Topic: Opinion The IRS Is Making Crypto Compliance Impossible (Read 380 times)

You either might be correct or the traditional financial firms and bank in the countries might not yet experienced how disruptive the cryptospace is hehehe.

In any case, similar to what you have already mentioned, this shows how stupid this old grandma is. Senator Elizabeth Warren warns everyone of one company that might create a sandwich shop monopoly. A sandwich shop monopoly?



We don't need another private equity deal that could lead to higher food prices for consumers. The
@FTC is right to investigate whether the purchase of @SUBWAY by the same firm that owns @jimmyjohns and @McAlistersDeli creates a sandwich shop monopoly.

Source https://twitter.com/senwarren/status/1728810999355175212?s=12&t=fx2RmsbaS0qNJTJTdpNu2w

There are still no laws on cryptocurrency in Russia, so there is a lot of freedom with cryptocurrencies. The general law has been adopted, but it applies more to digital assets that are issued by banks and companies on centralized platforms (such as blockchain).
And the law on cryptocurrencies cannot work without instructions, clarifications, tax declaration forms, and so on. Therefore, you can work honestly and pay 4-6% tax after exchanging cryptocurrency for fiat.

Yes, I'm sure there's some of that but in several places around the world its far easier to become a crypto services provider than it is in the US. This is because some governments aren't as staunchly against it. The reason for this is (aside from extra tax revenue, kickbacks & bribes) the government doesn't mind if crypto usurps traditional financial service providers... it doesn't have as much of a vested interest in their success because they are foreign-owned companies. Although it is distant, there's possibly even the chance that they're crypto-friendly because it actually helps their own people.

I very much doubt governments in any country would think in the way the you have described it. In many cases, it is the big companies that have funded much of the politicians' campaigns that have placed them in office. Corporate interests, the lobbying of this and bribery have become one of the accepted ways of politics. It is a customary practice for big corporations to gain their advantages over their competitors.

what would happen if you just didn't even file all those pages and just made a schedule C reporting your overall gross sales and gross cost and profit? seems like some people would do that and maybe not even report the true nature of the business trying to kind of keep the business name or industry kind of generic like "financial services"...




yeah it almost sounds like preparing your tax return is harder than doing the actual mining. or at least a bigger pain in the ass.

  I RUN all the mining through coinbase.
  I make payments to 3 partners and myself. (4)
  Since pools bust out. I use at least 2 pools and pull the coins 2 times a month.
  I stack all those pulls and send the coins 1 time a month.

---

I also sell and take any coin for payment (well any POW coin that coin bases takes)
 So if I do 100 sales in a year that is a lot of entries.
 And when these coins are moved it creates reportable tax events. (you don't always  need to pay but you need to report)
 and I am too small to fully automate.
 and I have the tax background.

---

here is a typical set of generated info
 So mine 2000 doge Jan 1 to Jan 15  this is income  at least 1 entry for the income and 1 entry for its cost
 Mine 2000 doge Jan 15 to Jan 31     this is income at least 1 entry for the income and 1 entry for its cost

Total of 4000 doge Jan 1 to Jan 31

distribute it 4 ways  4 entries of expense  and cap gain or loss is reported on each one.

2 pools mining doge so double this. And for 1 month just Doge over 24 entries x 12 months so just for doge mining 288 entries.

figure btc 288
and LTC 288

mining at a minimum = 864 entries

that does not include buying with crypto (gpu or asic or pc or parts) normally 25 to 50 buys a year. but many are cc so say 25

now 864+25= 869 entries.

A few trades each month = 12 x 5 = 60  so 869+60 = 929. Last year's return was ½ the size of 2021's

I made good money in 2021
I did meh in 2022 and
I will do meh in 2023

so say 150 pages for taxes 2021 taxes
then 75 pages and 2022 taxes
the 75  pages and 2023 taxes

I can tell you 2021 was good enough to make 2022 and 2023 doable.

But if I don't do better in 2024 I am really tired of buying bitcoin.tax and spending a long time to do my taxes.

that makes sense that fees should go down with more competitors and that's a good thing. But I wouldn't call 2% a great deal. I think there's services where one can pay a flat fee and send whatever they want. Like $1000 costs the same as $100. so paying a 2% flat fee is a ripoff. Unless you have some really good reason for doing it like using crypto. and have no other options. 2% of $1000 is $20. you can probably find a way to send that same $1000 for a flat fee of less than $5. but maybe not with bitcoin being involved. 

I think in the last 10 years western union has revamped their fees so that they don't rip people off on fees like they used to but their exchange rates suck.

For a long time coins.ph was the only game in town and for most of that time they've charged a flat 3% fee... This has now come down to ~2% because within the last few years a bunch of competitors have come onto the scene.

Its still better for the money to go to local companies than behemoths like Western Union... now people only use WU if they have no clue about how to move money at all.

I think the Philippines government takes out a fee on Western Union money transfers there. Not a huge amount but it's some tiny percentage. They've got Western Union regulated big time on that. Not sure about Moneygram or others. While the government there might want their overseas workers to benefit from crypto, there's alot of foreigners living in the Philippines too and if all of those foreigners started using crypto to bypass paying taxes/fees there would be a big problem I would assume. you would see some regulations then if there aren't already. Also I have to assume these e-wallet providers like coins.ph probably give a crappy exchange rate for btc to philippine pesos but I couldn't say for sure it would just be a guess. Maybe there's a money changer on every street corner that gives a better exchange rate I dunno 

The only upside is not every country feels the same way about this issue. All of the giant surveillance state governments do (US, Russia, China), but there are some countries that have taken a more laissez-faire approach because they see Bitcoin as being able to help their people save money by not having to pay it to remittance companies like Western Union. For example, the Philippines has made it rather easy for e-wallet providers to support crypto -- why should they care if it takes a chunk out of profits for Western Union and Moneygram? If it can help their overseas workers send more money back home and into their own economy, they're all for it.

It was not my catch. The credit certainly goes to @o_e_l_e_o. I thought I had a very skeptical mind, however, it appears that it is not skeptical enough hehehe.

Now there are a lot of exchangers that do not use KYC and also NO-KYC Level Exchanges, Soft-KYC Level Exchanges where data is not verified, and so on. And also decentralized exchanges and bridges for EVM coins.
https://archive.ph/CpS0W
Until you transfer your coins to a centralized service, then you own your coins.

Correct. It gives it a negative connotation. Self custody changed to non-custodial changed to non-hosted. The next step will be "non-compliant" wallets, or something similar.

Centralized exchanges already do this, and most (if not all) are already running fraction reserve scams and simply issuing IOUs they cannot honor. This is indeed their ultimate goal. Once centralized exchanges hold all the bitcoin and people only trade IOUs back and forth, then they will have achieved complete centralization, complete surveillance, and complete control.

very good catch there! they put the "non" in front of whatever the thing is they WANT people to do to make it sound like it is illegal. that would make sense to me.


yeah that's what they want is all bitcoin only owned by centralized 3rd parties. eventually maybe they own it themself and keep the private keys in a big vault and then just issue IOUs against what they say is in the vault but then oneday they decide to go off the bitcoin standard and just print IOUs that aren't even backed by real bitcoin. Thus removing all bitcoin from circulation bitcoin has been destroyed.  

The whole goal is obviously making any OTC operative impossible at the regulatory level, to the point users feel asphyxiated and wouldn't even bother withdrawing their funds out of exchanges. That's the whole point of the ETF's. Investors with relevant amounts of money willing to buy BTC are never going to bother holding the money themselves. If it's hard by itself being a self-custodian due all the things involved from a technical POV and the high responsibility it takes, now add in the fact that you'll have to document every single movement your wallet does and they'll just not bother and stick to regulated instruments, whether buying on the exchange and not withdrawing or by buying the ETF. Once they are main custodians on BTC I can see them attempting a fork of sorts. I hope everyone is aware of this possibility.

They also want to do this so when they ban physical cash, people are scared to use BTC as a cash substitute since every transaction would mean some sort of liability against the assorted taxman.

Also, something was brought to my attention by @o_e_l_e_o and I do not quite think that this is noticed by much of the people in the cryptospace. The government is changing the words we use in the cryptospace like self custody is changed to nonhosted wallets to make it sound that we are doing something illegal.

This is very much similar to how they changed global warming to climate change. It makes the damage on the environment sound less concerning.

Maybe it's a good idea to give up on US citizenship and move somewhere else? I don't think America looks like a dream country anymore. Probably, being a footballer or digital nomad is the best thing today. The more you study, the harder you work, the more you suffer mentally and in the end, new bullshit arises every time you slightly achieve a piece of mind.

American healthcare is more likely a drugcare or poisoncare or profitcare. American doctors prescribe amphetamines and oxys like candy. In what sane world does it make sense to give as powerful drug as amphetamine is to 12 years old kid? They give Adderall or Vyvanse to kids, ruin their brain chemistry, make them dependent on Addy, these kids then have heart problems, depression, can't function without it. That's insane. Yes, ADHD and ADD really exist but working on fixing this behavior is way better solution than giving these drugs to kids. Don't get me wrong but there is a massive degradation in America especially, this gender, identity thing where some people think they are member of wolf pack, doesn't make sense. And oxys? They prescribe it like a candy. Oxys, SSRI/SNRI, benzos, prescribed like a candy but I know this is not th main problem that people complain, there are insane prices on every medical service. My friend lives in America and she always travels in Turkey or Eastern Europe to get medical and dental service. I can't swear but I have heard that medical field is so unregulated in the USA that doctors can charge you whatever they want.
It's unethical to make money from someone's health but still, everyone forgets ethics but after all, one shouldn't milk people by increasing insulin prices up to unreal levels.

While it's true that we are all tracked, I don't think anyone cares on those statistics at individual level unless you are a millionaire or something like that. Majority of poeple turn a blind eye to all of this because average Joe on an individual level doesn't really matter for anyone, it's collective statistics that matter. I'll be frank, democracy is probably the most stupid concept. Democracy means majority of people, i.e. average Joe, deciding your fate. Average Joe is not a smart person, nor has any idea about life and what's good for him. Average Joe is a slave in reality.

FTFY.

Everything you do is monitored by the government. The surveillance state which we know about is massive, and the things we don't know will be several times more invasive than that. Look at the technology that most people use these days. Most operating systems track everything you do. Most browsers track everything that you do. Most ISPs track everything that you do. Most mobile phones track everything that you do, every message you send, every place you go, every website you visit, record everything that happens in their vicinity, every word you type, and more. Every purchase you make with any electronic means of fiat - transfers, credit cards, Google Pay, Apple Pay, whatever - is being tracked. People voluntarily bug their own houses with listening devices just so they don't have to manually turn on some music. Your smart TV spies on you. Your car spies on you. The majority of the population turn a blind eye to all of this, or worse, actively give away their privacy for the tiniest convenience.

They want to take all your freedoms away. Once they succeed in abolishing cash and replacing it with a CBDC, bitcoin will be the last solution for any financial privacy.

what are all those pages containing exactly? that sounds like something i would want to avoid at all costs to be honest. add an extra 0 onto that 15000 usd and maybe it would make sense then. 

that's why we really need something like opendime but WAY more cheaper. something that would cost fractions of a penny but you could just hand to someone and they become the new owner of that bitcoin without any record of it on chain. they wouldn't be able to then tax every single "sale" because there wouldn't be a record of them on chain so it would make it almost impossible to regulate.

Yes I remember that canned spiel from her about how criminals are finding "new ways" to perform transactions, including the use of self-custodial wallets, which are, and I quote, an "evermore sophisticated cryptocurrency technology."

I don't believe she is actually this stupid. I do believe she is a sociopath who will say anything to further her own career, including telling bold-faced lies to the nation, but this was written by one of her handlers who thought by saying this she could push her agenda in the right direction. The more people that find Bitcoin, the harder this will backfire on her.

There are lawmakers like old Elizabeth Warren who are already beginning to campaign for KYC on every nonhosted wallet. This is very headshaking because they want to control one of the cryptospace's best developments which is anonymity and the self custody of your cryptcoins, NFTs and tokens. They want to take our freedom away from the cryptospace.

There people in this forum that laugh at Robert Kennedy Jr, however, only he might be bitcoin's best chance to stop these politician's campaigns against the cryptospace.

These laws are from Congressman Senators and the President.

the IRS does not make them up.  Having worked for them three years And my wife worked for them thirty three years and my mom worked for them for twenty three years. the IRS are more like cops or meter maids. They are given a set of laws and make rulings on them. The last admin Trump and co ended the trade A btc for some ltc rule in 2018. No longer like kind.

They only allow real estate as like kind trades.

And not an apartment house for a home.

But a house for a house or an apartment house for an apartment house.

All my trades are fifo and the paper work is fucking nuts and I have a degree in accounting.

dca buy and hodl is the single best thing to do .

if I knew that I never would have mined since 2012.

I do 200 and 250 page returns and some years I make under 15000 usd.

What is the relationship here?
If the capitalization of cryptocurrencies is 1.4 trillion dollars, then we know for sure that the majority of USDC and USDT reserves are already invested in treasuries. But capitalization is a bubble, where there is very little real money, but most of this cryptocurrency capitalization is already working for the US economy. Therefore, it is beneficial for America for these stablecoins to dominate the cryptocurrency market. And if something happens, then all the blame can be shifted to the leaders of these companies.

So every time you want to use Bitcoin to buy a gift card, pay a bill, buy any physical or digital good, cash it out in a fiat currency other than the US dollar, its a capital gains event.

Stupid as all hell.

Clearly the government is not getting our best and brightest. To be frank I've only ever met a handful of "smart" government employees. And their jobs were incentive-based, not just a flat salary, which partially explains it.

I understand part of it is they want to make Bitcoin as inconvenient to use as possible so people will stick with the dollar, but in the long run I just don't see that happening. They can attempt to do it through threatening legislation, but its simply not going to work, mark my words.

The IRS are already very clear on this matter and have been for some time. Spending bitcoin on goods or services or trading it for an altcoin is the same as selling it for fiat as far as they are concerned.

However, might this little IRS rule also encourage the holders not to sell their coins hehehee? We can also use them as currency, particularly bitcoin. Does the rule say something about taxes and using your cryptocoins as currency? Also, what about coin to coin trades?

We've been over this before. The media are experts at taking numbers out of context and selectively reporting the things they want you to be angry about. National Health Expenditure was $4.3 trillion for 2021. We spend significantly more money than any other developed country and yet have significantly worse health in return, because our healthcare system is uniquely filled with unnecessary middle men who only care about making profits for themselves:

As I've explained above, $451 billion is still several hundred billion less than the completely unnecessary amount we throw away in unnecessary healthcare administrative costs every year. I'm also highly skeptical of this number.

The article you linked says it takes the number from this report: https://homeland.house.gov/wp-content/uploads/2023/11/Phase4Report.pdf
That report takes the number from this article, published by an anti-immigration think tank which is widely discredited: https://cis.org/Arthur/Bidens-Border-Fiasco-Costing-Local-Taxpayers-Billions
That article reaches that number by multiplying the estimated cost of an immigrant in NYC by the estimated number of immigrants in the country. It's estimated cost of an immigrant in NYC comes from this article: https://www.realclearinvestigations.com/articles/2023/04/20/where_did_all_the_biden_illegal_immigrants_go_hard-up_sanctuary_cities_like_new_york_are_only_part_of_the_answer_894505.html
That article reaches its estimate by saying that NYC pays $150,000 per immigrant, but it also says that 40,000 immigrants have cost $2 billion, which works out at $50,000 per immigrant, so the numbers are simply wrong.

So incorrect numbers, multiplied by guesswork, based on one of the most expensive states in the country. The final number is nowhere near accurate.

so i guess 2 wrongs really do make a right when it comes to uncle sam. he can do anything he wants to. including running up a huge debt that he'll never repay. the higher bitcoin goes in price the more they'll try and make life miserable for crypto users i would imagine.  bitcoin users in particular.



Migrant crisis has US taxpayers on the hook for up to $451B, House GOP report says
Americans could pay up to $451 billion to care for migrants who entered the US illegally, but have been released into the country or escaped from custody, according to a new report due out Monday from House Republicans and obtained exclusively by The Post.

The bill for government care and housing could total as much as $451 billion per year nationwide for apprehended migrants and known “gotaways” who have entered the US since 2021, according to figures the House panel cites from the Center for Immigration Studies.

https://nypost.com/2023/11/13/news/house-gop-report-cites-historic-451-billion-cost-of-migrant-crisis/


that's not just a one-off cost. it's per year.

not go get into any type of argument with you but you've always kind of been dismissive of budget expenditures saying how the the migrant situation is so tiny in comparison to the other things in the federal budget but not anymore. if the NYT story is true, then it's right up there with medicaid, medicare and a little less than half of the entire social security budget. is that big enough for you?

https://www.cbo.gov/publication/58888

Haha. Welcome to our broken government:


Senators attach completely unrelated pieces of legislation and completely unrelated amendments to bills all the time, as a way to sneak them through. Other senators will turn a blind eye to these unpopular pieces of legislation in return for their original legislation being passed without being vetoed. Which is why we end up with nonsense crypto legislation unless we agree to spend more and more of our tax money on bombing other countries.

imagine how much it would cost you to mail a few thousand pages of trades? better look into e-filing   but then you would be playing right into their hands. they WANT you to file electronically so it means less work for them. at some point i expect the IRS to refuse to accept paper returns in the mail just like banks refuse to accept coins.

check mark. i should give you a merit for that statement because it's the truth.


yeah but if they don't do anything to mitigate this situation, i would be really surprised. this thing has been a long time coming it appears. no one seemed to see it coming though.

https://coinledger.io/blog/form-1099-da

Why is the IRS creating Form 1099-DA?

In November 2021, the American infrastructure bill was signed into law by President Biden. The bill stated that cryptocurrency exchanges would be required to report their customer’s capital gains and losses to the IRS through 1099 forms starting in the 2023 tax year.

This law drew criticism from prominent voices in the cryptocurrency ecosystem. Cryptocurrency’s unique properties make it difficult for exchanges to accurately report their customers’ capital gains and losses.

It’s likely that the IRS is creating Form 1099-DA to tackle this issue and make it easier for cryptocurrency exchanges to report their customers’ activity.



they snuck it into the American infrastructure bill, whatever that bill was for. they just snuck it in no one knew about it until after it happened probably! thanks biden.

Would love to see the IRS inundated with tax returns each consisting of a few thousand pages of trades, which ultimately end up with no tax owed but which they have to spend many man hours trawling through. You want to set ridiculous rules? You enforce them.

That's it exactly. Guilty until proven innocent. They will assume you owe them thousands based on erroneous or entirely absent data, and it is up to you to prove otherwise.

I mean, this has been blatantly obvious for quite some time.

that's REALLY crazy. it's almost like they're forcing you to go underground trading p2p or use some dex or offshore exchange that is grudgingly willing to accept Americans as customers ( few and far between these days I would imagine!). not that coinbase or gemini or bittrex would be places i would reccommend to anyone but i guess they're better than having to go "offshore". but none of them is ideal.

only go after the worst offenders but probably still send out payments due to anyone they can get data on that they think owes some money. they just pop out a letter in the mail and assume their bill is valid unless you dispute it by a certain date. there was someone once that didn't know how to compute cost basis in the stocks they bought and the IRS assumed they had no cost basis: zero cost basis the entire sale was assumed to be profit. Guess how big that bill was? 



appreciate the kind words. bitcointalk is a pretty cool place and i have had alot of fun getting to be here. with regard to this story i found an update:

https://www.coindesk.com/policy/2023/11/16/us-lawmakers-urge-treasury-to-revise-proposed-crypto-tax-rules/

A group of bipartisan U.S. lawmakers have urged the Treasury to revise its proposed digital-assets taxation regime. The group is backing crypto representatives and lawyers who have called the proposed taxation scheme “dangerous and improper overreach.”

Chairman of the House Financial Services Committee, Patrick McHenry (R-NC) and Congressman Ritchie Torres (D-N.Y) led a group of nine lawmakers in the effort calling the tax reporting requirement “unworkable.”

so it's not like they're taking this lying down. it's being protested against so if this thing really passes i would REALLY be suprised. But if the IRS ignores all of these efforts and comments from the 124,000 people that submitted comments (you have to assume they were all against it!) then that just shows the government doesn't listen to the people.

I was reminded of this meme:



Several years back my state passed a ludicrous law that forbids any USA-based crypto exchange from servicing me as a customer (because the law's demands on exchanges are ridiculous), so what is being proposed is literally impossible for me to follow. I imagine there's at least hundreds of thousands (if not millions) of Americans in a similar situation. As we discussed in the other thread, there's no way the IRS will have the manpower & resources to track us all down, and they will only go after the worst offenders (according to tax data they receive from complying exchanges).


You ask some good questions larry, and seem to be interested in cutting-edge bitcoin tech & policy on your own accord, so you deserve every merit you get, even if it turns out you were a government mole all along

yep. that's the only logical conclusion. when you are trading on an exchange with simulated bitcoin...where you can't see the utxos or anything. just a balance on your screen. yeah you're gonna be at the mercy of whatever.

thanks for the 4 merit 

So, this rule has applied to stock brokers for a long time now, and it is not as bad as you describe. Typically, if you don't want FIFO, you go into your account settings and change it. I don't see why Coinbase couldn't do the same thing. The setting would apply to all the sales that follow so you don't have to notify Coinbase before every sale.

Furthermore, it wouldn't take much to add a feature to the sales process that lets the seller specify which lots they are selling from.

Now, of course the exchange has to add this capability, and if they don't then I don't know what happens. It might be a good idea to avoid exchanges that don't let you specify. OTOH, it might not even matter because if they don't do that, they probably aren't going to file the 1099, either.

And in the USA there are only 2 modes: FIFO and LIFO?
In Russia there is still a regime based on the average value.
I really sympathize with you. I have never read such tax nonsense. This is a clear attack on crypto traders and the remaining crypto exchanges in the US.

Exchanges simply won't support this. You think Coinbase is going to set up a process by which every time anyone makes any trade, they notify Coinbase in advance exactly which coins they are intending to trade with. And Coinbase keep a record of not just the balance on everybody's account, but exactly which coins were bought when, which coins were sold when, and which coins were traded when? This effectively means Coinbase would have to trace every single individual satoshi in their custody at all times. Logistical nightmare. And so when exchanges simply refuse to support this, everyone will default to FIFO and get hit with outrageous tax bills.

Yet another reason not to use centralized exchanges. You can easily avoid this by trading exclusively peer to peer, since whenever you sell any bitcoin you will be choosing which outputs to use and should know where those outputs came from, or you can use software to track it all for you as mentioned above.

The same happens in Europe, in fact let me quote:



They have a body equivalent to the IRS but people don't pay taxes for using Bitcoin as it is legal tender, or do you have to pay taxes for using dollars, calculating on every payment you make whether it has gone up or down?


Not really. The solution is to use software, as I said, although I suppose that the reliable one for the administration will be centralized, or that they put a tax exempt minimum for payments/transactions below a threshold, but I see it unlikely given how things are developing.

welcome to the USA where they don't want you to be in involving in anything. they want to treat cryptocurrencies like they do trading in the stock market which is a centralized exchange  

El Salvador doesn't have an IRS? a money hungry orginazation trying to take back as much money from people as they can while at the same time limiting their freedoms?

i don't know. they'll need to probably update their softwares so they can handle more than 1 form 1099-DA. that article gave a crazy example where someone had like 36 different form 1099s.  

but it's hard to imagine this new thing passing because if it does, it pretty much means buy and hold is the only way to avoid becoming a tax evader.

The thing is that the Bitcoin was not intended for that, to be calculating the equivalence with the fucking fiat every time you spend something and then calculate the difference with the acquisition price to calculate the potential tax. Another thing is how things have developed. But in El Salvador they don't have that problem, for example.

There are programs that automatically track all transactions, such as CoinLedger or Cointracking, so technically there is no problem.

more from the story!

If the exchange doesn’t support specific identification, they will default to FIFO reporting for all their customers. Meanwhile, taxpayers who previously used HIFO (highest in, first out), CCFO (closest cost, first out) or some other cost-basis method in prior years end up with a perpetual cost-basis mismatch. The exchange issues a 1099-DA on a FIFO basis and taxpayer A calculates a totally different gain or loss using their own cost-basis method. You should start to see where the extra work is creeping in.

get ready for a new IRS tax form guys. it's called 1099-DA. Double trouble that's what the D stands for.   all you can do is hope they don't come out with it.

who would want anything to do with anything that made them have to do something like that? i would have to be guaranteed 100% returns to even go through something like that.

1099-DA cost basis complicates the tax record, and even if a program is created that makes everything unified, complications will exist, and failure to do so may return you to FIFO, which may make a difference in calculating taxes if you use another method.
Tracking and calculating gains separately for each address is a never-ending headache and may lead many to stop trading, so imposing taxes based on returns will solve many of this headaches.

I already do fifo you planner it. and don't trade much.

but if you trade it sucks bigly.

https://www.coindesk.com/consensus-magazine/2023/11/13/the-irs-is-making-crypto-compliance-impossible/


The IRS states, “A specific identification of the units of a digital asset sold, disposed of, or transferred is made if, no later than the date and time of the sale, disposition, or transfer, the taxpayer identifies on its books and records the particular units to be sold…”
If a taxpayer uses a broker they must instruct the broker which digital assets they intend to sell before-the-trade. In the case of a broker taxpayers must:
Identify and document digital assets in their own records
Tell the broker to sell the assets they’ve identified
The IRS states, “…the taxpayer specifies to the broker having custody of the digital assets the particular units of the digital asset to be sold…”
Now, if you don’t meet the spec id requirements, your basis defaults to FIFO and you could incur a gigantic tax liability. Your spec ID gets recalculated under a FIFO basis.


you guys better hope this little rule doesn't pass because if it does then you are screwed if you live in the usa.