It's an honor system, the same as for other non-tracked property. You sell bitcoin, you pay capital gains taxes to pay for gov't infrastructure and services pro

It's an honor system, the same as for other non-tracked property. You sell bitcoin, you pay capital gains taxes to pay for gov't infrastructure and services provided to you (the things they give in exchange for taxes). You get robbed of your bitcoin, if the gov't has no reason to suspect otherwise they trust you when you claim a capital loss to pay less tax.