's exactly the attraction coinbase had for many sellers (avoiding the volatility): https://www.coinbase.com/instant-exchange

Re: IRS Requests Bitcoin Buyer Records in Broad Tax Evasion Case

#23

Post by brentm »

I would bet that unless you'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've probably been worrying anyway.

Re: IRS Requests Bitcoin Buyer Records in Broad Tax Evasion Case

#24

Post by cableshaft »

I buy a small amount (about $20 worth) every paycheck, so I'm really not sure how to even report that reasonably. With such a volatile price, I don't really know how much it's gone up or down without some serious calculations. I'm not really sure what to do about that.

I was just about to sell some of it too, to help cover some recent expenses.

Re: IRS Requests Bitcoin Buyer Records in Broad Tax Evasion Case

#25

Post by mhluongo »

ryaniscool wrote: post #18
mhluongo wrote: post #11

Earlier quoted context omitted.

Coinbase has to report SARs, as well- they're a fully licensed money transmitter in the US- so maybe tone down the condescension. This is an overreach of a different type and by a different government body, and would be precedent-setting AFAIK.

SARs only apply to suspicious activity. CTRs are what your bank has to file for every transaction over $10000. Also, it's all the Dept. of Treasury. The IRS is essentially the collection agency of the Dept. of Treasury. It's listed as a bureau on the U.S. Treasury's website. https://www.treasury.gov/about/organizational-structure/bure...

My point stands. Coinbase already has bank-level scrutiny, both directly and from its banking partners ("know your customer's customer").

I completely agree that anonymity in finance is at odds with many of the government's methods to enforce taxation, and that this is only the beginning. But Coinbase has been the white knight in this space in the US dealing with the regulations, and I don't think they're naive to push back on this. It might be a losing battle over the next decade, but that doesn't mean it's not a worthwhile cause today.

Re: IRS Requests Bitcoin Buyer Records in Broad Tax Evasion Case

#26

Post by tedd4u »

cableshaft wrote: post #24

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

The note from the IRS about Bitcoin I read on CoinBase's site said it's similar to a security. So until you trade it out (sell it) you don't realize a gain. When you do your gains are considered similar to capital gains / capital losses (if you held for more than 1 year). Otherwise considered income.

Re: IRS Requests Bitcoin Buyer Records in Broad Tax Evasion Case

#27

Post by ryaniscool »

mhluongo wrote: post #25
ryaniscool wrote: post #18

Earlier quoted context omitted.

SARs only apply to suspicious activity. CTRs are what your bank has to file for every transaction over $10000. Also, it's all the Dept. of Treasury. The IRS is essentially the collection agency of the Dept. of Treasury. It's listed as a bureau on the U.S. Treasury's website. https://www.treasury.gov/about/organizational-structure/bure...

My point stands. Coinbase already has bank-level scrutiny, both directly and from its banking partners ("know your customer's customer"). I completely agree that anonymity in finance is at odds with many of the government's methods to enforce taxation, and that this is only the beginning. But Coinbase has been the white knight in this space in the US dealing with the regulations, and I don't think they're naive to pu…

If your point is that it has a bank's level of scrutiny, then no it clearly does not stand. I mean isn't that the point of the government request? A bank's level of scrutiny would mean the government could reasonably guess if you are holding out on taxes which is clearly not the case here. Does the IRS regularly subpoena Chase and BofA's customer records. No, because there is no need. Thanks to the CTRs, they can crunch the numbers and figure out if the amount you paid on your taxes is suspiciously low.

Sure, it's a worthwhile cause. I wish them luck because Congress and the Courts have consistently torn down financial privacy over the last 30-40 years.

Re: IRS Requests Bitcoin Buyer Records in Broad Tax Evasion Case

#28

Post by cloakandswagger »

jonaf wrote: post #16
ryaniscool wrote: post #5

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]. Whe…

This, absolutely. I'm actually surprised the government showed their hand so soon. There must be a lot of money in Bitcoin already. The government WANTS people to go 100% digital with their capital. It is infinitely easier to track digital money. Bitcoin is something they're against because the anonymity factor. I won't be surprised if we see some legislation to block or inhibit anonymous digital currency. Let's not…

The downvotes on this comment are confusing. Do people dispute that a cashless society would be a dream come true for the US government & Fed? Or that the US will do pretty much anything to protect its currency hegemony?

Re: IRS Requests Bitcoin Buyer Records in Broad Tax Evasion Case

#29

Post by cableshaft »

tedd4u wrote: post #26
cableshaft wrote: post #24

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

The note from the IRS about Bitcoin I read on CoinBase's site said it's similar to a security. So until you trade it out (sell it) you don't realize a gain. When you do your gains are considered similar to capital gains / capital losses (if you held for more than 1 year). Otherwise considered income.

Well again, I was about to sell some, and figuring out exactly how much I 'gained' from so many tiny buy transactions I imagine would be difficult (but might not be, I'm not sure).
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