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What are the laws requiring reporting of every transaction? I know it's necessary to report transactions which establish the cost basis for capital gains, but

What are the laws requiring reporting of every transaction? I know it's necessary to report transactions which establish the cost basis for capital gains, but doesn't mandate report of all transactions.

ineedasername 7y ago
In the US, all transactions to/from a financial institution of $10,000 or higher (including cash) must be reported. Same applies if multiple transactions on the same day reach that limit. So all attempts to cash out will be hard to avoid tracking. Also, attempts to structure transactions to avoid this, like $9999 per day, is illegal with jail and fines applied.
sobani 7y ago
The IRS considers Bitcoin an asset. Every time you buy/sell goods with Bitcoin or just plain buy/sell Bitcoin, you have to report that as if you were buying/selling any other asset, like stocks. So most Bitcoin transactions will be subject to capital gains tax. https://www.investopedia.com/articles/investing/040515/are-there-taxes-bitcoins.asp https://www.investopedia.com/articles/investing/040515/are-t...
- ibeckermayer 7y ago
  Please correct me if I’m wrong — does this fact not imply that any attempt to actually use cryptocurrency as a currency to buy and sell goods (I.e. how we currently commonly use USD) is completely impossible, since the capital gains taxes will cause everything to cost substantially more?
  - sobani 7y ago
    The tax is only on the gains of the worth of the spend Bitcoin. If you buy a Bitcoin and immediately spend it on something, there will be no gain, so $0,00 taxes. If you bought a Bitcoin when it was $5000 and you spend 0.2 Bitcoin today (now they're ~$10000 a piece) you would need to report $1000 of capital gains. You could argue that would make your 0.2 Bitcoin / $2000 purchase cost more, because you have to add the tax. On the other hand, if you sell those Bitcoin later, you would have to pay those capital gains tax anyway. The story does become a bit more complex when you factor in long-term vs short-term capital gains tax.

ineedasername 7y ago

In the US, all transactions to/from a financial institution of $10,000 or higher (including cash) must be reported. Same applies if multiple transactions on the same day reach that limit. So all attempts to cash out will be hard to avoid tracking. Also, attempts to structure transactions to avoid this, like $9999 per day, is illegal with jail and fines applied.

sobani 7y ago

The IRS considers Bitcoin an asset. Every time you buy/sell goods with Bitcoin or just plain buy/sell Bitcoin, you have to report that as if you were buying/selling any other asset, like stocks. So most Bitcoin transactions will be subject to capital gains tax. https://www.investopedia.com/articles/investing/040515/are-there-taxes-bitcoins.asp https://www.investopedia.com/articles/investing/040515/are-t...

ibeckermayer 7y ago
Please correct me if I’m wrong — does this fact not imply that any attempt to actually use cryptocurrency as a currency to buy and sell goods (I.e. how we currently commonly use USD) is completely impossible, since the capital gains taxes will cause everything to cost substantially more?
- sobani 7y ago
  The tax is only on the gains of the worth of the spend Bitcoin. If you buy a Bitcoin and immediately spend it on something, there will be no gain, so $0,00 taxes. If you bought a Bitcoin when it was $5000 and you spend 0.2 Bitcoin today (now they're ~$10000 a piece) you would need to report $1000 of capital gains. You could argue that would make your 0.2 Bitcoin / $2000 purchase cost more, because you have to add the tax. On the other hand, if you sell those Bitcoin later, you would have to pay those capital gains tax anyway. The story does become a bit more complex when you factor in long-term vs short-term capital gains tax.