Topic: Bitcoin, taxes, 1099s, and basis (Read 1142 times)

Agree: if you never convert BTC back to dollars it shouldn't be taxable.  But if you were to buy low and sell high that would be taxable (I'm pretty sure).

I've answered a few of my own questions with research.  Circle does not issue 1099s (which means they wouldn't be reporting any realized gains to IRS).  If you were realizing gains on USD-->BTC-->USD conversions you'd have to keep track of your own basis and report it yourself.

Aren't they a pay-app?   so why would they give you a 1099int or misc?

forget cryptocurrency, you can fund your circle payments from a normal checking account.  so, you link to your $20,000 balance checking account.  you pay a friend $200 for the AirBnB place he booked and paid fully.  Would circle know or care if that $20k source balance was from normal job income from which payroll taxes and deductions were already taken? or a gift you did owe taxes on?  or from you trading USD for CAD the previous year that you did owe taxes on?

it's upstream from them and not of their concern, no?


if you bought BTC for $200 and then paid someone in BTC which at the time had a value of $600, it would seem like you realized $400 of income (or LTCG - not sure yet, see my post), but that's between you and uncle sam, not Circle - unless I'm misunderstanding what they'd do for you.

i agree, this can get messy, trying to figure out how to keep the mess to a minimum myself.

EDIT: I see, in their btc option:

"If I choose to convert back to dollars, this may be considered a taxable event."

so a buy low sell high, normal stuff - so as long as you convert only once from usd to btc, seems like there would be no risk if 'making money'

ask their support if they would track the buy vs. sell price and issue a 1099

Does Circle issues you a 1099 at the conclusion of the tax year?  Does anyone know or has anyone been issued one?

From my knowledge any income you realize buying and selling Bitcoin (or anything for that matter) you technically have to declare as income (though I'm actually not entirely sure if it's earned income or capital gains when it comes to Bitcoin... Does anyone know that?).

If they're not issuing 1099s, I assume they are not reporting it to the IRS and as long as the amounts are not large there is really very little chance the IRS would ever find out or even care, right?

If they are issuing 1099s, do they also keep track of your basis? Or is that something you have to do for each purchase lot you make?  That could get prohibitively cumbersome if you're dollar cost averaging over several years.