IRS Requests Bitcoin Buyer Records in Broad Tax Evasion Case • Hacker News Board

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

#81

Post by DennisP » Mon, Nov 21, 2016, 6:09 PM UTC

dbl9 wrote: post #76

emddudley wrote: post #57

Earlier quoted context omitted.

I am not an accountant or tax advisor. Lots of little transactions are a pain, but I do believe you are required to track them in order to report your capital gains correctly. You only have capital gains when you sell, but you need to know your purchase prices and dates in order to compute it. I used this website to analyze my CoinBase transactions: https://bitcoin.tax/ The site imports the transactions and computes…

When I visited Istanbul, I passed through a district with an endless number of exchange shops, and it seemed like a place where you could easily wash money without any bank account involved. I believe Turkey isn't alone in having such a culture of buying/selling US dollars by tracking the USD rate. Do the IRS and say Turkey's tax office tracks these as well? Assuming that you don't try to deposit the exchanged for bi…

This is not tax advice but from what I've seen in news reports, the IRS has different rules for currency. The reason bitcoin users have to report every little gain/loss is that the IRS doesn't consider it currency.

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

#82

Post by [deleted] » Mon, Nov 21, 2016, 6:12 PM UTC

emddudley wrote: post #57

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.

I am not an accountant or tax advisor. Lots of little transactions are a pain, but I do believe you are required to track them in order to report your capital gains correctly. You only have capital gains when you sell, but you need to know your purchase prices and dates in order to compute it. I used this website to analyze my CoinBase transactions: https://bitcoin.tax/ The site imports the transactions and computes…

[deleted]

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

#83

Post by johncolanduoni » Mon, Nov 21, 2016, 6:12 PM UTC

ncallaway wrote: post #56

cloakandswagger wrote: post #52

Earlier quoted context omitted.

Either they had it and destroyed it, lost it or did what lots of small businesses do and had a credit card or checking account only used for business, then referred against the statements to determine deductions (sans receipts)

Is an e-mail copy receipt sufficient for the IRS? As a small business, we travel a lot and obviously book travel online (as well as make a number of other business purchases online). I've never even considered that the e-mail receipt or purchase history on Amazon.com might not be sufficient documentation. Is this something I should spend the next half-hour researching, or am I concerned over nothing?

IANAL, but looks like it's addressed on page 9 here: https://www.irs.gov/pub/irs-irbs/irb97-13.pdf

I'd be shocked if it wasn't, since invoicing purely by e-mail is pretty common these days.

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

#84

Post by 3pt14159 » Mon, Nov 21, 2016, 6:24 PM UTC

smackfu wrote: post #69

3pt14159 wrote: post #49

Earlier quoted context omitted.

I had the same problem with the Canadian equiv (CRA). I just treated it like I bought it all at $0 / BTC. I was selling between $100 and $1000, with an average purchase price between $4 and $10, so the cost was basically minuscule.

I would personally be wary of a $0 purchase price since that seems more like a gift to someone reviewing it.

In Canada you just file capital gains or expenses for anything under how much your expense / gain was. If you get reviewed or audited you can revise your documents and you'll get more back.

It's kinda interesting because a lot of people will claim less than the levels that would normally trigger an audit (49% of household expenses towards rent, say) and then if they get audited upwards revise it to 75%. It's like a societal cheaper NASH equilibrium, since both the individual and the government gets penalised for being overzealous.

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

#85

Post by wheelerwj » Mon, Nov 21, 2016, 6:36 PM UTC

ryaniscool wrote: post #45

mhluongo wrote: post #35

Earlier quoted context omitted.

To your point about SARs / CTRs- SARs at banks are usually triggered by cash deposits and withdrawals at a much lower level, and every bitcoin transaction is roughly equivalent to a cash transaction. Thus "bank-level scrutiny". > I mean isn't that the point of the government request? It's not clear to me whether they actually need this at all, considering Coinbase's existing reporting requirements. It's common enough…

You're fixated on SARs being comparable to CTRs and they just aren't. First, a SAR is only for suspicious activity and it's relatively uncommon, a CTR is not optional and very common. If a SAR is being filled out, it's after trying to get in touch with the person to better understand their business and why various transactions look suspicious. It's not undertaken lightly. It's not a routine filing whereas CTR's are.

> SAR is only for suspicious activity and it's relatively uncommon

lol, just. stop. you obviously have no experience with this type of regulation (or at least you better hopeyou don't).

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

#86

Post by 627467 » Mon, Nov 21, 2016, 6:38 PM UTC

emddudley wrote: post #61

thrillgore wrote: post #41

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.

Purchasing something with bitcoin can trigger capital gains/loss. If you buy 1 BTC at $700, it increases to $800, and you pay 1 BTC for something worth $800, then you have to report and pay taxes on $100 capital gains.

May be unrelated... but what happens when I purchase goods with a foreign currency which I had bought before (and reported the purchase) and said foreign currency value had increased 15% since the moment I reported its purchase?

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

#87

Post by tracker1 » Mon, Nov 21, 2016, 6:48 PM UTC

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…

I've been postulating that a return to import/export taxes in addition to a small vat and include financial exchanges for import/export could be a better tax system with less bureaucracy than the current IRS.

Not that I like the approach, but feel it would be better overall, have less gov't and be harder to work around.

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

#88

Post by eco » Mon, Nov 21, 2016, 6:59 PM UTC

thfuran wrote: post #48

lettergram wrote: post #10

Earlier quoted context omitted.

They will probably not go after anyone who made less than like $500. Remember each time they go after someone it costs them money too.

The IRS is kind of strapped for money. I suspect the threshold is way over $500.

We had a couple of agents show up at our door over something like $17. They weren't even from the nearest IRS office (50 miles away instead of 10 miles). Our theory is that they needed an excuse to drive up and try the new In-N-Out that just opened up in the state.

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

#89

Post by jerf » Mon, Nov 21, 2016, 7:12 PM UTC

rms_returns wrote: post #59

jonaf wrote: post #16

Earlier quoted context omitted.

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…

> This, absolutely. I'm actually surprised the government showed their hand so soon. Does this have anything to do with Trump coming into power?

Do we have any reason to believe either of Obama or Trump particularly care about this issue? Enough to actually do something about this other than casually brush off a question if asked?

It's been obvious this is coming for a long time to anyone who has a realistic view of the IRS.

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

#90

Post by logfromblammo » Mon, Nov 21, 2016, 7:19 PM UTC

loeg wrote: post #71

ulkesh wrote: post #7

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. I wonder if that $50 will end up being hundreds owed in some kind of late fees/etc.

> I wonder if that $50 will end up being hundreds owed in some kind of late fees/etc. No. Penalties are proportionate.

Spoken like someone who has never been penalized by the IRS.

If you get a zealous agent, they will tack on anything even remotely plausible to nail you with. If you get an "it's a job" agent, they will do the minimum amount of work to process your file out of their inbox.

The difference between the two can be thousands of dollars, not just hundreds.