With bitcoin hitting all time high, like to hear what everyone is doing with their taxes for the profits. Be honest, lets have a open discussion.
I plan to file with irs and pay the capital gain tax. I think it's just a matter of time before coinbase hands over all records to irs anyway, they are fighting for the 2015 and earlier info now, but i am sure 2016/2017 will be easier to get.
The fight for the 2013-2015 records is over. The court reduced the scope of the order to those with $20,000 or more in transactions during any one year. So that was ~ 3% of customers.
This does establish some precedent, though. If you have annual trading activity on Coinbase approaching that amount, I would be very careful to report taxes correctly going forward, and I'd also consider amending previous years if there were egregious errors. In the future, I think they'll be sending all US customers 1099s, and I think the threshold for reporting will be lower than $20,000.
I am fine paying my share of the taxes due, only real concern is irs will use it as an indicator to flag me for audit. So basically trying to do it right but end up getting screwed.
What is everyone's thoughts and plan? given it's almost tax season.
IMO, do not mention "bitcoin" or "cryptocurrencies" on your tax return. Treat them like any other capital gains (or whatever method of taxation your advisor advises) and pay the amount due. Coinbase isn't sending anything to the IRS, no 1099. So there's no reason to treat it like anything out of the ordinary. If you treat it as capital gains, it's just like selling stock.