Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

IRS sends warning letters to more than 10k cryptocurrency holders

wsj.com

Post reply on HN
Print view View original

371–380 of 416 posts

Re: IRS sends warning letters to more than 10k cryptocurrency holders

#371

Post by rphlx »

wpietri wrote: post #268
AdrianB1 wrote: post #265

This will be a very unpopular opinion, but it is true: USA is much better than 200 years ago; if 200 years ago you were a slave, 100% of your output belonged to your master. Now your government owns only 40-50% of your output and you feel totally free. The only bad thing is that almost 100% of the population is now a half-slave. You don't chose what to pay, how much and what for, you just have to pay up, or else. Yes…

This is just foolishness. Are some rich people still exploiting others and rigging the system? Sure. But chattel slavery was an extraordinary evil. It's at best vacuous to put it in the same moral bucket as a democracy where people vote to, say, make sure old people don't starve in the streets.

> people vote

The "high taxation is not slavery, because you voted" argument lost all merit once net recipients of the welfare state became able to out-vote its net contributors - which has already happened in the US.

> make sure old people don't starve

If only that were what the extent of what social security actually does. But it's not properly asset tested. So broke millenials are paying a ton of payroll taxes, which are - after substantial adminsitrative overhead - transferred to their elders who almost always have significantly more assets than they do, and often don't even need a transfer at all, let alone as their only way of avoiding starvation.

Re: IRS sends warning letters to more than 10k cryptocurrency holders

#372

Post by nihonde »

somebodythere wrote: post #355
BeetleB wrote: post #336

Earlier quoted context omitted.

The IRS treats BTC as commodities like stocks, not as foreign currencies. If you mine any coins, that is income you have to pay taxes on. Just like when my RSU stocks vest, I pay (regular income) taxes on the vested amount. It's treated as if my company gave me the money to buy these stocks I now have. Later when I sell them, I'll pay capital gains tax on the gain/loss. Now if I buy coins, then I will only be taxed o…

> The IRS treats BTC [...] like stocks This is also not correct. Crypto-tokens that are not securities are considered property. As such, they are not subject to wash-sale rules, while stocks are. (Not legal advice.) Before anyone gets excited, despite being considered property, crypto-tokens are explicitly not eligible for 1031 like-kind exchanges after the latest tax bill (although it's debatable that they were allo…

1031 is for profits.

As far as I know, you can still take a loss, then re-purchase at FMV, and claim the loss, even though you end up with the same assets in your portfolio.

Re: IRS sends warning letters to more than 10k cryptocurrency holders

#373

Post by caseysoftware »

sjy wrote: post #298
caseysoftware wrote: post #209

Earlier quoted context omitted.

This is why "lying to investigators" is such a bs charge. It's incredibly easy to do what you think is the right thing but still "lie" because you didn't know/understand all the facts, implications, and details. Always, always, always, get qualified legal/accounting counsel involved. No, your uncle the family law attorney is not qualified.

Lies have to be knowing and wilful [1]. It shouldn't be easy to knowingly and wilfully lie about something when you don't understand all the facts, implications and details. Did you have a example in mind of someone who had been wrongfully convicted of this offence due to an innocent mistake? [1]: https://en.wikipedia.org/wiki/Making_false_statements

Many, many situations of "lying to investigators" has been claimed to be an innocent mistake. No telling how many really were as it's 100% a judgement call of the investigators.

Until you've sat across from a pair of investigators, it's hard to guess how you'll respond to relatively simple questions.

I've run mock interview sessions for these and it's incredibly easy to trip someone up once you get them angry or get them agree to something you've purposely misstated.

Re: IRS sends warning letters to more than 10k cryptocurrency holders

#374

Post by halter73 »

anonymous5133 wrote: post #191
bilbo0s wrote: post #161

Earlier quoted context omitted.

> One version of the letter recently uploaded to the IRS website asks recipients who believe they have followed the law to sign a statement... Just a word of advice to anyone who may be receiving letters like this in the future. Do not, under any circumstances, sign a statement that you have followed the law without consulting with qualified counsel first. You should know that every time you sign off on something to…

Exactly. It falls in line with similar to "don't talk to the police". Just keep quiet. This applies to everything when dealing with any government agency. The government is not your friend.

People say stuff to police that's later used against them in court all the time, so I agree keeping quiet is generally good advice. You should still use your common sense though.

I have a friend who took this advice way too literally when we were 18.

I was in the car when he got pulled over for speeding once, and he refused to say a single word to the officer. He handed over his license, registration and proof of insurance, but wouldn't answer any questions.

The cop asked how him how fast he thought he was going, and my friend didn't even tell the cop that he wouldn't answer his questions. It was just the straight silent treatment. The cop was clearly getting agitated. I was begging my friend just to answer the questions, even if just say he didn't remember or something, but he refused.

Fortunately, his grandma is in the backseat and really saved the day by apologizing for her idiot grandson. My friend wound up only getting a warning thanks to his grandma, but no doubt we would have gotten a big ticket at the minimum if he kept the silent treatment up.

Another time, we both got busted for launching bottle rockets in a public park a couple weeks after the 4th of July. There were several witnesses including the people that called the cops, but once again my friend did the exact same silent treatment to the cops. I sang like a bird about my own actions while being careful not to say that my friend had also launched rockets.

Fortunately the questions were directed at both of us, and we weren't asked specifically who all was involved before my friend felt guilty that I was taking all the blame and started talking to the cops himself.

Good thing because in Ohio launching bottle rockets is an M-1 misdemeanor carrying up to a six month prison sentence. The cops could have been jerks, but instead they recommended that the prosecutor drop charges after we did some community service. Had my friend stuck with the silent treatment, I fully believe we would have been punished more severely.

Again I urge common sense. Every situation is different. Had it been someone else or somewhere else or a slightly different situation, being quiet could have been the right decision. This could be an example of white privilege, but so far in my life, I've never regretted just being honest with the cops.

Re: IRS sends warning letters to more than 10k cryptocurrency holders

#375

Post by gruez »

xamuel wrote: post #213
donclark wrote: post #64

So why do we have to file? Why cant the IRS just tell us every year if we owe or not and how much?

A serious answer that isn't just "lobbyists": Even if the IRS had perfect info about all your income and investments, there are decisions you can make which effectively make taxes non-deterministic. Suppose on two different dates, you bought shares of a company. Then on a later date, you sold one share. You get to choose which purchase date to count the sale as being against. This is important because you pay on the…

Or you can enforce FIFO/average cost basis and avoid all the hassle/micro tax optimizations.

Re: IRS sends warning letters to more than 10k cryptocurrency holders

#376

Post by sbov »

tracker1 wrote: post #354
garmaine wrote: post #314

Earlier quoted context omitted.

> IANAL, I'm not a tax expert, but I believe you can deduct losses when converting to/from fiat currency (US dollars). Which is where taxation would take effect. You are flat out wrong. You are taxed on any income or transaction, no matter the currency used.

IIRC, you don't pay capital gains/taxes while sitting on one share of stock that you haven't exchanged yet. When you trade it, that's when you get taxed.

That's when you buy it. I'm not an accountant, but AFAIK if someone gave you stock for performing a service you would pay taxes on it at that point in time. Then if you sold it you would pay taxes on the difference in value.

I think the key might be that the IRS is viewing bitcoin as a payment for the service of mining.

Re: IRS sends warning letters to more than 10k cryptocurrency holders

#377

Post by banachtarski »

JumpCrisscross wrote: post #197
banachtarski wrote: post #159

Earlier quoted context omitted.

There are two separate matters here. Defining the law and enforcing the law. Misreporting capital gains on crypto violates existing law and is illegal today. Tax evasion by legitimate means (401ks, IRAs, writing off losses) is perfectly legal, and if you or I have complaints, this should be taken up with policy makers and at voting booths.

> Tax evasion by legitimate means Tax avoidance is legal. Tax evasion is illegally not paying taxes. (The distinction is purely legal.) If you don't like someone's tax avoidance, you change the law. If you don't like someone's tax evasion, you prosecute them.

Thanks for the correction, totally mixed up the terms.

Re: IRS sends warning letters to more than 10k cryptocurrency holders

#378

Post by banachtarski »

ascagnel_ wrote: post #206
banachtarski wrote: post #159

Earlier quoted context omitted.

There are two separate matters here. Defining the law and enforcing the law. Misreporting capital gains on crypto violates existing law and is illegal today. Tax evasion by legitimate means (401ks, IRAs, writing off losses) is perfectly legal, and if you or I have complaints, this should be taken up with policy makers and at voting booths.

> Tax evasion by legitimate means A nitpick on your language: "tax evasion" specifically refers to _illegal_ actions (eg misreporting capital gains); "tax avoidance" is the term to describe _legal_ actions that reduce a tax burden.

Thanks! Duly noted

Re: IRS sends warning letters to more than 10k cryptocurrency holders

#379

Post by topmonk »

uwuhn wrote: post #223
verdverm wrote: post #208

Earlier quoted context omitted.

Weren't they treated more like property then?

I think Like-Kind is the term. Someone please correct me if I'm wrong, but IIRC any crypto-for-crypto was a Like-Kind exchange prior to Jan 1, 2018.

It was possible to do so before that date, but you could also not treat it that way, as well.

The IRS then released guidance that after Jan 1st 2018, it was not acceptable to do so.

Post reply on HN