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

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Megalith

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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.
 
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
 
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
 
katanaD said:
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
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Nah, think about it. Must be a lot of legislators who had just under $600 in transactions. :)
 
Wait till the Fed gets in on this to get their pound of flesh. Cap gains are gonna be a bitch.
 
katanaD said:
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
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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.
 
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.
 
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.
 
nutzo said:
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.
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If you buy coins at 200, and then sell them at 2000, you have to pay taxes on that.
 
steakman1971 said:
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.
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400 bucks is a freaking rounding error. I'd laugh in their face.
 
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.
 
Kardonxt said:
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.
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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.
 
Kardonxt said:
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.
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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.
 
Biznatch said:
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.
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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?
 
U-238 said:
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?
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That's currency trading, and yes you would owe taxes on your gain.
 
U-238 said:
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?
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Yup, it should be treated like other currencies. You sir, are correct.
 
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.
 
DPI said:
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.
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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)
 
DPI said:
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.
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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.
 
Imagine having $20,000 worth of bitcoins and still have them from 2013-2015. Hell even 2016.5.
 
DPI said:
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.
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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 :)
 
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.
 
John Ransom said:
Incorrect
Notice 2014-21 that classified cryptocurrency as property[1], not currency, for federal income tax purposes.
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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.
 
B00nie said:
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 :)
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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. :)
 
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.
 
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.
 
DocFaustus said:
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.
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gotcha, sorry for that.
 
atp1916 said:
Why governments around the world don't like fully transparent transaction ledgers is beyond me...
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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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