Does that mean Coinbase will give me a 1099 at the end of the year?
Just pray they don't give you a 1099 with grossly incorrect values like they generously did for me.
The IRS collects data on Coinbase account holders
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Re: The IRS collects data on Coinbase account holders
#32What would happen if someone was to lose access to their wallets? Would they still have to pay taxes? If my memory serves me right, close to 4 million bitcoins are missing.
Re: The IRS collects data on Coinbase account holders
#33Good. Pay your taxes you nerds.
That is not a high-status response ;)
Re: The IRS collects data on Coinbase account holders
#34So if I made a whole $32 off of my experiment on Coinbase (invested $50 when the price was around $273.59/bitcoin and then sold when the price was around $459.69/bitcoin), will the IRS really care about their cut? I honestly expected some kind of documentation from Coinbase with respect to taxes, such as a 1099-B. I never received such a document.
I also read somewhere that the IRS is only coming after people who made $20,000 or more. (Note: I couldn't read this article due to the paywall)
Should I be concerned that they'll try to get their $10 from me and then pile on a bunch of penalties?
Re: The IRS collects data on Coinbase account holders
#35So if I made a whole $32 off of my experiment on Coinbase (invested $50 when the price was around $273.59/bitcoin and then sold when the price was around $459.69/bitcoin), will the IRS really care about their cut? I honestly expected some kind of documentation from Coinbase with respect to taxes, such as a 1099-B. I never received such a document. I also read somewhere that the IRS is only coming after people who mad…
Even if they don't send you a doc you need to pay taxes on your earnings.
Re: The IRS collects data on Coinbase account holders
#36Earlier quoted context omitted.
Maybe it's different where you live, but my experience is that the only people that can afford to not fear the IRS are precisely the "politicians and their buddies"...it wouldn't surprise me at all to see task forces being formed just to identify under-reporting via Bitcoin and issue threatening letters (e.g. pay what is due or say goodbye to any assets you have) to whoever comes up on that list.
As HN has a lot of people who have complicated financial situations and will eventually get one, I'd like to point folks in the direction of what the IRS' typical first play is if they think you underpaid taxes. They do not send you a threatening letter. They do not throw you in prison. They send you a bill; more formally, a CP3219A. (The IRS says it is not a bill, it is a proposal. In practice, it's a bill you can a…
Can confirm this. I run a consulting company and received a letter like that in 2016. They sent a bill with corroborating documentation indicating I’d underpaid by about $2,600. I reviewed my own records, concluded they were right, checked in with my accountant and paid it. It wasn’t threatening at all, nor did I feel like I’d be imminently prosecuted. The IRS, for all its public perception, has actually been sort of a joy to work with, insofar as I’ve had to interact with them at all.
That said, I’m always vaguely terrified each year when I deduct the low five figures I’ve spent on bare meral server hardware. Being audited remains in my top ten fears, even though I don’t try to evade taxes. I always wonder if someone at the IRS is going to see my return and say, “He paid this much for ‘Computer Hardware’? That seems fishy.”
Re: The IRS collects data on Coinbase account holders
#37One of the tax implications I’ve often thought about is those that heavily trade among different cryptos. If I buy $10k of Intel, it grows to $15k and I sell it to buy $15k of Google, I owe tax on the $5k gain. Now, perhaps one could argue that there is no “liquidity” event by trading one crypto for another. But perhaps the IRS argues there is a phantom liquidity event during such a trade. The IRS generally doesn’t l…
> one could argue that there is no “liquidity” event by trading one crypto for another. But perhaps the IRS argues there is a phantom liquidity event during such a trade.
This is called a "like-kind trade" which is IMO muddy for cryptocoins [1].
EDIT: oh yes, I see now that you cite 1031, oops.
[1] https://www.forbes.com/sites/tysoncross/2018/02/19/the-truth...
Re: The IRS collects data on Coinbase account holders
#38So if I made a whole $32 off of my experiment on Coinbase (invested $50 when the price was around $273.59/bitcoin and then sold when the price was around $459.69/bitcoin), will the IRS really care about their cut? I honestly expected some kind of documentation from Coinbase with respect to taxes, such as a 1099-B. I never received such a document. I also read somewhere that the IRS is only coming after people who mad…
Even if they don't send you a doc you need to pay taxes on your earnings.
Of course, it's just what I expected since every other reputable investment business does this.
However, my concern is less from that and more from the $30. Will they care?
Re: The IRS collects data on Coinbase account holders
#39So if I made a whole $32 off of my experiment on Coinbase (invested $50 when the price was around $273.59/bitcoin and then sold when the price was around $459.69/bitcoin), will the IRS really care about their cut? I honestly expected some kind of documentation from Coinbase with respect to taxes, such as a 1099-B. I never received such a document. I also read somewhere that the IRS is only coming after people who mad…
The IRS once sent me a letter because I had slightly underpaid my taxes where they informed me of the amount I had underpaid and assessed a 10% penalty.... for a grand total of ~$8.
They weren't jerks about it but they do seem to have a weird attention to detail for certain matters.
Re: The IRS collects data on Coinbase account holders
#40My only concern is that I bought Bitcoin for a friend because he had trouble setting his account up. Now that tax time is coming up, this has me worried that I'll get singled out because what I claim doesn't match my account. He's filing for his portion of things, so it should all work out in the end, but I don't want to be audited to have to explain that.