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If you obtained stock prior to 2011, and sold it, the IRS has no idea what the cost basis is, so this is voluntarily reported by the filer (and this will determ

If you obtained stock prior to 2011, and sold it, the IRS has no idea what the cost basis is, so this is voluntarily reported by the filer (and this will determine your capital gains). Of course, if you fudge this number to the point it is noticeable, you're looking at between a 20% and 100% penalty, or possible civil fraud. Bitcoin is really no different. It doesn't matter if there's no easy way for the government to keep track of every taxpayer's BTC holdings, because if the IRS determines at a later time that you have provided inaccurate information, you're in trouble. Maybe one day exchanges will provide 1099s for sales, but until then, it's the same rules as any other unreported income.

hkphooey 13y ago
> If you obtained stock prior to 2011, and sold it, the IRS has no idea what the cost basis is Any links to this? Isn't it based on FIFO or LIFO and you just have to be consistent in your approach? Why specifically 2011? Thanks in advance.
- maxerickson 13y ago
  As of 2011 brokerages are required to keep track of cost basis information.
  - URSpider94 13y ago
    .. not just keep track, but report the basis to the IRS.
- URSpider94 13y ago
  You don't have to use any particular approach, you can choose to match up purchases and shares however you wish (FIFO, LIFO, per-sale tax optimization). You just need to make sure you track what you're buying and selling, so that every purchase and sale are matched. As of 2011, your broker does this for you -- and different brokers offer different levels of sophistication in their tracking. Some only offer FIFO and LIFO, others will do more complex optimizations for you. For purchases before 2011, you need to save info on your purchases lot-by-lot and match them up yourself. This has screwed me several times, when I can't remember when I bought a certain stock and can't put my hands on the appropriate statements at tax time. Royal pain.

hkphooey 13y ago

> If you obtained stock prior to 2011, and sold it, the IRS has no idea what the cost basis is Any links to this? Isn't it based on FIFO or LIFO and you just have to be consistent in your approach? Why specifically 2011? Thanks in advance.

maxerickson 13y ago
As of 2011 brokerages are required to keep track of cost basis information.
- URSpider94 13y ago
  .. not just keep track, but report the basis to the IRS.
URSpider94 13y ago
You don't have to use any particular approach, you can choose to match up purchases and shares however you wish (FIFO, LIFO, per-sale tax optimization). You just need to make sure you track what you're buying and selling, so that every purchase and sale are matched. As of 2011, your broker does this for you -- and different brokers offer different levels of sophistication in their tracking. Some only offer FIFO and LIFO, others will do more complex optimizations for you. For purchases before 2011, you need to save info on your purchases lot-by-lot and match them up yourself. This has screwed me several times, when I can't remember when I bought a certain stock and can't put my hands on the appropriate statements at tax time. Royal pain.