Topic: [2017-08-29] It Looks Like New Bitcoin Millionaires Are Avoiding the IRS (Read 9844 times)
September 02, 2017, 02:40:25 AM
This is silly. to earn on bitkoin quite good money and deviate from non-payment of taxes. This can lead to the collapse of your investments and all profits. As they say, you earn. Give and others too.
September 02, 2017, 02:39:44 AM
This is silly. to earn on bitkoin quite good money and deviate from non-payment of taxes. This can lead to the collapse of your investments and all profits. As they say, you earn. Give and others too.
August 31, 2017, 10:14:39 PM
If you use one address once, it will be very difficult for them to track. However, this will create big trouble for yourself also.
I use an HD wallet (Trezor), never use any address more than once, not a problem at all. You must have an antiquated wallet if address reuse is an issue for you.
August 31, 2017, 10:12:44 PM
If you use one address once, it will be very difficult for them to track. However, this will create big trouble for yourself also.
August 31, 2017, 08:54:13 PM
@BurtW. That is why I reckon that Monero will be the cryptocoin of the future for the darknet and for questionable and corrupt dealings. From what you are saying, I know that the IRS will still try and get you but this might be the case of technology catching up with the system.
Was it not disruption that lead some of us to the cryptospace?
Was it not disruption that lead some of us to the cryptospace?
August 31, 2017, 04:49:00 PM
If you don´t have a job in the US you can cash out 38000 $ worth of BTC per year without paying a single
$ in taxes. If you are content with a modest lifestyle, this amount could actually be enough to live off
Besides, you could always use a debit card that can be funded using BTC and pay at a merchant
directly. If you pay for clothes, groceries and so on using a debit card like this, the 38000 $ could
be sufficient to pay for the remaining costs like rent.
Where are you getting this? Please post a reference to the appropriate regulations. Where did you get the $38,000 amount? Even if you end up owing no taxes you still have to fill out the Schedule D and account for your capital gains and losses.$ in taxes. If you are content with a modest lifestyle, this amount could actually be enough to live off
Besides, you could always use a debit card that can be funded using BTC and pay at a merchant
directly. If you pay for clothes, groceries and so on using a debit card like this, the 38000 $ could
be sufficient to pay for the remaining costs like rent.
BTW using a debit card to pay for things directly in BTC does not help you as far as the IRS is concerned. When you buy something for BTC you have to account for the transaction as if you converted the BTC to cash (causing a capital gain or loss) then used the cash to purchase the item. So if you cashed in the $38K in BTC with no tax your use of the debit card would add to that, possibly pushing you over the magic $38,000 number and causing you to have to pay tax.
For example: I once bought a case of girl scout cookies using BTC so in my books I took a capital gain on the BTC for that transaction at the value of the cookies I got.
August 31, 2017, 04:00:27 PM
At one point I had three law firms on retainer burning through about $250,000 of my money: a Bitcoin savvy federal felony criminal defense firm [in CA], a special federal civil asset forfeiture defense firm [in CO], and a federal tax law firm specializing in Bitcoin tax law [in NY]. So from direct experience: you owe the tax the second you convert your crypto to fiat and realize a gain over what the price was in fiat when you bought it. Normally you can wait until the end of the year to fill out your Schedule D and report all your gains (minus all your losses) and then pay all the tax at once. But if you have a large underpayment of taxes for the year there will be penalties and interest charged because you did not pay the taxes on time throughout the year when you realized the actual gain at the time you sold the crypto.
Some people might misinterpret that as saying you don't owe taxes when you trade crypto, as long as you don't tough fiat. Taxes are due when you convert crypto (to fiat, another crypto or anything else).
August 31, 2017, 10:37:11 AM
'The IRS figures hundreds of thousands of American residents did not report income from sales or exchanges of cryptocurrency'
Obviously, if bitcoiners in US have to pay big amount of taxes, they will try to find some way to avoid it.
Pay 15% for hold bitcoin in long term and people have to pay 25%-35% for short term which is most likely as trading activities.
Bitcoin surges over 400% within 8 months is incredible achievement, and Uncle Sam wants big pieces of cake from everyone who involved in crypto-world. Better to hold bitcoin for long term or exchange it outside the country, send some amount of bitcoin to other exchanges and withdraw to another fiat currency
Obviously, if bitcoiners in US have to pay big amount of taxes, they will try to find some way to avoid it.
Pay 15% for hold bitcoin in long term and people have to pay 25%-35% for short term which is most likely as trading activities.
Bitcoin surges over 400% within 8 months is incredible achievement, and Uncle Sam wants big pieces of cake from everyone who involved in crypto-world. Better to hold bitcoin for long term or exchange it outside the country, send some amount of bitcoin to other exchanges and withdraw to another fiat currency
If you don´t have a job in the US you can cash out 38000 $ worth of BTC per year without paying a single
$ in taxes. If you are content with a modest lifestyle, this amount could actually be enough to live off
Besides, you could always use a debit card that can be funded using BTC and pay at a merchant
directly. If you pay for clothes, groceries and so on using a debit card like this, the 38000 $ could
be sufficient to pay for the remaining costs like rent.
August 30, 2017, 06:09:29 PM
'The IRS figures hundreds of thousands of American residents did not report income from sales or exchanges of cryptocurrency'
Obviously, if bitcoiners in US have to pay big amount of taxes, they will try to find some way to avoid it.
Pay 15% for hold bitcoin in long term and people have to pay 25%-35% for short term which is most likely as trading activities.
Bitcoin surges over 400% within 8 months is incredible achievement, and Uncle Sam wants big pieces of cake from everyone who involved in crypto-world. Better to hold bitcoin for long term or exchange it outside the country, send some amount of bitcoin to other exchanges and withdraw to another fiat currency
None of that matters to the IRS. Only way to avoid paying the tax is to move and give up citizenship. I have never done that so it might be that even then they can claim the taxes up to the point you give up your citizenship. Anyone out there do this and have direct experience? Obviously, if bitcoiners in US have to pay big amount of taxes, they will try to find some way to avoid it.
Pay 15% for hold bitcoin in long term and people have to pay 25%-35% for short term which is most likely as trading activities.
Bitcoin surges over 400% within 8 months is incredible achievement, and Uncle Sam wants big pieces of cake from everyone who involved in crypto-world. Better to hold bitcoin for long term or exchange it outside the country, send some amount of bitcoin to other exchanges and withdraw to another fiat currency
August 30, 2017, 06:02:43 PM
'The IRS figures hundreds of thousands of American residents did not report income from sales or exchanges of cryptocurrency'
Obviously, if bitcoiners in US have to pay big amount of taxes, they will try to find some way to avoid it.
Pay 15% for hold bitcoin in long term and people have to pay 25%-35% for short term which is most likely as trading activities.
Bitcoin surges over 400% within 8 months is incredible achievement, and Uncle Sam wants big pieces of cake from everyone who involved in crypto-world. Better to hold bitcoin for long term or exchange it outside the country, send some amount of bitcoin to other exchanges and withdraw to another fiat currency
Obviously, if bitcoiners in US have to pay big amount of taxes, they will try to find some way to avoid it.
Pay 15% for hold bitcoin in long term and people have to pay 25%-35% for short term which is most likely as trading activities.
Bitcoin surges over 400% within 8 months is incredible achievement, and Uncle Sam wants big pieces of cake from everyone who involved in crypto-world. Better to hold bitcoin for long term or exchange it outside the country, send some amount of bitcoin to other exchanges and withdraw to another fiat currency
August 30, 2017, 05:58:17 PM
Based on my experience with securities, the recommended method for tracking cash basis on a stock spin-off is to split the basis over the two stocks according to the percentage of value that each had at the moment of the spin-off. In this case, it would be roughly 8.5:1 weighted towards BTC, reflecting the $2550 value of BTC compared to the $300 BCH futures were trading for just before the split, which the value of BCH roughly tracked for the first few weeks. The acquisition date should be at the time the BTC was originally acquired, since that's when the cost reflected in the cost basis was actually incurred. I am not a tax attorney, but based on my memory of advice I've been given by my accountants in the past this seems to be the best way to track the value of your investment over an event like this.
This is pretty much exactly what the first accountant I talked to said. "Let's treat is like a stock spin-off". This is great for those of us that have been around a long time as it means our gains on any spin offs [Bitcoin cash, CLAMS, Lumens, etc. etc.] will all be long term capital gains. Small favors...
I am verifying with one more accountant but we already have two votes for this methodology.
August 30, 2017, 05:53:08 PM
I personally haven't paid any tax over my Bitcoin gains, but that's mainly due to the fact that I barely actually cash out fiat to my bank account. That directly makes me wonder what the exact point is that I am supposed to pay tax. Is it (1) once I have sold whatever number of coins, but the fiat is still in my exchange account, or is it (2) once the fiat hits my bank account? I am hinting towards the latter option, but the first option makes sense too.
It is obviously (1), because that is when you have realized your gains. The exchange account is no different from your bank account.
If you extend the logic a bit further, are taxes due at (3) when you withdraw the fiat from your bank account?
Are you talking from experience, or is it just what you think? In essence, there is no real evidence of me having gained any profits if I don't actually withdraw the funds back to my bank account. If I just continue to keep the fiat in my exchange account, how would whatever government agency ever know that I at that point realized a gain at all? The only way would be to force the exchange in question to hand over my entire account/trade history. Banks on the other hand, are basically an extension of the government since incoming deposits above a certain range or monthly transfer volumes are reported to the authorities.
At one point I had three law firms on retainer burning through about $250,000 of my money: a Bitcoin savvy federal felony criminal defense firm [in CA], a special federal civil asset forfeiture defense firm [in CO], and a federal tax law firm specializing in Bitcoin tax law [in NY]. So from direct experience: you owe the tax the second you convert your crypto to fiat and realize a gain over what the price was in fiat when you bought it. Normally you can wait until the end of the year to fill out your Schedule D and report all your gains (minus all your losses) and then pay all the tax at once. But if you have a large underpayment of taxes for the year there will be penalties and interest charged because you did not pay the taxes on time throughout the year when you realized the actual gain at the time you sold the crypto.
August 30, 2017, 04:06:33 PM
I personally haven't paid any tax over my Bitcoin gains, but that's mainly due to the fact that I barely actually cash out fiat to my bank account. That directly makes me wonder what the exact point is that I am supposed to pay tax. Is it (1) once I have sold whatever number of coins, but the fiat is still in my exchange account, or is it (2) once the fiat hits my bank account? I am hinting towards the latter option, but the first option makes sense too.
It is obviously (1), because that is when you have realized your gains. The exchange account is no different from your bank account.
If you extend the logic a bit further, are taxes due at (3) when you withdraw the fiat from your bank account?
Are you talking from experience, or is it just what you think? In essence, there is no real evidence of me having gained any profits if I don't actually withdraw the funds back to my bank account. If I just continue to keep the fiat in my exchange account, how would whatever government agency ever know that I at that point realized a gain at all? The only way would be to force the exchange in question to hand over my entire account/trade history. Banks on the other hand, are basically an extension of the government since incoming deposits above a certain range or monthly transfer volumes are reported to the authorities.
August 30, 2017, 02:59:46 PM
I personally haven't paid any tax over my Bitcoin gains, but that's mainly due to the fact that I barely actually cash out fiat to my bank account. That directly makes me wonder what the exact point is that I am supposed to pay tax. Is it (1) once I have sold whatever number of coins, but the fiat is still in my exchange account, or is it (2) once the fiat hits my bank account? I am hinting towards the latter option, but the first option makes sense too.
It is obviously (1), because that is when you have realized your gains. The exchange account is no different from your bank account.
If you extend the logic a bit further, are taxes due at (3) when you withdraw the fiat from your bank account?
August 30, 2017, 02:44:48 PM
I personally haven't paid any tax over my Bitcoin gains, but that's mainly due to the fact that I barely actually cash out fiat to my bank account. That directly makes me wonder what the exact point is that I am supposed to pay tax. Is it (1) once I have sold whatever number of coins, but the fiat is still in my exchange account, or is it (2) once the fiat hits my bank account? I am hinting towards the latter option, but the first option makes sense too.
August 30, 2017, 02:04:27 PM
Its impossible to engage the legacy banking system and not leave a trail. Just pay the 13 - 15% on long-term capital gains and be done with it. (Most people have held for more than a year.)
I don't understand why someone would risk potential fines and audits or even jail by not paying. Whatever your stance on taxation is, you're not going to change the system from inside a jail cell.
I don't understand why someone would risk potential fines and audits or even jail by not paying. Whatever your stance on taxation is, you're not going to change the system from inside a jail cell.
Agreed.
One open question is the impact of the Ver Tantrum Coin fork since it had/has some value. The IRS hasn't given guidance yet as far as I am aware as to how to handle it.
When do you pay taxes:
1. At the fork?
2. Converting it from Ver Tantrum Coin to BTC?
3. Selling any resulting BTC?
Probably #2, but hopefully #3.
My limited understanding is that any real income is determined by local currency.
So the conversion from whatever crypto into fiat is the taxable event.
It could be more complicated, but until specific guidance is issued, you're better off paying something rather than nothing. It is in your favor to have had attempts to settle potential tax instead of avoiding it all together.
What is the basis?
And even more importantly, when is the acquisition date? If you "acquired" them at the moment of the spit then selling them now is a short term capital gain. If you can attach them to the original acquisition date then you might have a long term capital gain.
Basis could be handled by splitting the basis of the original coin over the two coins you now have or just assuming a zero basis on the new coin and keeping all the original basis on the BTC. I expect the IRS would not care one way or the other on this point because as it results in the same overall tax either way (like letting you pick your basis method as FIFO or LIFO - over the long haul you will pay the same in taxes so they do not care).
But the acquisition date is a trickier question as it affects how much tax is owed.
I am in the process of getting the opinion of a couple of tax expert on this for my own accounts.
Well the IRS ... a while ago.
Signature spam much you signature spam scum.Based on my experience with securities, the recommended method for tracking cash basis on a stock spin-off is to split the basis over the two stocks according to the percentage of value that each had at the moment of the spin-off. In this case, it would be roughly 8.5:1 weighted towards BTC, reflecting the $2550 value of BTC compared to the $300 BCH futures were trading for just before the split, which the value of BCH roughly tracked for the first few weeks. The acquisition date should be at the time the BTC was originally acquired, since that's when the cost reflected in the cost basis was actually incurred. I am not a tax attorney, but based on my memory of advice I've been given by my accountants in the past this seems to be the best way to track the value of your investment over an event like this.
August 30, 2017, 01:48:17 PM
Its impossible to engage the legacy banking system and not leave a trail. Just pay the 13 - 15% on long-term capital gains and be done with it. (Most people have held for more than a year.)
I don't understand why someone would risk potential fines and audits or even jail by not paying. Whatever your stance on taxation is, you're not going to change the system from inside a jail cell.
I don't understand why someone would risk potential fines and audits or even jail by not paying. Whatever your stance on taxation is, you're not going to change the system from inside a jail cell.
Agreed.
One open question is the impact of the Ver Tantrum Coin fork since it had/has some value. The IRS hasn't given guidance yet as far as I am aware as to how to handle it.
When do you pay taxes:
1. At the fork?
2. Converting it from Ver Tantrum Coin to BTC?
3. Selling any resulting BTC?
Probably #2, but hopefully #3.
My limited understanding is that any real income is determined by local currency.
So the conversion from whatever crypto into fiat is the taxable event.
It could be more complicated, but until specific guidance is issued, you're better off paying something rather than nothing. It is in your favor to have had attempts to settle potential tax instead of avoiding it all together.
What is the basis?
And even more importantly, when is the acquisition date? If you "acquired" them at the moment of the spit then selling them now is a short term capital gain. If you can attach them to the original acquisition date then you might have a long term capital gain.
Basis could be handled by splitting the basis of the original coin over the two coins you now have or just assuming a zero basis on the new coin and keeping all the original basis on the BTC. I expect the IRS would not care one way or the other on this point because as it results in the same overall tax either way (like letting you pick your basis method as FIFO or LIFO - over the long haul you will pay the same in taxes so they do not care).
But the acquisition date is a trickier question as it affects how much tax is owed.
I am in the process of getting the opinion of a couple of tax expert on this for my own accounts.
Well the IRS ... a while ago.
Signature spam much you signature spam scum. August 30, 2017, 01:43:01 PM
Well the IRS was starting this with butting it's nose in the affairs of people who use coinbase as a source of their bitcoin purchases.
So this was bound to happen.
Since they have been collect customer;s personal data from coinbase since they imposed those customers pay their taxes since they see it as profiteering now all because bitcoin has surpassed golds price quite a while ago.
So this was bound to happen.
Since they have been collect customer;s personal data from coinbase since they imposed those customers pay their taxes since they see it as profiteering now all because bitcoin has surpassed golds price quite a while ago.
August 30, 2017, 01:36:46 PM
Its impossible to engage the legacy banking system and not leave a trail. Just pay the 13 - 15% on long-term capital gains and be done with it. (Most people have held for more than a year.)
I don't understand why someone would risk potential fines and audits or even jail by not paying. Whatever your stance on taxation is, you're not going to change the system from inside a jail cell.
I don't understand why someone would risk potential fines and audits or even jail by not paying. Whatever your stance on taxation is, you're not going to change the system from inside a jail cell.
Agreed.
One open question is the impact of the Ver Tantrum Coin fork since it had/has some value. The IRS hasn't given guidance yet as far as I am aware as to how to handle it.
When do you pay taxes:
1. At the fork?
2. Converting it from Ver Tantrum Coin to BTC?
3. Selling any resulting BTC?
Probably #2, but hopefully #3.
My limited understanding is that any real income is determined by local currency.
So the conversion from whatever crypto into fiat is the taxable event.
It could be more complicated, but until specific guidance is issued, you're better off paying something rather than nothing. It is in your favor to have had attempts to settle potential tax instead of avoiding it all together.
I like the edit. Lol.
It does depend on jurisdiction, you are right. Some it could be conversion between cryptos and some just converting to fiat. E.g. If I have a yen position (and I am a US citizen) and trade it for the Euro for a gain, that would be a taxable event even if I don't convert to dollars for a week. And was it short or long term gains?
August 30, 2017, 12:54:36 PM
Its impossible to engage the legacy banking system and not leave a trail. Just pay the 13 - 15% on long-term capital gains and be done with it. (Most people have held for more than a year.)
I don't understand why someone would risk potential fines and audits or even jail by not paying. Whatever your stance on taxation is, you're not going to change the system from inside a jail cell.
I don't understand why someone would risk potential fines and audits or even jail by not paying. Whatever your stance on taxation is, you're not going to change the system from inside a jail cell.
Agreed.
One open question is the impact of the Ver Tantrum Coin fork since it had/has some value. The IRS hasn't given guidance yet as far as I am aware as to how to handle it.
When do you pay taxes:
1. At the fork?
2. Converting it from Ver Tantrum Coin to BTC?
3. Selling any resulting BTC?
Probably #2, but hopefully #3.
My limited understanding is that any real income is determined by local currency.
So the conversion from whatever crypto into fiat is the taxable event.
It could be more complicated, but until specific guidance is issued, you're better off paying something rather than nothing. It is in your favor to have had attempts to settle potential tax instead of avoiding it all together.
August 29, 2017, 09:28:47 AM
I am really hoping Monero takes off way more. That will help immensely in avoiding paying the government their bribes. Seriously, they provide NOTHING of value for the crypto markets and want a cut when your high risk pays off? Unbelievable.
Agreed with that too in principle (nothing of value), but for most people the risk (jail time) isn't worth any potential gain. The leeches will get their blood to buy people's votes and unless you want to follow the Roger Ver route and renounce your citizenship (from the US in his case), you have little choice if you want to be compliant. And "New Bitcoin Millionaires" probably will want to be able to enjoy their gains and to do so will need to follow the law.
Just like people were over-confident in the security of TOR and were burned by either misconfigured servers, emails, honeypots, KYC/AML etc, there will be plenty of times that misusing the anonymity of Monero, mixers, Dark Wallet and the like will leak information that will enable the authorities to follow your path of transactions. And then you'll be screwed.
August 29, 2017, 09:19:52 AM
I am really hoping Monero takes off way more. That will help immensely in avoiding paying the government their bribes. Seriously, they provide NOTHING of value for the crypto markets and want a cut when your high risk pays off? Unbelievable.
August 29, 2017, 09:16:21 AM
Its impossible to engage the legacy banking system and not leave a trail. Just pay the 13 - 15% on long-term capital gains and be done with it. (Most people have held for more than a year.)
I don't understand why someone would risk potential fines and audits or even jail by not paying. Whatever your stance on taxation is, you're not going to change the system from inside a jail cell.
I don't understand why someone would risk potential fines and audits or even jail by not paying. Whatever your stance on taxation is, you're not going to change the system from inside a jail cell.
Agreed.
One open question is the impact of the BCC fork since it had/has some value. The IRS hasn't given guidance yet as far as I am aware as to how to handle it.
When do you pay taxes:
1. At the fork?
2. Converting it from BCC to BTC?
3. Selling any resulting BTC?
Probably #2, but hopefully #3.
August 29, 2017, 08:32:02 AM
Its impossible to engage the legacy banking system and not leave a trail. Just pay the 13 - 15% on long-term capital gains and be done with it. (Most people have held for more than a year.)
I don't understand why someone would risk potential fines and audits or even jail by not paying. Whatever your stance on taxation is, you're not going to change the system from inside a jail cell.
I don't understand why someone would risk potential fines and audits or even jail by not paying. Whatever your stance on taxation is, you're not going to change the system from inside a jail cell.
August 29, 2017, 05:39:52 AM
It's ridiculous. People who use BTC should not attempt to evade tax.
It's obvious that the IRS (and other governments) are only going to get better at catching BTC tax evaders with time. The more significant BTC gets in ordinary society, the more it's going to be tracked and regulated.
Unless they're extremely clever, they shouldn't even bother trying. They're only going to get burned.
It's obvious that the IRS (and other governments) are only going to get better at catching BTC tax evaders with time. The more significant BTC gets in ordinary society, the more it's going to be tracked and regulated.
Unless they're extremely clever, they shouldn't even bother trying. They're only going to get burned.
I don't think the people are intentionally hiding in bitcoin because they don't want to pay taxes. Perhaps this the reason why IRS has reportedly acquiring software to track down individual not paying taxes if I'm not mistaken.
If people would really want to evade they are better off with Monero, anonymous and IRS would have a hard time chasing them. But as what I believed, we are into bitcoin not to evade but to profit. But I guess everything that involves big money movement IRS is there. LOL.
August 29, 2017, 04:22:51 AM
It's ridiculous. People who use BTC should not attempt to evade tax.
It's obvious that the IRS (and other governments) are only going to get better at catching BTC tax evaders with time. The more significant BTC gets in ordinary society, the more it's going to be tracked and regulated.
Unless they're extremely clever, they shouldn't even bother trying. They're only going to get burned.
It's obvious that the IRS (and other governments) are only going to get better at catching BTC tax evaders with time. The more significant BTC gets in ordinary society, the more it's going to be tracked and regulated.
Unless they're extremely clever, they shouldn't even bother trying. They're only going to get burned.
August 28, 2017, 07:42:12 PM
There will come a new trend of would be tax evaders from the new millioniares who speculated in bitcoin and all the other cryptocoins. But the IRS have also started tracking down bitcoiners, thanks to the help of Chainalysis as mentioned here https://news.bitcoin.com/irs-crackdown-tracking-bitcoiners-with-chainalysis/
Does this present a new value proposition for anonymous cryptcoins in the coming future? I speculate it will.
As Bitcoin continues its humongous run, soaring to new highs again this month, more and more investors are flocking to the cryptocurrency. Get-rich-quick artists and even mainstream investors are riveted by Bitcoin's 353% year-to-date return and the countless stories of early investors strutting around as newly-minted millionaires.
But despite the colossal gains and surge in new-fangled Bitcoin millionaires, few investors seem to be reporting their cryptocurrency windfalls on their U.S. tax returns. And experts warn this could mean huge penalties down the line.
Read the whole article https://www.thestreet.com/story/14285109/1/bitcoin-tax-dodgers-on-collision-course-with-the-irs.html
Does this present a new value proposition for anonymous cryptcoins in the coming future? I speculate it will.
As Bitcoin continues its humongous run, soaring to new highs again this month, more and more investors are flocking to the cryptocurrency. Get-rich-quick artists and even mainstream investors are riveted by Bitcoin's 353% year-to-date return and the countless stories of early investors strutting around as newly-minted millionaires.
But despite the colossal gains and surge in new-fangled Bitcoin millionaires, few investors seem to be reporting their cryptocurrency windfalls on their U.S. tax returns. And experts warn this could mean huge penalties down the line.
Read the whole article https://www.thestreet.com/story/14285109/1/bitcoin-tax-dodgers-on-collision-course-with-the-irs.html
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