Bitcoin Tax notices from IRS this year for previous years

squatter

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Quote from: ulhaq on December 01, 2019, 01:02:20 PM

Regarding "like-kind", this applied to real estate and some other narrow areas. It never applied to crypto.

I generally agree since that's the position most tax experts have taken. However, some -- like this tax lawyer -- believe the question is debatable regarding pre-2018 altcoin exchanges. He seems to think that section 1031 could apply under some circumstances.

It's true the 2018 tax code limited like-kind exchanges to real estate, but the IRS hasn't officially closed the book on prior years. Like you said, it's all speculation until the IRS and the courts establish case law.

ulhaq

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Quote from: carter34 on August 19, 2019, 10:43:57 AM

Quote from: badboyrazor on August 18, 2019, 08:08:09 PM

For example, if I make 3 BTC in profit from trading alt coins against BTC in 2017, then does my BTC profit count as a taxable event if I never cashed out?

Any opinions or thoughts on this would be much appreciated.

From this, I think you are not to be made to pay any tax if there were no tax laws at that time because laws are not usually made in retrospect but if at the time maybe there was a bill on the floor and stipulating to capture in retrospect at the document (bill) preamble, then you might have been captured as at the date mentioned in the bill or from the date mentioned.

The IRS will make laws and apply it retrospectively whenever it wants. Does not seem fair, but that is the world we live in.

Regarding "like-kind", this applied to real estate and some other narrow areas. It never applied to crypto.
This does not mean anything regarding altcoin-altcoin trading and paper gains. The IRS has never given any definitive information on it, so everything that everyone (including CPAs) says about crypto taxation is speculation.

squatter

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Quote from: nrnahid on October 04, 2019, 12:51:08 PM

Yeah, but did you use coinbase to cash out bitcoins to USD? that seems to be the common thread among those receiving the IRS letters.

It's not just people who cashed out. There have been reports of people receiving letters who only bought bitcoins on Coinbase. Those people received the 6174 letter, which basically says, "We know you own cryptocurrency. You're on our radar. Here's how to report your cryptocurrency transactions."

nrnahid

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Yeah, but did you use coinbase to cash out bitcoins to USD? that seems to be the common thread among those receiving the IRS letters.

jerry0

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So its 200 trades or $20000 in total trades in coinbase to get a 1099 from coinbase?

So what if someone has like $25000 worth of btc and just want to send it to coinbase to keep btc there as a place of storage. Do you need to report for that?

Also i assume cashing out to bank account or having the usd balance in coinbase is same thing right?

squatter

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Quote from: Theb on August 22, 2019, 02:32:06 PM

If that is the case then I doubt the authorities would even need a subpoena just to know their clients' trading transaction. Subpoenas are only served once there is a lawsuit filed in the court whether it is a civil case or a criminal one which in this case the IRS wouldn't need since they are just doing regular background checks if the U.S. citizens that are trading in crypto are paying their taxes right.

The IRS has no legal right to broadly fish for information like that. That's why they had to fight Coinbase in court for 2 years just to get data on ~13,000 higher volume traders.

I'm sure Poloniex has responded to one-off requests from the IRS before, but I'm also sure it's nothing on the scale that we've seen from Coinbase. The OP confirmed he sold bitcoins through Coinbase during the tax years in question, which corroborates the theory that it's Coinbase users who are receiving these letters.

Theb

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Quote from: figmentofmyass on August 21, 2019, 10:59:53 AM

Quote from: Theb on August 21, 2019, 10:50:45 AM

You should take note that not all of their clients' trading history are being submitted to the IRS for review, the order for them was to submit "random" trade reports or unusual amounts of trades coming from their clients. And yes being a U.S. compliant exchanges I expect them to be one of the companies being required to submit trade reports.

poloniex has said repeatedly that they do not do any tax reporting. i'm sure if the USA government sends them a subpoena for your data, they will comply, but that is a very rare situation. in the regular course of business, they do not send 1099s to the IRS like coinbase does.

If that is the case then I doubt the authorities would even need a subpoena just to know their clients' trading transaction. Subpoenas are only served once there is a lawsuit filed in the court whether it is a civil case or a criminal one which in this case the IRS wouldn't need since they are just doing regular background checks if the U.S. citizens that are trading in crypto are paying their taxes right. The IRS and the SEC might cooperate in this matter and just put up some kind of regulation/requirements ordering these crypto exchanges to make the submission of these trade reports legal.

Harlot

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Haven't the IRS warned the US crypto traders about paying their taxes rate with relation to their crypto assets recently in public? I got a feeling that this is just part of their intimidation by notifying each and single one about their tax obligations with the government because I have seen several cases like this online already which is similar to what you are saying. If they have notified you again and this time with calculations to your discrepancy I guessed you need to re-calculate your taxes, don't forget to deduct fees you are paying each time you trade crypto to crypto as this will help you lessen your tax obligation.

rodel caling

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Quote from: badboyrazor on August 18, 2019, 08:53:01 PM

I used poloniex.

Anyone know if poloniex submitted any information?

If not wrong IRS of untited states force the two major US base crypto exhnage which is coibase and poloniex to submit all US citizen holding crypto currency to give them the letter to pay their taxes.🙂🙂🙂

figmentofmyass

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Quote from: Theb on August 21, 2019, 10:50:45 AM

You should take note that not all of their clients' trading history are being submitted to the IRS for review, the order for them was to submit "random" trade reports or unusual amounts of trades coming from their clients. And yes being a U.S. compliant exchanges I expect them to be one of the companies being required to submit trade reports.

poloniex has said repeatedly that they do not do any tax reporting. i'm sure if the USA government sends them a subpoena for your data, they will comply, but that is a very rare situation. in the regular course of business, they do not send 1099s to the IRS like coinbase does.

Quote from: Theb on August 21, 2019, 10:50:45 AM

@OP are you sure that your calculations are done properly? Because the IRS won't even be on your radar if the gap from your real earnings is that big from what you have reported.

indeed, it sounds like the OP received a 6173. from other reports, that indicates he was cashing out through coinbase and not fully reporting the taxes due.

if it were me, i would at least run all my coinbase data by a CPA and probably plan to amend schedule D and form 8949 to match what the IRS already has.

Theb

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Quote from: pooya87 on August 18, 2019, 09:25:47 PM

Quote from: badboyrazor on August 18, 2019, 08:53:01 PM

I used poloniex.

Anyone know if poloniex submitted any information?

since Poloniex is based on US already, then it is best if you assume that they have reported your history to the different government agencies. even if they haven't it should always be a possibility that they will do in an instant upon request.

You should take note that not all of their clients' trading history are being submitted to the IRS for review, the order for them was to submit "random" trade reports or unusual amounts of trades coming from their clients. And yes being a U.S. compliant exchanges I expect them to be one of the companies being required to submit trade reports. @OP are you sure that your calculations are done properly? Because the IRS won't even be on your radar if the gap from your real earnings is that big from what you have reported. And you also don't have to worry if you didn't fabricate your tax report as you'll just get a re-audit from them at best.

LeGaulois

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Top Crypto Casino

Quote from: audaciousbeing on August 20, 2019, 01:19:26 PM

...

The agents themselves are not able to answer on this subject 99.% of the time. They are not trained for this emerging niche. They often tell you "Come back later, we'll find out". Sometimes it's even the citizen who teaches the latest legislation to the tax agent. Generally speaking, you find better help on forums than the IRS.

Paying a consultant is not really a long-term solution, because it would still have to be done on its own for the other years.

audaciousbeing

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I think the best way to good about this is to reach out to IRS themselves maybe their support office or customer care centre because its at that point that you can have a reliable information because different people with different situations and different treatment is applied and in a case of more complexity, you can just consult an accountant that can accept reduce fees while he handles the filing and the accompanying correspondences from the authority.

jostorres

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Of course, so far you are making an increase and as such a new increase, you have to pay tax in it, but I am surprised you said tax was already introduced for this and how did you even get this tax letter when you did not disclose that you were into Forex trading, I thought that the government was not interested in cryptocurrency?

They must have gotten some of your details from the exchange where you are trading from, you see why many people has not been supportive of these KYC that was suddenly introduce and took over the market, this was exactly what they needed it for and I think they imposed it just to please the government so they cannot go against cryptocurrency, probably that is why they have been backing down from their attack because they have finally discovered that the system is taxable.

BitHodler

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Quote from: pooya87 on August 18, 2019, 09:25:47 PM

since Poloniex is based on US already, then it is best if you assume that they have reported your history to the different government agencies. even if they haven't it should always be a possibility that they will do in an instant upon request.

I by default assume that my personal information and trading history has been compromised by regulators. It just isn't worth it to avoid taxation. One way or another, they will catch you off guard and still make you pay.

It's debatable and very subjective whether or not taxation is fair, but there isn't a way to get around it when you're using centralized services and they have all your personal information.

At the end of the day, fiat exchanges have turned into a slave of their banking relations already, so what would prevent the same exchanges from handing over your information to regulators in order to remain operational?

carter34

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Quote from: badboyrazor on August 18, 2019, 08:08:09 PM

For example, if I make 3 BTC in profit from trading alt coins against BTC in 2017, then does my BTC profit count as a taxable event if I never cashed out?

Any opinions or thoughts on this would be much appreciated.

From this, I think you are not to be made to pay any tax if there were no tax laws at that time because laws are not usually made in retrospect but if at the time maybe there was a bill on the floor and stipulating to capture in retrospect at the document (bill) preamble, then you might have been captured as at the date mentioned in the bill or from the date mentioned.

badboyrazor

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Quote from: figmentofmyass on August 19, 2019, 01:25:45 AM

Quote from: badboyrazor on August 18, 2019, 08:53:01 PM

I used poloniex.

Anyone know if poloniex submitted any information?

yeah but did you use coinbase to cash out bitcoins to USD? that seems to be the common thread among those receiving the IRS letters.

Yea I did cash out with Coinbase.

figmentofmyass

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Quote from: badboyrazor on August 18, 2019, 08:53:01 PM

I used poloniex.

Anyone know if poloniex submitted any information?

yeah but did you use coinbase to cash out bitcoins to USD? that seems to be the common thread among those receiving the IRS letters.

Quote from: pooya87 on August 18, 2019, 09:25:47 PM

since Poloniex is based on US already, then it is best if you assume that they have reported your history to the different government agencies. even if they haven't it should always be a possibility that they will do in an instant upon request.

unlike coinbase, poloniex does not send the 1099-K. they don't voluntarily report anything to the IRS: https://twitter.com/Poloniex/status/1091724304138600448

the letter writing campaign is clearly a fishing expedition. if the IRS has already gone to the lengths of subpoenaing exchanges for your records, you're probably getting audited and criminally charged---not receiving a warning letter telling you to amend your tax return.

pooya87

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Quote from: badboyrazor on August 18, 2019, 08:53:01 PM

I used poloniex.

Anyone know if poloniex submitted any information?

since Poloniex is based on US already, then it is best if you assume that they have reported your history to the different government agencies. even if they haven't it should always be a possibility that they will do in an instant upon request.

badboyrazor

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I used poloniex.

Anyone know if poloniex submitted any information?

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