IRS Nabs Big Win Over Coinbase In Bid For Bitcoin Customer Data

originally posted by: Tempter
Does the SEC have authority over a currency that the government doesn't print?

The IRS has authority on any United States citizen's financial gains regardless the manner of attainment.

Try something. Call the IRS and say, 'I purchased X for $YYY and then I sold it for $YY,YYY. Do I have to pay taxes on that?', and let us know what they say.

Replace X with gold, Bitcoin or dog crap.

originally posted by: SlapMonkey
Folks...folks...calm down.

Capital gains taxes only apply to increased values of investments (or anything where monetary value was gained) if you sell them off for a profit. If you leave all of your money invested in your cryptocurrencies, and you don't sell them off, you don't have to report anything or pay any taxes until you DO sell them off for a profit.

That profit is what you will pay taxes on.

Here's a neat little tidbit of info: Even if you sell a car for more than you bought it for, that is supposed to be reported as a capital gain and the profits are taxable. This doesn't only affect investments, but many other things in life.

I can guarantee you that a large portion of Americans are guilty of evading capital gains taxes and not even knowing it, every single year.

ETA:

5 Things You Should Know About Capital Gains Tax

Only thing I would add, and this is particularly important for cryptos, is that if you buy something directly with an asset that has increased in value then you can still be subject to capital gains tax.

a reply to: AugustusMasonicus

I do not think you understand.

Bitcoin is a currency.

In what reality do you pay taxes on the conversion of currencies and call them "profits".

a reply to: peter_kandra


Fair enough thank you very much.

originally posted by: ParasuvO
a reply to: AugustusMasonicus

I do not think you understand.

Bitcoin is a currency.

In what reality do you pay taxes on the conversion of currencies and call them "profits".

In this reality, where it's not a currency recognized by the government that makes our tax laws.

a reply to: AugustusMasonicus

I would disagree. While it has been demonstrated that their are some truly ignorant people who don't understand investing and/or taxation on gains I think most people buying Bitcoin realize they will need to pay taxes on their gains.

I'll have to disagree here.

The impetus for Bitcoin (and crypto in general, before and since) has been a decentralized financial system without the need for financial institutions. While it's not spelled out in the whitepaper, the implications are clear.

What function do banks serve in regards to government oversight? They require account holders to prove their identity (at least here in the US), they report on transactions of certain sizes, maintain records of transactions and provide a mechanism by which assets can be seized or frozen by court order.

Without banks, oversight and enforcement is impossible. In that way, Bitcoin and the like enable many of the same benefits as cash with the convenience of electronic banking.

That's why it's perfect for Internet black markets and other illicit transactions.

Now that's not the only reason why one might be interested in crypto of course. In other ways, crypto can for instance, serve much the same function as precious metals. And that's without getting into the many emerging uses for blockchain tech.

As it turns out though, crypto as a independent financial system is a mixed bag. While Bitcoin can actually be used to buy stuff, a lot of crypto doesn't really function as currency at all. They're more like a commodities that people speculate on. Furthermore, the same factors that led to our present financial systems are predictably at work with crypto.

As the market caps have skyrocketed, individuals and businesses involved in crypto actually want the security afforded by government oversight. People place their crypto in things like exchange wallets and they want to know that there's some sort of recourse if the operator absconds with their crypto. They want to know that a outfit like Coinbase is legitimate and can be held to account.

And of course, people want to be able to convert their crypto fortunes to the real world. What good is having millions of dollars worth of crypto if you can't actually buy millions of dollars worth of stuff with it?

The irony here is that the success of crypto is leading it to become ever more like traditional financial systems, including the establishment of financial institutions and a desire for regulation.

It's a schizophrenic #show.

originally posted by: ParasuvO
a reply to: AugustusMasonicus

I do not think you understand.

Bitcoin is a currency.

In what reality do you pay taxes on the conversion of currencies and call them "profits".

Arguably not really a currency.

Regardless you pay capital gains on Forex trading.

originally posted by: AugustusMasonicus

originally posted by: face23785
Which is probably most of the people buying it.

I would disagree. While it has been demonstrated that their are some truly ignorant people who don't understand investing and/or taxation on gains I think most people buying Bitcoin realize they will need to pay taxes on their gains.

Stop being so mean to people who don't understand investments! I'm glad you do, I wish I did, but don't be so mean about it. People have to learn!

a reply to: AugustusMasonicus

The topic is also about crypto currency which you dont understand..

a reply to: AugustusMasonicus

But you do have to pay taxes on Bitcoin proceeds. You'd know this if you understood investing. Or tax policy. Which you don't.

I said transactions. Taxes and fees are not collected for that. If you read my post you would know that too.

a reply to: theantediluvian

I don't think the contention is that Bitcoin is used as an alternative form of currency, anonymous splurging on the dark web, black market shenanigans, whatever. The issue is when you convert it back to dollars it is then taxable. So if I have $10 dollars worth of Bitcoin, go crazy on the dark web selling fetuses to some really weird people and convert my profit back to dollars now worth $10,000, those Benjamin's are taxable.

originally posted by: FauxMulder
a reply to: theantediluvian

I don't think the contention is that Bitcoin is used as an alternative form of currency, anonymous splurging on the dark web, black market shenanigans, whatever. The issue is when you convert it back to dollars it is then taxable. So if I have $10 dollars worth of Bitcoin, go crazy on the dark web selling fetuses to some really weird people and convert my profit back to dollars now worth $10,000, those Benjamin's are taxable.

I'm not sure who's contention that may be.

The point of my OP is that the Feds want - and now have - visibility into the transactions that caused "said profit".

But this is far from over. Watch...

originally posted by: intrptr
a reply to: AugustusMasonicus

But you do have to pay taxes on Bitcoin proceeds. You'd know this if you understood investing. Or tax policy. Which you don't.

I said transactions. Taxes and fees are not collected for that. If you read my post you would know that too.

The IRS isn't attempting to tax transactions which was what you originally claimed.

originally posted by: purplemer
a reply to: AugustusMasonicus

The topic is also about crypto currency which you dont understand..

What do you think he has got wrong?

originally posted by: ParasuvO
I do not think you understand.

Bitcoin is a currency.

In what reality do you pay taxes on the conversion of currencies and call them "profits".

It's obvious you don't understand. Income tax is due on the proceeds of any sale where you sold something for more than you purchased it. I am not the only one trying to explain this to you.

originally posted by: ScepticScot

originally posted by: intrptr
a reply to: AugustusMasonicus

But you do have to pay taxes on Bitcoin proceeds. You'd know this if you understood investing. Or tax policy. Which you don't.

I said transactions. Taxes and fees are not collected for that. If you read my post you would know that too.

The IRS isn't attempting to tax transactions which was what you originally claimed.

Yes they will. The Big Banks and the gubment want regulatory control, the banks use the fed to force disclosure of private sales, first.

Then the fed will file charges for income tax evasion for all the transactions to date. Thats how they always take down businesses they don't like.

Income tax evasion.

originally posted by: theantediluvian
I'll have to disagree here.

Replace Bitcoin with gold. Do you have to pay taxes on your sale of gold if there are proceeds?

What Bitcoin is happens to be irrelevant. People having been trading on the ForEx long before Bitcoin and they pay taxes on their proceeds.

originally posted by: purplemer
The topic is also about crypto currency which you dont understand..

The topic is about capital gains/income which you are ignoring.

originally posted by: intrptr

I said transactions. Taxes and fees are not collected for that. If you read my post you would know that too.

I don't care what you think you mean, profits are table regardless of where they are generated. I understand you probably never had a profitable endeavor but that doesn't excuse you from knowing that they are taxable.

originally posted by: angeldoll
Stop being so mean to people who don't understand investments! I'm glad you do, I wish I did, but don't be so mean about it. People have to learn!

I'm selectively mean to the consciously ignorant. They kind of earned it.

Maybe they can pay taxes on that earnings for good measure. ;P