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Coinbase Ordered to Turn Over Identities of 14,355 Crypto Traders to the IRS
- umanwizard 9y agoGood. If I have to pay capital gains on normal stocks I don’t see why crypto traders shouldn’t have to also.
- relyio 9y agoIn my opinion, your outrage is misplaced. Don't hate the other players, hate the game that coerce you into paying taxes (i.e punish you) because you have partaken in a peaceful and voluntary exchange with another person.
- umanwizard 9y agoBecause I like living in a civilization.
- eternalban 9y agoBecause I like living in a civilization [controlled by Private Finance Oligarchy].
- deadmetheny 9y agoI hear Somalia is looking like a lovely Libertarian paradise these days, if that's what you're after.
- eternalban 9y agoDisingenuous. There are ample examples of robust, thriving, civilizations that had alternative monetary systems before the Private Finance Oligarchy ate the world.
- dsacco 9y agoI'll entertain this. Let's start off with this: can you provide any specific examples of these civilizations? To give you some prep, the next question I'm going to ask is what the quality of life was like for the average individual in those civilizations, including the usual metrics: healthcare, access to food, access to running water, etc. One step further, if you provide answers for these questions, I'm going to happily show you why it's extremely difficult to extract the incentives for developing these quality of life improvements from capitalism without designing an economic system that looks like it. Then I suppose you and I will debate whether or not capitalism is perfect, which will be a red herring, because that was never really the point. Deal?
- logfromblammo 9y agoWithout a duplicate Earth to utilize as a control in any experimental setup, it is very difficult to determine whether any given technology improvement came about because of a specific historic factor, or in spite of that factor. I think you are making a reasonable assumption that theoretical systems that allow for concentration of capital result in greater technological advancement than theoretical systems that tend to diffuse capital. But the real world is complex and messy. Living people sometimes behave in ways that are surprising to the economist. It is very difficult to "design an economic system". You either have to devise an incremental path to it from the old system, or march people to it under the threat of death. If you're really going to ask someone to compare historic civilizations with the modern global civilization we have now, you're probably going to need to make some adjustments in order for that to be a fair comparison, instead of one implicitly biased to your own point of view. I'm not certain it is even possible to do that for a comparison between a pre-industrial civilization and a post-industrial civilization. What we can say for sure is that it hasn't always been this way and therefore it doesn't always need to be as it is now.
- logfromblammo 9y agoAnd yet the tally sticks were still burned.
- searine 9y agoBecause the electricity, roads, laws and communications which support your monopoly money currency need to be funded. If you want to go make a million dollars, more power to you, but you also need to pay your fair share like everyone else.
- repomies6999 9y agoWhat is seen as fair is a very subjective question. I would prefer not calling it "fair share" because taxation is very complex and depends hugely on how good you are at gaming the system.
- matt4077 9y agoWhat's the capital gains tax in the US? I seem to distinctly remember it's far lower than a bricklayer's income tax. So, arguably, taxes on bitcoin speculation are not a "fair share" only in the sense that it's still too low.
- 52-6F-62 9y agoI think it's fair to say that many people lose perspective when it comes to their wallets.
- buttcoinslol 9y agoParaphrasing Upton Sinclair: It's difficult to get a man to understand something when his portfolio value depends on his not understanding it
- lostboys67 9y agoCGT is very high in the USA compared to the UK and the rest of the EU - which discourages investment as opposed to buying safe T Bills or Guilts
- nappy 9y agoso that we can have nice things like roads, a power grid, environmental protections, etc.
- Dangeranger 9y agoIf you would like to make that exchange in person, using a currency of your choosing, then I don't see a problem with your argument. However if you want to use the Internet, which was subsidized by and developed using research by U.S. and E.U. governments then my counter argument would be that you need to pay the toll of the IRS or whatever other government you reside within. If you want to start your own nation somewhere and build your own inter-continental communication network then by all means feel free to fund that effort by whatever you deem necessary to achieve that end. Taxes are needed, however begrudgingly, to fund a government which maintains a civilized and peaceful exchange of commerce. There are no examples I'm aware of where a lawless no-mans-land has resulted in anything more than a region dominated by warlords.
- millzlane 9y agoSerfdom. Be thankful for what the system has provided you by giving us the fruits of your labor.
- Dangeranger 9y agoSelfishness. To exploit the fruits of a system without providing a means to maintain said system.
- matt4077 9y agoIt's not (just) "the fruits of your labor". You are a member of a society, which has invested in your schooling, the infrastructure you use, the police and the military to keep you safe, etc... If you want to opt out, there are a few deserts left with weak enforcement of the rule of law. Good luck.
- CabSauce 9y agoThis is such a tired argument. Do you really want a pay-as-you-go system for the internet or roads or any other public good? I sure don't.
- sempron64 9y ago
- repomies6999 9y agoBecause those who have the power will always tax those who haven't, for the simple reason that it is much easier than gainint the money via voluntary exchange.
- buttcoinslol 9y agoCan you name a nation state/principality/empire that survived on voluntary monetary contributions rather than taxation or plunder?
- matt4077 9y agoI distinctly remember comments like this one being extremely common on HN a year or two ago, and my replies along the line of "no man is an island" or "'Taxation is theft' is like 'Surgery is assault'" quickly turning invisible. I wonder if something has changed for the better, or if I'm misremembering. Edit: Never mind. The Ayn Rand brigade is just getting slower with age and untreated mental conditions.
- dsacco 9y ago> The Ayn Rand brigade is just getting slower with age and untreated mental conditions. Please don't say things like this. It doesn't help.
- bitL 9y agoOK, so anyone who can will do their mining stuff in Switzerland with 0% capital gains taxes.
- umanwizard 9y agoWhat does any of this have to do with mining? Miners would pay income tax, not capital gains...
- lightbyte 9y agoMining? This is about buying bitcoin on an exchange and using it like a security.
- bitL 9y ago"mining stuff" i.e. all owned e-coins. Please don't be so pedantic when you can optimistically derive semantics yourself by just giving a little bit of good will to my statement instead of expecting a text-book definition.
- tehlike 9y agoTechnically, united states still taxes worldwide income. There is some credit, but still...
- tonfa 9y agoCapital gains from active trading is taxed in Switzerland though.
- ravingraven 9y agoBecause currencies are not stocks. Edit: I understand that FX trade is not tax free. What I am saying is that we should tax crypto like we tax (or don't tax, depending on where you live) other currencies because that is what they are.
- umanwizard 9y agoFirst of all, bitcoin is more like gold than a currency. Second, forex traders (and gold owners) have to pay capital gains taxes on any gains. So, what is your point?
- luckydata 9y agoexcept that if someone pulls the plug they disappear while you can still make teeth out of gold :)
- eternalban 9y agoIndeed. Not just a shiny rock, that Au. https://spectrum.ieee.org/biomedical/devices/smart-contact-lenses-and-eye-implants-will-give-doctors-medical-insights https://spectrum.ieee.org/biomedical/devices/smart-contact-l...
- icu 9y agoNot necessarily true... again it depends on the tax rules that apply to you. In the UK you can buy Gold Britannia coins and Sovereigns which is Capital Gains Tax (CGT) exempt because of a loophole where British Legal currency (which the gold coins are) is exempt from CGT.
- umanwizard 9y agoWe are talking about US federal taxes, nothing to do with Britain.
- icu 9y ago
- Akujin 9y agoWhat bothers me about this whole thing is that I never bought it like a stock. I mined it YEARS ago when it was worthless. Now all of a sudden I have to pay tax on something I already own? Seems like the government is double dipping. After all I already paid tax on the hardware, the internet connection, the electricity, and countless other market products that allowed me to mine said coin. I have a couple of choices now. I can either sign up for Coinbase and sell it and kiss 15% of it good bye or I can go on Newegg and buy stuff directly with Bitcoin.... or go to a bitcoin meetup and sell with cash in-person..... or go on vacation in Europe and get Euro and again keep it off the books. Which do you think I'm gonna end up doing? PS: My address has never been tied to an IRL transaction. PPS: God damn it's easy to troll HN. More salt than the dead sea.
- alanpca 9y agoLike a stock, you pay taxes when selling for a profit. You don't owe anything until then.
- bringtheaction 9y agoWell if your intention is to do what you seem to imply maybe stop talking about it?
- Akujin 9y agoMy intention is to HODL and have a discussion. These are all hypotheticals.
- deleted 9y ago[deleted]
- koolba 9y ago> What bothers me about this whole thing is that I never bought it like a stock. I mined it YEARS ago when it was worthless. If you mined gold, planted corn, or raised chickens and then subsequently sold any of them you'd pay taxes on the proceeds as well. > PS: My address has never been tied to an IRL transaction. Short of using a tumbler to anonymize your source bitcoins and fraudulently declaring a different or fake person as the recipient of the purchase, I don't see how this is possible if you're buying something online.
- icu 9y agoThis was bound to happen. What many people outside of the USA don't realise is that the Common Reporting Standard (CRS) means that the IRS is very likely going to share this info with a great many other countries. However at present I don't believe the USA has signed up to the CRS. If your tax residency resides outside of the USA, and you made a taxable capital gain, I strongly advise to report it to your tax authority.
- relyio 9y agoI wonder why there hasn't been an attempt at making a country where regulations are kept minimal and taxes nonexistent or only dependent on what you use. It would probably attract a ton of economic activity. Does it exist? edit: rephrase
- YorickPeterse 9y agoThe Cayman Islands?
- caymanjim 9y agoThis is largely how the Cayman Islands operate. There's no income or capital gains tax, but everything brought to the island for consumption is subject to 20%+ import duties. Non-citizen professionals working there must pay $10-25k annually for a work permit. It's a very expensive place to live, on par with some of the most expensive cities in the US, but there's no direct tax on wealth. If you're a US citizen, however, you have to pay taxes to the US (beyond roughly the first $100k, anyway).
- eli 9y agoSomalia maybe?
- icu 9y agoIf you are American the answer is no... Americans are taxed by way of citizenship. The only way out is to give up your citizenship and that's not easy. Other countries have different rules that apply to their citizens and also to residents. Generally speaking I think it's far better too focus on making the money more than mitigating the tax. So while I believe there is no moral obligation to pay more tax than legally required, you would have benefited from the tax of previous generations so why should you have a free ride?
- falcolas 9y agoAnd this is where the "promise" of anonymous currency/assets falls apart. Some folks might be able to obtain or sell it anonymously, but so long as these exchanges exist and given the ease at tracking coins through the publicly visible blockchain, it only takes one transaction at a broker who can be raided/subpoenaed for the government to track your assets. Much like any other form of anonymity on the internet - it often only takes one tie between your physical and digital identity for the whole thing to fall apart.
- robert_foss 9y agoBitcoin is not much of an anonymous platform. And anyone using it expecting anonymity is bound to end up disappointed.
- eternalban 9y agoOk, so we can forget it was initially sold as anonymous currency. The current spin that passes my twitter timeline is that it is state independent. Technically it is, but the sense it conveys is 'out of the reach of governments'. (c.f. "Prince Ibn so-and-so should have put his money is bitcoins. haha".) It is always helpful to take the old history books out of the dusty shelves and read up on e.g. The Opium Wars to have a 'better' understanding on the er 'softer' aspects of "money".
- 3pt14159 9y agoPeople keep saying this but it is very possible to stay anon while using Bitcoin. It's just complicated and people are lazy.
- muzani 9y agoLike most other security features, laziness is a great defense. Most things can be cracked, but it's too tedious to.
- throwawayjava 9y agoThe same thing is technically true for cash... it's just that people are lazy and there are lots of "gotchas".
- dsl 9y agoYour information will also be shared with the IRS if you used your Coinbase account to transact with one of the "$20,000+" Coinbase accounts.
- lightbyte 9y ago>any user who bought, sold, sent, or received more than $20,000 worth of Bitcoin in their accounts between 2013 and 2015. Your own account needs to have had $20k worth of bitcoin, not simply interacting with someone else who does.
- dsl 9y agoIt isn't mentioned in the article, but from the order: "and, where counterparties transact through their own Coinbase accounts/wallets/vaults, all available information identifying the users of such accounts and their contact information"
- rb808 9y agoThe internet initially was an anonymous way to access information. Now its the least anonymous as corporations, ISPs, government and ad agencies watch what you do. Crypto currencies used to be anonymous too, wont be long before everyone is watching your wallet as well.
- deadmetheny 9y agoCryptocurrency was never been anonymous without expending a fair amount of effort to keep it so until very recently. The entire chain of every transaction ever is kept on a publicly accessible ledger for most implementations, how can you have any expectation of anonymity in that case?
- flashdance 9y agoMonero and dash both have fairly good privacy built into the protocol [1] [2], although monero suffers from large transaction sizes and dash suffers from centralization as a result of this. [1] https://en.wikipedia.org/wiki/Monero_(cryptocurrency)#Privacy https://en.wikipedia.org/wiki/Monero_(cryptocurrency)#Privac... [2] https://en.wikipedia.org/wiki/Dash_(cryptocurrency)#PrivateSend https://en.wikipedia.org/wiki/Dash_(cryptocurrency)#PrivateS... Disclaimer: I have no monero or dash, but I do have various other cryptocurrencies.
- deadmetheny 9y ago>until very recently Was meant to cover those particular cases, which were created specifically to deal with the lack of anonymity within Bitcoin and its derivatives, as far as I know.
- flashdance 9y agoFair enough, I just figured others may find the exceptions interesting. And to be fair, both of those cryptocurrencies have been around for ~3 years now, which is practically ancient history in this field.
- 9y ago
- chollida1 9y agoThis is a net good for bitcoin and all crypto currencies isn't it? I mean the IRS is treating it the same way that they treat other securities, isn't that what the majority of the bitcoin community wants? Just some clarification as to exactly what bitcoins tax situation is and now we are getting it. I mean at this point if you traded bitcoin and didn't pay taxes on your capital gains, that is 100% on you, you can't claim ignorance at this point. This, more than CME and CBOE futures, though those are important, and more than a sane way to store them without having to worry about lost keys or being hacked, is what institutional investors really want before they get into bitcoin. In the long run this is a very positive event for bitcoin adoption by the masses, and more importantly for speculators, large inflows of institutional money.
- deleted 9y ago[deleted]
- 52-6F-62 9y agoI think you're right. It at least means its being taken seriously. And I think it bodes well for civilization in general if it's not just some underground hideaway of value, but actually contributing. Beyond just paying for roads, taxes and some of the loopholes present are a general effort to keep exchanges of value moving. At least that's the intention... so that things like this don't happen: https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V
- mavdi 9y agoYup, this is actually great news for Crypto in general. It means it will become more mainstream.
- lloyd-christmas 9y ago> This is a net good for bitcoin and all crypto currencies isn't it? No. A quote from the article: "asking for detailed transaction information on so many people, simply for using digital currency, is a violation of [customers'] privacy, and is not the best way for us to accomplish our mutual objective.” The point of the article isn't about regulation or enforcement; it's about the methodology of enforcement. If A business magically has more money than they should given their transactions in a year, issuing a subpoena on their information is completely legitimate if they are under an active investigation. Similarly, if a specific person is under investigation, and they are suspected to be evading taxes, an investigation into them is grounds to get their info from coinbase. It's not grounds to get my info from coinbase. People also try and evade taxes in the stock market, that doesn't mean the IRS is entitled to investigate me just because I also happen to use schwab and made a trade on nasdaq. At the end of the day, this ISN'T good for crypto currencies because it demonstrates that enforcement obeys different rules than other assets.
- searine 9y agoThis was inevitable and a good thing. Crypto has been extremely risky because there is no sure-fire exit strategy. Now that reliable exchanges like coinbase are popping up, and playing by the rules, that risk is going down drastically. A reliable exchange means much less risk, and one of the ways it does that is accurate reporting. That means accurate reports to you AND the IRS. If you want a reliable market, that market has to play by the rules.
- zbentley 9y agoAbsolutely. But you're still going to see prices fall or bad price fluctuation behavior in the short term, because: - A chilling effect/scared-lemming effect from the news will rattle some people, with or without reason. - A reliable market is usually (not always) a less volatile market. A lot of crypto traders who were capitalizing on the volatility of these markets will now exit.
- SonicSoul 9y agothis is interesting. I get the FX angle, but what if you never convert your BTC to USD? in that case your profits are not "realized" and so long as you pay for stuff in BTC how can they possibly calculate your gains
- ksherlock 9y agohttps://www.irs.gov/newsroom/four-facts-about-bartering https://www.irs.gov/newsroom/four-facts-about-bartering Barter Income Barter dollars or trade dollars are identical to real dollars for tax reporting. If you conduct any direct barter - barter for another’s products or services - you will have to report the fair market value of the products or services you received on your tax return.
- wiredfool 9y agoIn all likelihood, they'll use the date of sale/purchase to set a exchange rate. This is a recordkeeping and tax form nightmare, especially if there is a lot of trading. It may be possible to report the net gains over the year for frequent trading similar to security trading, but the details are somewhat foggy at the moment. The theory is not though, and the IRS has had the position for some time that gains in bitcoin imply taxable capital gains.
- patio11 9y ago“Realization” has a meaning in accounting and swapping property for property does, generally, realize the gains. This might or might not generate an informational return to the IRS. Most transactions in the economy don’t. They’re still taxed. The tax system functions on a combination of informational returns and auto matching, human-intensive audits on a small selection of returns each year, and the honor system. “They can’t tax us if we don’t write stuff down!” is believed by many people, including Bitcoiners, and they are often surprised to find that the IRS has thought of this clever strategy before. For example: “I see you own a boat. What year did you buy it in?” “Oh I dunno.” “2015. Let’s try again: how much did you buy it for?” “I dunno.” “List price, great answer. OK, you understated your income from 2015 by $65k. Here’s your bill for $150k.” “You can’t do that!” “I get that a lot.”
- an_account 9y ago
- bmcusick 9y agoThis really reminds of the essay "Technologies of Control and Resistance"[1], which has really shaped my thinking over the years. Bitcoin itself is a technology of resistance. Private crypt-currencies more so. (Cash too) But as long as you have to go through central portals (like Coinbase) to access the rest of the economy, the government will lean on those central parties to regulate you indirectly. Central parties are technologies of control. [1] https://blog.elidourado.com/technologies-of-control-and-resistance-making-sense-of-our-stagnant-dynamism-d135149d0761 https://blog.elidourado.com/technologies-of-control-and-resi...
- Cthulhu_ 9y agoThe alternative is to do things off the grid, so to speak - meet people in person, exchange funds for cryptocurrencies. Actually that might be a small side business idea. Of course, one of the goals of cryptocurrencies is to not have to go through central organizations at all. Not converting your cryptocurrencies back to fiat, and not storing them on an exchange will be the best way to dodge taxes. Pretty sure that if you hide your keys well enough, the IRS and co cannot prove that you have any assets in cryptocurrencies as long as how you acquired them can't be traced.
- eberkund 9y agohttps://localbitcoins.com https://localbitcoins.com
- tlrobinson 9y agohttps://www.coindesk.com/localbitcoins-trader-pleads-guilty-money-transmitter-charge/ https://www.coindesk.com/localbitcoins-trader-pleads-guilty-...
- dmix 9y agoSo two people out of hundreds of thousands, who were running significant money-trading businesses through the network? They weren't targeting regular users or many people at all...
- deleted 9y ago[deleted]
- londons_explore 9y agoQue 14,355 people searching for "punishment for not reporting capital gain"...
- jasonrhaas 9y agoThe old Death & Taxes rule still applies, even for Bitcoin.
- smokeyj 9y agoAnd who's face is on the bitcoin? Pay Satoshi what's due to Satoshi?
- polskibus 9y agoAll cryptocurrencies are down today. BTC lost 25%. I wonder if it is because of this news or sth else?
- peg_leg 9y agoNormal profit taking for the asset. Many projections continue to look upward...outrageously upward. Not sure where it goes, but I put a little bit of money in just to satisify my FOMO.
- polskibus 9y agoWhich projections? I don't see many serious analysis for Bitcoin climbing further up, what I see is the opposite. Do you mind sharing ?
- therealmarv 9y agoThis is the bottleneck of Bitcoin. The real money<->bitcoin exchange places. And for me it's also the most frightening part on Bitcoins.
- quickthrower2 9y agoOnly 25% swing? Normal day.
- myth_drannon 9y agoCoinbase now top 10 in the App Store https://twitter.com/FEhrsam/status/936014373562195968 https://twitter.com/FEhrsam/status/936014373562195968
- ssharp 9y agoSign #4024209230 that we're in a bubble.
- omegbule 9y agoBig brothers always going to get a cut of your $$
- Hasz 9y agoIf you're trying to use bitcoin to avoid tax obligations, the IRS is more than capable of coming after you. Launder your coins? You bet they can track that. Buy off localbitocins? Still trackable, given enough interest. Never done anything with the coin, just a wallet.dat file? The money's no good if you can't use it, and they'll want what's owned the minute it moves. The IRS will get what it is owed, whether you like it or not. The only real way to avoid them is to be worth so little it's not worth their time.
- JumpCrisscross 9y agoMoreover, if you take steps like laundering coins or meeting in person specifically to avoid paying taxes, you've handed the IRS evidence to prosecute you for willful evasion. You're trading money today for jail time tomorrow. Disclaimer: I am not a lawyer. This is not legal advice. Pay your taxes.
- bonestamp2 9y agoI don't know how they'd prove you met someone specifically to avoid taxes. I mean, prior to coinbase there weren't any good/easy ways to get bitcoin... it all seemed a little bit sketchy on the surface -- you were either buying it from someone in person or using the red phone in the back of CVS. Coinbase was a godsend when it came along. No more explaining to my wife why I was going to the sketchy part of town because that CVS has a red phone... finally a legit company that I can buy from! But, even with coinbase and gemini and any other legit exchanges, you may still want to buy bitcoin from someone in person if you've hit your weekly maximum on the exchange. I know some local computer repair people who buy lots of bitcoin to pay off their client's cryptolocker incidents. They easily hit their weekly limits for business purposes.
- JumpCrisscross 9y ago> I don't know how they'd prove you met someone specifically to avoid taxes I'm not saying using these services per se is necessarily enough to warrant arrest. But if you're (a) not reporting taxable holdings or income, (b) using these services after alternatives are available and (c) running your mouth on forums about cashing in your Bitcoins while on vacation in Europe, you're in the easy pile. Disclaimer: I am not a lawyer. This is not legal nor tax advice. Pay your taxes.
- knodi 9y agoLast year IRS reported 800 people reported BTC holding and paid taxes on it. I know at lease two people that transferred their money in to BTC before filing for bankruptcy to side their assets. Hopefully laws can put in place for proper taxation.
- protomyth 9y agoThe IRS has a page on it https://www.irs.gov/newsroom/irs-virtual-currency-guidance https://www.irs.gov/newsroom/irs-virtual-currency-guidance with this linked pdf https://www.irs.gov/pub/irs-drop/n-14-21.pdf https://www.irs.gov/pub/irs-drop/n-14-21.pdf
- pc86 9y ago> I know at lease two people that transferred their money in to BTC before filing for bankruptcy to side their assets. Hopefully actions like the above continue and those two people go to prison.
- igorgue 9y agoHah probably some VC :D, really think about it.
- pikchurn 9y ago> I know at lease two people that transferred their money in to BTC before filing for bankruptcy to side their assets. That.. wouldn't accomplish anything. Not by itself. The other side will ask for discovery of financial records, ask for and receive discovery of exchange record (or, if it's cash withdraws for localbitcoins, demand plausible receipts for what it was used for, which will then be investigated). Outside a total fabrication of a false history of losses, involving probably multiple accounts of self-perjury and external help and a lot of luck, I don't see that actually working, and the risk of ending up in jail for a looong period of time is massive. Source: I've worked an actual divorce case involving bitcoin. > Hopefully laws can put in place for proper taxation. There's no need for new laws here. It's entirely covered by existing laws regarding the appreciation of value to capital gains property, with published IRS rules. There's actually not a lot of uncertainty here.
- noretire 9y agoI think it’s funny how people here bemoan the big, bad, centralized government while conveniently forgetting that like five private Chinese companies could easily collide to alter the blockchain tomorrow and nobody could do anything about it.
- root_axis 9y agoHaven't you guys heard? Just trade bitcoins IRL. Fast, convenient and secure, why would anyone bother with a bank?
- deleted 9y ago[deleted]
- gst 9y agoAs Coinbase user I always assumed that all of my transactions are automatically reported to the IRS - I'm actually surprised that this didn't happen yet.
- mullen 9y agoI'm in this category too. I just assumed that Coinbase was handing all this to the IRS for audits or future prosecution.
- sigjuice 9y agoTitle should say Cryptocurrency instead of Crypto
- eldavido 9y agoThe naivitee, ignorance, and arrogance of this thread astounds me. The HN population (I include myself in this) seems to think everything is new, there are no precedents for any of this, and that we're building some kind of new society here. We aren't. Times like this make me wish people like us were less dismissive of history, liberal arts, and people-not-in-tech generally. Case 1: a commenter below said something about "a guy moved his assets into BTC to hide from bankruptcy". Bankruptcy courts deal with this stuff ALL DAY. It's their job. You can't just make huge transfers/sales when in bankruptcy and expect people to think that's normal behavior. This has gone on long before bitcoin, and will continue long after it's gone. Case 2: taxes. BTC is an asset. If you buy at price X and sell at price Y, guess what, you owe taxes on Y-X. I don't understand how this is news to anyone. Case 3: money laundering and other types of financial crimes. There are entire companies who build software to detect money laundering. It's a well-understood problem. All I'm trying to say is, just because you have a CS degree and work in San Francisco, don't think you're the smartest person in the world. Moving money is one of the oldest human endeavors and unlike a lot of topics in software development, it's an old profession with a huge body of accumulated domain knowledge. We shouldn't be so quick to dismiss it.
- baq 9y agoAm very grateful for this voice of reason and sanity.
- sandworm101 9y ago>> If you buy at price X and sell at price Y, guess what, you owe taxes on Y-X. I don't understand how this is news to anyone. First principal of TaxLaw: It is all income unless it isn't. It is always taxable unless you can find language in the code exempting it. I'd go a little further in saying that the taxable amount isn't "Y-X", ie the profit. The taxable amount is actually just Y, the sale price. Income is all money literally coming into you. You then need to find a deduction for X, the cost of purchasing the asset. Maybe you find one, or maybe you bought your bitcoins with cocaine and so owe on tax on the entire sale price. Or maybe you have already deducted that cost in a previous year and so cannot deduct it again now. Or maybe you traded your bitcoins for some other bitcoins last year, realized the gain then, and now have to start reviewing the like-kind exchange rules. (I'm in that 0,01% of people who actually enjoy tax law. It's actually very eloquent.)
- supercanuck 9y agoso let's say you buy Bitcoin and instead of selling it back for a $ profit, you go onto Overstock and buying 10,000 worth of stuff. Is buying stuff on Overstock using bitcoin a taxable event?
- firloop 9y agoYes.
- Lon7 9y agoYes. The same applies to when you trade bitcoin for other cryptocurrencies. Although it is technically one transaction, if you want to be safe you should treat it as two separate transactions: 1. Selling the bitcoin for USD (this is taxable) 2. Using the USD to buy whatever it is you want.
- supercanuck 9y agoThat is going to be really challenging for users to use this as a currency in the USA.
- zzxxddere333 9y agoThis is GOOD news for bitcoin/cryptos. Pay your taxes on your gains. If the IRS can turn this into a revenue stream, it will solidify and legitimize it.
- zerostar07 9y agoIsn't that the whole reason why they ask for identifying information? Hardly news
- howard941 9y agoNot for no reason does Yves Smith of Naked Capitalism [0] refer to cryptocurrencies as "Prosecution Futures" [0] http://www.nakedcapitalism.com http://www.nakedcapitalism.com
- vkou 9y agoThe more interesting question is whether or not Coinbase will do the responsible thing, and provide its American users with the right tax forms to report their net gains/losses/sales. I have a feeling that they'll leave the users holding that bag. Move fast, break things, crowdsource all compliance costs to your users. I, for one, wouldn't know the first thing about filing to the IRS that I spent $250 to buy BTC in Feb 2016, and then spent $27.43 of BTC to buy a widget in May 2017, and then cashed out the other $1,530 into my bank account in November 2017. How many of Coinbase's users do?
- LrnByTeach 9y agoit can't get any simpler than this . > Case 2: taxes. BTC is an asset. If you buy at price X and sell at price Y, guess what, you owe taxes on Y-X. I don't understand how this is news to anyone.