the IRS started sending out letters to Coinbase users telling them coins they bought for pennies require thousands of dollars in taxes on even if they used the coins to do something like buy a pizza before the price went up.
Do you have any evidence to go with with your assertion, or are you just doubling down on your fever dreams?
Jim Rickards claims it was happening to people:
"But when K read the 1099, it got even worse. It showed that he owed $2.4 million in taxes, despite his estimate that he only put $8,000 into cryptos. K has decided to sit tight in the belief that he does not owe the taxes. Big mistake."
Hmm. I've not had time to keep up with Rickards' emails lately. Trawling through my archives, I find this sent by him on 2018 Feb 26:
This would rank as the funniest article of the week if it weren’t so sad for the individual involved. We’re all familiar with the IRS Form 1099. That’s the one used to report most income other than regular wages that go on Form W-2. The person paying the income — it could be a bank, broker or any supplier — files a copy of the 1099 with the IRS and sends one to the income recipient. It’s the recipient’s job to report the income on their tax return. By the way, IRS computers match 100% of the 1099s they receive with what taxpayers put on their tax returns. It’s a kind of computerized audit. Those who don’t report the income may not get a knock on the door, but they will definitely receive an official letter asking the income recipient to explain the discrepancy. Cases just escalate from there. Coinbase, a major U.S.-based cryptocurrency exchange (not to be confused with Coincheck, the subject of the story above) just sent a Form 1099 to one of its customers identified only by the initial “K” in this story. K was initially freaked out even to be receiving a 1099 from a crypto exchange. What happened to the anonymity in the crypto world? Apparently, it doesn’t exist, as I have been warning for years. But when K read the 1099 it got even worse. It showed that he owed $2.4 million in taxes, despite his estimate that he only put $8,000 into cryptos. K has decided to sit tight in the belief that he does not owe the taxes. Big mistake. The IRS will take its copy of the 1099 from the exchange and assert that K does owe the taxes. The IRS puts the burden of proof on the taxpayer to show they don’t. Courts have backed up the IRS on this burden-of-proof approach. Just ask Al Capone, the notorious gangster who went to Alcatraz not for extortion and murder but for not paying his taxes! K will find this out the hard way, as will millions of other crypto customers. The IRS is warming up for a bonanza of tax claims. Cryptocurrency traders should get ready for the mother of all tax nightmares.
Something in this does not match my experience.
I've been 1099'd by Coinbase as well. Just buttresses my documentation. However, the 1099 I received was a 1099-K. Are you familiar with the purpose and structure of a 1099-K? Nowhere on a 1099-K is any indication of tax owed. All it is is a month-by-month accounting of USD-denominated revenues. Conspicuously absent is any mention of USD-denominated expenses.
As we know, the IRS does not claim that you owe income tax on revenue. The IRS claims you owe income tax on income. Which is revenue minus expenses.
Now, it is kind of odd that Coinbase chose the 1099-K as a form to file. This is usually used to track things such as revenue from credit card processors.
But regardless, it is pretty silly that someone in the chain (after reading the source article which is short on details, Jim seems to be taking on faith the claim that the specific 1099 sent to "K." shows tax owed) seems to be confusing revenue with income.
Tempest in a teapot.
. 