Coinbase Ordered to Turn Over Identities of 14,355 Cryptocurrency Traders to the IRS

Discussion in 'HardForum Tech News' started by Megalith, Nov 30, 2017.

  1. Megalith

    Megalith 24-bit/48kHz Staff Member

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    A California federal court has ordered the popular cryptocurrency exchange and wallet service Coinbase to turn over records on thousands of customers to the Internal Revenue Service. The requested records include the name, birthdate, address, and account activity for any user who bought, sold, sent, or received more than $20,000 worth of Bitcoin in their accounts between 2013 and 2015.

    The court order is a reaction by the IRS to possible tax avoidance on cryptocurrency gains. Arguably, though, tax law simply hasn’t caught up with cryptocurrency, and the order effectively places over 14,000 Coinbase users under investigation simply for using a new technology. US legislators introduced a bill in September that would exempt any cryptocurrency transaction under $600 from taxation.
     
  2. shad0w4life

    shad0w4life Gawd

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    Good, pay your taxes! This might spread out the card..knew I should bought the water cooled Vegas when they were on for $800 CAD
     
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  3. katanaD

    katanaD [H]ard|Gawd

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    why is there any exemption at all? any transaction i do using dollars that is taxable, generally sales tax, i am liable for, not anything over $600. thats an odd exemption
     
  4. canmanone

    canmanone Limp Gawd

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    Holy shit im fucked!!!
     
  5. BSmith

    BSmith [H]ard|Gawd

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    Nah, think about it. Must be a lot of legislators who had just under $600 in transactions. :)
     
  6. DedEmbryonicCe11

    DedEmbryonicCe11 [H]ard|Gawd

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    Sadly, that is what makes the most sense.
     
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  7. HeadRusch

    HeadRusch [H]ard|Gawd

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    My guess is this has nothing to really do with Tax burdens and everything to do with Money Laundering investigations.
     
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  8. thesmokingman

    thesmokingman [H]ardness Supreme

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    Wait till the Fed gets in on this to get their pound of flesh. Cap gains are gonna be a bitch.
     
  9. nutzo

    nutzo [H]ardness Supreme

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    They are not looking at sales tax, they are looking at income tax.
    Technically, if you mine bitcoin, you own income tax on any money you make. Of course you should be able to write off any expenses like that high-end video card or the electricity you used. :D

    It's not worth their time to go after people who have mined a few hundred dollars, so I would assume that's where the $600 transaction amount comes from.
    If you make a few hundred mining it would be likely be considered a hobby, not a business. :p

    The way to avoid this is to buy gift cards for places you already shop/eat at a few hundred $ at a time, and then spend the gift cards. Hard for them to trace gift cards.
     
  10. Retronym

    Retronym Something big is coming.

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    I've always operated under the assumption that everything I did from CoinBase was watched.

    They stop short of requiring a stool sample when you set up your account.
     
  11. steakman1971

    steakman1971 2[H]4U

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    The IRS is not very friendly when you don't pay taxes. I made an honest mistake in calculating the sale of stock options once - I owed them about $400 in taxes if I remember right. Well, I got fined and had to pay interest on my owed taxes. They charged 12% interest! Shit, I wish I could have been getting 12% interest somewhere. My fine was around $1000 (and since it was my first time, my penalty was reduced. Thanks guys!)
    For money laundering, doesn't the Secret Service get involved with that? Pretty sure they are involved with counterfeit money.
    Basic lesson - don't fuck with the governments money.
     
  12. Verge

    Verge [H]ardness Supreme

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    If you buy coins at 200, and then sell them at 2000, you have to pay taxes on that.
     
  13. RogueTadhg

    RogueTadhg [H]ard|Gawd

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    If only I had such problems. :cry:


    The government doesn't like competition.
    Death and Taxes.
    ..and whatever other "They're gonna get their money" sayings you can think of.
     
  14. Retronym

    Retronym Something big is coming.

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    400 bucks is a freaking rounding error. I'd laugh in their face.
     
  15. RogueTadhg

    RogueTadhg [H]ard|Gawd

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    You could laugh in their face. But you'll still owe them that money and more. Might as well give them pennies and count them all.
     
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  16. Kardonxt

    Kardonxt 2[H]4U

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    I wonder how value is determined. I was selling bitcoins as low as $8 at one point. That means $16 of coins adjusted to current value would meet their criteria and essential they will be handing over the records of everyone.

    If its based of value at the time I won't have anything to worry about.
     
  17. steakman1971

    steakman1971 2[H]4U

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    I would think the value would be similar to how you calculate profit for stocks. You buy a stack for $1 a share and sell it for $2. You made $1 so have to pay tax on the gain. Your broker would send you a list of the sell price. You would have to know the buy price (which you should have a transaction record for).

    However, not sure how Bitcoin shows up on taxes.
     
  18. Biznatch

    Biznatch 2[H]4U

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    You only pay taxes on the money you made, it has nothing to do with the current value. If you bought at 8 and sold at 16, you'd be paying capital gains tax on the 8$. At least capital gains is taxed less than income tax, especially in the higher brackets.
     
  19. DocFaustus

    DocFaustus 2[H]4U

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    They may not have asked for it but I still provided one.
     
  20. U-238

    U-238 Limp Gawd

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    My question is, does that even count as profit since all it is, in reality, is a currency exchange? If I took $100 and exchanged for $200 worth of Canadian dollars at a 2:1 exchange rate, then later find out that the Canadian dollar got much stronger and I took that $200 Canadian and exchanged it for $300 USD it would look like I made $200 but, in reality, I didn't really make anything, the US dollar just fell in value. That's essentially what's happening with Bitcoin now so why should it be treated any differently?
     
  21. nutzo

    nutzo [H]ardness Supreme

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    That's currency trading, and yes you would owe taxes on your gain.
     
  22. DocFaustus

    DocFaustus 2[H]4U

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    Yup, it should be treated like other currencies. You sir, are correct.
     
  23. John Ransom

    John Ransom n00b

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    Incorrect
    Notice 2014-21 that classified cryptocurrency as property[1], not currency, for federal income tax purposes.
     
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  24. DPI

    DPI Nitpick Police

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    So much for the salty naysayers that always insist Bitcoin is "fake internet monopoly money" that "isn't even real".

    Apparently it's real enough for the IRS.
     
  25. velusip

    velusip [H]ard|Gawd

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    It starts...
     
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  26. John Ransom

    John Ransom n00b

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    Irrelevant argument to the value of bitcoin, IRS comes after anything you make money on, even fraud. (not saying bitcoin is, just saying its irrelevant)
     
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  27. NickJames

    NickJames [H]ardness Supreme

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    They don't care how much Bitcoin you own, just that you exchanged it for USD. If you buy a comic book for $1,000 then sell it for $10,000, you still have to pay your taxes on the difference.
     
  28. nightanole

    nightanole [H]ard|Gawd

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    Imagine having $20,000 worth of bitcoins and still have them from 2013-2015. Hell even 2016.5.
     
  29. B00nie

    B00nie [H]ardness Supreme

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    And still Bitcoin is not accepted as payment in majority of shops in the planet. You'll have to pay your taxes in real money :)
     
  30. atp1916

    atp1916 [H]ard|DCoTM x1

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    0 problems with this.

    Pay your taxes, respect the law of the land, and don't bitch about it.


    - bitcoin enthusiast / miner
     
  31. John Ransom

    John Ransom n00b

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    The day real blockchain commodities exist i'm dumping my money into it. So 1 ounce of gold in vault, 1 goldbitcoin. etc. Real price discovery would be amazing. I still don't know how to prevent an entire fraud mechanism other than auditing firms etc. but still way better than what exists today.
     
  32. DocFaustus

    DocFaustus 2[H]4U

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    I think you are reading my reply a bit out of context, but fair enough, I did literally say that.

    The person I was quoting was trying to imply that there would be no tax burdens for trading currencies and saying bitcoin should act like that. I was agreeing with his conclusion in a bit of tongue-and-cheek manner because either way, there is still an expectation that it will taxed.
     
  33. Darth Millennial

    Darth Millennial Gawd

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    I'm certain the IRS would be more than willing to seize the coin in the process if you don't have the scratch to pay. They would liquidate it and deduct it from your bill. :)
     
  34. Zarathustra[H]

    Zarathustra[H] Official Forum Curmudgeon

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    Yeah, anyone who thinks cryptocurrencies are anonymous is kidding themselves.
     
  35. Drakeniir

    Drakeniir [H]Lite

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    I imagine the IRS is only concerned about profits made from converting bitcoins into fiat. It would be pretty hard to tax your bitcoins, unless the accept bitcoins in payment. then again, if the US government used all those systems they used for PRISM to mine crypto they might be able to pay off the national debt in a few decades.
     
  36. Wolf_Tech

    Wolf_Tech Limp Gawd

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    Well considering Trump's GOP Tax bill which just gives the rich more money, I guess they need to find more taxes. I laughed at a summit someone ask a whole bunch of rich CEO what they would do with the extra money from tax relief. Almost the entire room said they would not invest in more employee's or into the company. 90% said they would buy a new boat or fancy new house. Take it from me rich people are the cheapest people in the world. I have worked for some in my lifetime. I worked 8 hours for one and he only paid me 300.00 for the work it was an entire day of networking his house. Last time I worked for a middle class house same thing I asked for 600.00 for the work and he paid that plus a 400.00 tip because I did such a nice job.
     
  37. John Ransom

    John Ransom n00b

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    gotcha, sorry for that.
     
  38. atp1916

    atp1916 [H]ard|DCoTM x1

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    Why governments around the world don't like fully transparent transaction ledgers is beyond me...
     
  39. John Ransom

    John Ransom n00b

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    i do hope that is sarcasm
     
  40. Biznatch

    Biznatch 2[H]4U

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    They do, but only for us peasants..... They don't want us to see their shady bullshit or we'd no longer be lazy piece of shit couch potatoes, we'd be ANGRY lazy piece of shit couch potatoes....
     
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