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I feel like I don't know enough to care about this. I suspect many people will be upset about it but I just don't see it. Is what the IRS asking for any differe

I feel like I don't know enough to care about this. I suspect many people will be upset about it but I just don't see it. Is what the IRS asking for any different from the kind of access they already have to traditional banking and trading accounts?

toomuchtodo 9y ago
This is really no different than the docs/info your brokerage would furnish at the end of the year to the IRS (1099-INT, 1099-DIV [or both together on a consolidated 1099], Form 5498).
- mhluongo 9y ago
  It is. Coinbase has to consider all withdrawals for these purposes as sales, IIRC. It's not just reporting gains
  - toomuchtodo 9y ago
    The IRS guidance has been available for some time: https://www.irs.gov/newsroom/irs-virtual-currency-guidance https://www.irs.gov/newsroom/irs-virtual-currency-guidance https://www.irs.gov/pub/irs-drop/n-14-21.pdf https://www.irs.gov/pub/irs-drop/n-14-21.pdf https://www.irs.gov/pub/irs-pdf/p544.pdf https://www.irs.gov/pub/irs-pdf/p544.pdf The problem is, unlike traditional exchanges or financial institutions, people think cleverness is in order and regulation won't catch up to them. Follow the guidance, pay your taxes due, and if in any doubt about your situation, consult a tax professional. EDIT: Hoo boy are cryptocurrency taxes scary af. I'm still of the mind Coinbase should provide all of the reporting, but the taxable/realization events are going to be tricky. Examples: * "Trading cryptocurrency to a fiat currency like the dollar is a taxable event." * "Trading cryptocurrency to cryptocurrency is a taxable event (you have to calculate the fair market value in USD at the time of the trade; good luck with that)." * "Using cryptocurrency for goods and services is a taxable event, i.e., spending cryptocurrency is a “realization event.” You have to calculate the fair market value in USD at the time of the trade; you may also end up owing sales tax." Source: https://cryptocurrencyfacts.com/2017/12/30/the-tax-rules-for-crypto-in-the-u-s-simplified/ https://cryptocurrencyfacts.com/2017/12/30/the-tax-rules-for...
    - mhluongo 9y ago
      I'm not sure what your comment has to do with mine... I just know that to conservatively report, Coinbase includes withdrawals that are still in cryptocurrency as sales. You see why that might be a tax issue I imagine
      - deleted 9y ago
        [deleted]
      - deleted 9y ago
        [deleted]
mhluongo 9y ago
Yes, the initial request was a fishing expedition in direct contradiction of IRS rules on the matter. Here's prior discussion in lieu of a proper citation [0]. [0] - https://news.ycombinator.com/item?id=13007310 https://news.ycombinator.com/item?id=13007310
protomyth 9y ago
The only unique thing is that its bitcoin. They'll do their own form of discovery in other investigations.
couchdive 9y ago
I think you are right, by law any other security or commodity or group would normally disclose any known profits or interest made. It's a capital asset and you must disclose any realized gains or losses on a cost basis. And long term and short term gains rates apply. The only difference here is that unlike a stock, I can go sell bitcoin on the street and it would be hard to trace. IRS will have to go after exchanges or somehow get savvy enough for people to post proof of ownership on addresses to show they didn't liquefy their holdings or deal with those who said it got stolen...etcetera I mean, I understand people don't like paying taxes, but laws in 2014 made it pretty clear you need to claim for crypto in the US. Some will argue that the feds don't make your local coin shop file if you pick up silver all the time in small batches, but if you went and sold 50k in silver to the shop, you better be ready to claim it on your taxes. (unless it sank on your boat of course)
- woolvalley 9y ago
  It's general property, and you don't have to report pure losses AFAIK. Otherwise everyone will have to report the loss basis of stuff they sell for a loss on craigslist.
  - couchdive 9y ago
    Correct but slightly off. Although the IRS considers it property, it also allows capital gains and losses on such due to its widely fluctuating price. This means filing cost basis and net gross and loss when the crypto was spent, sold, created (mined), given to another person, etcetera. here is document Notice 2014-21. In which conditions for crypto IRS conditions are explained in an easy to understand fashion. It's widely interesting to me. https://www.irs.gov/pub/irs-drop/n-14-21.pdf https://www.irs.gov/pub/irs-drop/n-14-21.pdf I filed for gains for three years, losses for one year. But im out of it, everything is to hot for me. more info on filing losses. It is the same as declaring losses on stocks pretty much. Cost basis when received, bought, created, or given to you on commerce and then consolidation when that crypto is sold, traded in commerce, etc. http://fortune.com/2018/01/29/bitcoin-taxes-cryptocurrency-irs/ http://fortune.com/2018/01/29/bitcoin-taxes-cryptocurrency-i... https://medium.com/the-litecoin-school-of-crypto/how-to-tax-your-crypto-losses-98687eb1494f https://medium.com/the-litecoin-school-of-crypto/how-to-tax-...
wmf 9y ago
In traditional accounts the brokerage would send a 1099 form to the customer and the IRS. But Coinbase doesn't do that for some reason, so the IRS is suing them to get the information. And for some reason the IRS initially asked for more information than they need, so there was some legal wrangling to narrow the information. It's like both Coinbase and the IRS are trying to make things more complicated and scary.
- jboles 9y ago
  I had kinda thought that providing 1099 to the IRS would've already been a necessary condition of Coinbase being able to get a financial services licence, or is that not usual?
- gowld 9y ago
  They are both trying to make things more simple, for themselves.
  - wmf 9y ago
    In the end, Coinbase still had to produce the data and they spent a ton of lawyer hours. I don't think they simplified anything. Maybe they were trying to set some kind of precedent that they don't have to assist in taxes in any way.

toomuchtodo 9y ago

This is really no different than the docs/info your brokerage would furnish at the end of the year to the IRS (1099-INT, 1099-DIV [or both together on a consolidated 1099], Form 5498).

mhluongo 9y ago
It is. Coinbase has to consider all withdrawals for these purposes as sales, IIRC. It's not just reporting gains
- toomuchtodo 9y ago
  The IRS guidance has been available for some time: https://www.irs.gov/newsroom/irs-virtual-currency-guidance https://www.irs.gov/newsroom/irs-virtual-currency-guidance https://www.irs.gov/pub/irs-drop/n-14-21.pdf https://www.irs.gov/pub/irs-drop/n-14-21.pdf https://www.irs.gov/pub/irs-pdf/p544.pdf https://www.irs.gov/pub/irs-pdf/p544.pdf The problem is, unlike traditional exchanges or financial institutions, people think cleverness is in order and regulation won't catch up to them. Follow the guidance, pay your taxes due, and if in any doubt about your situation, consult a tax professional. EDIT: Hoo boy are cryptocurrency taxes scary af. I'm still of the mind Coinbase should provide all of the reporting, but the taxable/realization events are going to be tricky. Examples: * "Trading cryptocurrency to a fiat currency like the dollar is a taxable event." * "Trading cryptocurrency to cryptocurrency is a taxable event (you have to calculate the fair market value in USD at the time of the trade; good luck with that)." * "Using cryptocurrency for goods and services is a taxable event, i.e., spending cryptocurrency is a “realization event.” You have to calculate the fair market value in USD at the time of the trade; you may also end up owing sales tax." Source: https://cryptocurrencyfacts.com/2017/12/30/the-tax-rules-for-crypto-in-the-u-s-simplified/ https://cryptocurrencyfacts.com/2017/12/30/the-tax-rules-for...
  - mhluongo 9y ago
    I'm not sure what your comment has to do with mine... I just know that to conservatively report, Coinbase includes withdrawals that are still in cryptocurrency as sales. You see why that might be a tax issue I imagine
    - deleted 9y ago
      [deleted]
    - deleted 9y ago
      [deleted]

mhluongo 9y ago

Yes, the initial request was a fishing expedition in direct contradiction of IRS rules on the matter. Here's prior discussion in lieu of a proper citation [0]. [0] - https://news.ycombinator.com/item?id=13007310 https://news.ycombinator.com/item?id=13007310

protomyth 9y ago

The only unique thing is that its bitcoin. They'll do their own form of discovery in other investigations.

couchdive 9y ago

I think you are right, by law any other security or commodity or group would normally disclose any known profits or interest made. It's a capital asset and you must disclose any realized gains or losses on a cost basis. And long term and short term gains rates apply. The only difference here is that unlike a stock, I can go sell bitcoin on the street and it would be hard to trace. IRS will have to go after exchanges or somehow get savvy enough for people to post proof of ownership on addresses to show they didn't liquefy their holdings or deal with those who said it got stolen...etcetera I mean, I understand people don't like paying taxes, but laws in 2014 made it pretty clear you need to claim for crypto in the US. Some will argue that the feds don't make your local coin shop file if you pick up silver all the time in small batches, but if you went and sold 50k in silver to the shop, you better be ready to claim it on your taxes. (unless it sank on your boat of course)

woolvalley 9y ago
It's general property, and you don't have to report pure losses AFAIK. Otherwise everyone will have to report the loss basis of stuff they sell for a loss on craigslist.
- couchdive 9y ago
  Correct but slightly off. Although the IRS considers it property, it also allows capital gains and losses on such due to its widely fluctuating price. This means filing cost basis and net gross and loss when the crypto was spent, sold, created (mined), given to another person, etcetera. here is document Notice 2014-21. In which conditions for crypto IRS conditions are explained in an easy to understand fashion. It's widely interesting to me. https://www.irs.gov/pub/irs-drop/n-14-21.pdf https://www.irs.gov/pub/irs-drop/n-14-21.pdf I filed for gains for three years, losses for one year. But im out of it, everything is to hot for me. more info on filing losses. It is the same as declaring losses on stocks pretty much. Cost basis when received, bought, created, or given to you on commerce and then consolidation when that crypto is sold, traded in commerce, etc. http://fortune.com/2018/01/29/bitcoin-taxes-cryptocurrency-irs/ http://fortune.com/2018/01/29/bitcoin-taxes-cryptocurrency-i... https://medium.com/the-litecoin-school-of-crypto/how-to-tax-your-crypto-losses-98687eb1494f https://medium.com/the-litecoin-school-of-crypto/how-to-tax-...

wmf 9y ago

In traditional accounts the brokerage would send a 1099 form to the customer and the IRS. But Coinbase doesn't do that for some reason, so the IRS is suing them to get the information. And for some reason the IRS initially asked for more information than they need, so there was some legal wrangling to narrow the information. It's like both Coinbase and the IRS are trying to make things more complicated and scary.

jboles 9y ago
I had kinda thought that providing 1099 to the IRS would've already been a necessary condition of Coinbase being able to get a financial services licence, or is that not usual?
gowld 9y ago
They are both trying to make things more simple, for themselves.
- wmf 9y ago
  In the end, Coinbase still had to produce the data and they spent a ton of lawyer hours. I don't think they simplified anything. Maybe they were trying to set some kind of precedent that they don't have to assist in taxes in any way.