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I highly recommend that you do not commit tax fraud. Pay your taxes - not only the right thing to do, but because of the lack of anonymity provided by every blo

I highly recommend that you do not commit tax fraud. Pay your taxes - not only the right thing to do, but because of the lack of anonymity provided by every blockchain save a few, it is trivial to track your trades. You don’t want to go from mild-mannered software engineer to tax criminal, do you? Think about it hard. Government lawyers and regulators are indeed incentivized by metrics - the max number of pleas and convictions. They don’t care about your stories. The smart move is to pay what you owe, and if you don’t like it, structure your affairs for the future to minimize taxes. But it’s very risky to lie about your past. Additionally, tech industry workers have not exactly been worshipped by the press as of late. Expect a lot of backlash if you, an already highly paid knowledge worker, cheated to pay what taxes you dutifully owed. The press would not be kind to you, and they would not be in the wrong.

heyyyouu 9y ago
This is great advice, especially as the conviction rate (and prison rate) for tax offenses is pretty high: https://www.irs.gov/compliance/criminal-investigation/current-fiscal-year-statistics https://www.irs.gov/compliance/criminal-investigation/curren... Although note that if you ever can try to fight the IRS in another court (e.g., bankruptcy); it's the only time you'll have a fighting chance. But you really do have to be in the right -- if you're just avoiding taxes and they decide to prosecute, prison is not unlikely.
thinkloop 9y ago
I guess this advice is for non-coinbase customers since the ruling removes the ability to choose.
amorphid 9y ago
To me, having to cut a big check to the IRS is the ultimate first world problem. I'd love to owe the IRS a million bucks because I made way more than that :)
- jjeaff 9y ago
  >made way more than that Well, not so fast. Depending on the way you earned that money and which state you lived in, you could very well end up paying more in taxes than you get to keep.
- UncleMeat 9y ago
  Yup. I'm happier if I am paying more taxes, as it means I am making more money.
  - jjeaff 9y ago
    Yes, but I'd be even happier if I got to keep a larger percentage of that money.
  - BigChiefSmokem 9y ago
    As an immigrant to this country it feels good to pay my taxes every year. It's the least I can do for everything this country has done for me and my family.
- Alex3917 9y ago
  > I'd love to owe the IRS a million bucks because I made way more than that A lot of the people who owe big bills to the IRS didn't make any money at all, and have no way to pay it.
  - Namrog84 9y ago
    Can you elaborate more on this? You know you can also report losses to reduce taxes? Or do you mean that they spent their profits on non returnable expenses(e.g. A vacation)
    - jjeaff 9y ago
      One example is that your parents pass the family business or farm on to you when they die, the tax man comes knocking and wants his 40%. And the tax man says that family business is worth $10 million. You know you could never get that much money in a sale, but the IRS doesn't care. Have a fire sale and pay them the millions you owe in taxes. It turns out you were only able to sell it for about how much you owe in taxes. So, they adjust the appraised value and lower your tax burden right? Nope. Pay up and you may need to kick in a bit of your own money to make up the difference. Your welcome, says the IRS.
      - heyyyouu 9y ago
        This is when you fight the IRS in bankruptcy court -- it's your only shot.
    - niij 9y ago
      I believe GP is referring to people exercising options.
    - AdamJacobMuller 9y ago
      From a business perspective, if you spend money on illiquid assets expecting to make a profit, say, short-term profit that doesn't materialize or will take longer than expected to materialize the business will still owe taxes on the value of those assets but you may not have the liquid cash to pay for those assets. As an example, say your LLC buys a million dollars worth of round iPhone cases because you're 100% sure Apple is releasing a round iPhone before Christmas 2017. Apple comes out and says "sorry, we're pushing the release to Christmas 2018!" Now, your company has 1m in assets, probably more by a fair market value of round iPhone cases because you expected to sell them for 10m, so now the value of your company has increased by some millions of dollars. Now, say you bet 100% of your liquid cash on that (regardless of if that's a smart idea or not), how do you pay your tax bill? You could liquidate your round iPhone cases to someone today, but, you'll lose a ton of money on them. This isn't a 100% perfect example, in a lot of ways, but it does indicate a highly contrived example of ways in which you can have 0 free cash while having huge reportable income.
pishpash 9y ago
Plus it only takes somebody spiteful who missed out to rat you out.
wefawefsdf 9y ago
On the other side of the coin, I'm actually going to offset some huge gains on my stocks by filing a loss for a few cryptos during the crash :D
notyourwork 9y ago
I wholeheartedly agree with the premise. However, I disagree with "...blockchain save a few, it is trivial to track your trades.". If coinbase does your buy/sell off chain than this is really more a matter of what coinbase knows/doesn't know and is/isn't willing to report. The transparency isn't asserted like it is with the blockchain which is public.
b6 9y ago
> Pay your taxes - not only the right thing to do I find it stunning anyone can deliver a line like this as if the issue is quite simple, just a matter of greed vs. personal responsibility, of paying what is owed, etc, seemingly without a shred of doubt. How many deaths of Iraqi children is it that the US embargo is thought to have caused again? Isn't the federal government still grinding toward the 50th year of the drug war? "The right thing to do," it is vastly more complicated than that, and the older I get, the more it looks like when I pay the IRS, I'm feeding a machine that causes misery to others to avoid inconvenience to myself.
- gowld 9y ago
  Your income is in large part due to the environment created and protected by the government, even the parts you find distasteful. If you feel guilty about that, you can donate your income to charity and deduct it from your taxable income.
  - adsfasdfsad111 9y ago
    not in the case of bitcoin. sorry.
- ridgeguy 9y ago
  The better response to this situation is to vote in a different government, not to beggar our nation through tax fraud. If you don't like what our government is doing (and I'm with you on the examples you cite), put in the time and $ to make it different.
  - abecedarius 9y ago
    Tell that to Thoreau and Gandhi? https://en.wikipedia.org/wiki/Civil_Disobedience_(Thoreau) https://en.wikipedia.org/wiki/Civil_Disobedience_(Thoreau) I mean, I'm not advising anyone to not pay taxes either, but it's a protest tactic with a pedigree.
  - b6 9y ago
    Honest question: how old are you? 20 years ago, I thought there was no way the drug war could continue. I thought the revelation of wiretapping in the AT&T datacenter would be the beginning of the end for illegal surveillance. I've given time and money continuously over that time, and watched the issues I care about most get worse. There seems to me to be no realistic mechanism for change. Do you really think that, in this situation, doing anything other than paying whatever the IRS demands is fraud?

heyyyouu 9y ago

This is great advice, especially as the conviction rate (and prison rate) for tax offenses is pretty high: https://www.irs.gov/compliance/criminal-investigation/current-fiscal-year-statistics https://www.irs.gov/compliance/criminal-investigation/curren... Although note that if you ever can try to fight the IRS in another court (e.g., bankruptcy); it's the only time you'll have a fighting chance. But you really do have to be in the right -- if you're just avoiding taxes and they decide to prosecute, prison is not unlikely.

thinkloop 9y ago

I guess this advice is for non-coinbase customers since the ruling removes the ability to choose.

amorphid 9y ago

To me, having to cut a big check to the IRS is the ultimate first world problem. I'd love to owe the IRS a million bucks because I made way more than that :)

jjeaff 9y ago
>made way more than that Well, not so fast. Depending on the way you earned that money and which state you lived in, you could very well end up paying more in taxes than you get to keep.
UncleMeat 9y ago
Yup. I'm happier if I am paying more taxes, as it means I am making more money.
- jjeaff 9y ago
  Yes, but I'd be even happier if I got to keep a larger percentage of that money.
- BigChiefSmokem 9y ago
  As an immigrant to this country it feels good to pay my taxes every year. It's the least I can do for everything this country has done for me and my family.
Alex3917 9y ago
> I'd love to owe the IRS a million bucks because I made way more than that A lot of the people who owe big bills to the IRS didn't make any money at all, and have no way to pay it.
- Namrog84 9y ago
  Can you elaborate more on this? You know you can also report losses to reduce taxes? Or do you mean that they spent their profits on non returnable expenses(e.g. A vacation)
  - jjeaff 9y ago
    One example is that your parents pass the family business or farm on to you when they die, the tax man comes knocking and wants his 40%. And the tax man says that family business is worth $10 million. You know you could never get that much money in a sale, but the IRS doesn't care. Have a fire sale and pay them the millions you owe in taxes. It turns out you were only able to sell it for about how much you owe in taxes. So, they adjust the appraised value and lower your tax burden right? Nope. Pay up and you may need to kick in a bit of your own money to make up the difference. Your welcome, says the IRS.
    - heyyyouu 9y ago
      This is when you fight the IRS in bankruptcy court -- it's your only shot.
  - niij 9y ago
    I believe GP is referring to people exercising options.
  - AdamJacobMuller 9y ago
    From a business perspective, if you spend money on illiquid assets expecting to make a profit, say, short-term profit that doesn't materialize or will take longer than expected to materialize the business will still owe taxes on the value of those assets but you may not have the liquid cash to pay for those assets. As an example, say your LLC buys a million dollars worth of round iPhone cases because you're 100% sure Apple is releasing a round iPhone before Christmas 2017. Apple comes out and says "sorry, we're pushing the release to Christmas 2018!" Now, your company has 1m in assets, probably more by a fair market value of round iPhone cases because you expected to sell them for 10m, so now the value of your company has increased by some millions of dollars. Now, say you bet 100% of your liquid cash on that (regardless of if that's a smart idea or not), how do you pay your tax bill? You could liquidate your round iPhone cases to someone today, but, you'll lose a ton of money on them. This isn't a 100% perfect example, in a lot of ways, but it does indicate a highly contrived example of ways in which you can have 0 free cash while having huge reportable income.

pishpash 9y ago

Plus it only takes somebody spiteful who missed out to rat you out.

wefawefsdf 9y ago

On the other side of the coin, I'm actually going to offset some huge gains on my stocks by filing a loss for a few cryptos during the crash :D

notyourwork 9y ago

I wholeheartedly agree with the premise. However, I disagree with "...blockchain save a few, it is trivial to track your trades.". If coinbase does your buy/sell off chain than this is really more a matter of what coinbase knows/doesn't know and is/isn't willing to report. The transparency isn't asserted like it is with the blockchain which is public.

b6 9y ago

> Pay your taxes - not only the right thing to do I find it stunning anyone can deliver a line like this as if the issue is quite simple, just a matter of greed vs. personal responsibility, of paying what is owed, etc, seemingly without a shred of doubt. How many deaths of Iraqi children is it that the US embargo is thought to have caused again? Isn't the federal government still grinding toward the 50th year of the drug war? "The right thing to do," it is vastly more complicated than that, and the older I get, the more it looks like when I pay the IRS, I'm feeding a machine that causes misery to others to avoid inconvenience to myself.

gowld 9y ago
Your income is in large part due to the environment created and protected by the government, even the parts you find distasteful. If you feel guilty about that, you can donate your income to charity and deduct it from your taxable income.
- adsfasdfsad111 9y ago
  not in the case of bitcoin. sorry.
ridgeguy 9y ago
The better response to this situation is to vote in a different government, not to beggar our nation through tax fraud. If you don't like what our government is doing (and I'm with you on the examples you cite), put in the time and $ to make it different.
- abecedarius 9y ago
  Tell that to Thoreau and Gandhi? https://en.wikipedia.org/wiki/Civil_Disobedience_(Thoreau) https://en.wikipedia.org/wiki/Civil_Disobedience_(Thoreau) I mean, I'm not advising anyone to not pay taxes either, but it's a protest tactic with a pedigree.
- b6 9y ago
  Honest question: how old are you? 20 years ago, I thought there was no way the drug war could continue. I thought the revelation of wiretapping in the AT&T datacenter would be the beginning of the end for illegal surveillance. I've given time and money continuously over that time, and watched the issues I care about most get worse. There seems to me to be no realistic mechanism for change. Do you really think that, in this situation, doing anything other than paying whatever the IRS demands is fraud?