Another Internet Bubble Lesson (Pay Your Crypto Taxes)

emodendroket 8 years ago | |

Probably because a lot of people who've gotten into Bitcoin mining don't have any experience with significant taxable income that isn't a wage.

vinniejames 8 years ago | | |

If you make thousands or millions trading an asset and think somehow you don't owe taxes, you've got other problems than just the IRS

SuperNinKenDo 8 years ago | | |

That's actually not what is being talked about in the article at all. I think anybody would understand that if you make money by selling off your crypto, you would owe taxes on it, that's not what the article is pointing out. The article is pointing out that you may owe taxes on the value of crypto your received at a certain time, or traded for another crypto at a certain valuation, even if you never sold the asset for fiat money at that valuation. Meaning you could owe hundreds of thousands in taxes on an asset that never made you any money at all. That really is worth pointing out to people.

cantrip 8 years ago | |

It's not by any argument just saying "pay your taxes".

The article outlines an interesting situation specific to bubble valuations like the dot com boom or (possibly) crypto currency in which you can easily end up owing far more in taxes to the IRS than the current worth of your holdings.

That, to me, is worthy of discussion and a front page place on a tech news site.

jsgo 8 years ago | |

to emodendroket's point, I recall reading an article that in the previous year (2016) that the IRS stated that very few people were claiming bitcoins in their taxes. I'm not versed on cryptocurrencies so I don't know how plausible it is that they know this, but it seems like something they're looking at now.

neuronexmachina 8 years ago | | |

Basically, only 802 people told the IRS about their 2016 profits in CoinBase, one of the more popular exchanges. It's safe to assume that number was a tiny fraction of the actual US users.

http://fortune.com/2017/03/19/irs-bitcoin-lawsuit/

AznHisoka 8 years ago | | |

How would the IRS know the exact number? What about people who lumped their bitcoin gains with their other capital gains?

jsgo 8 years ago | | |

I imagine it is like anything else: they don't know, but if they do an audit or another agency is investigating you for something else and they notice, then they start investigating it.

I do think it is fair to say that there are more than 802, apparently, people in the United States in 2016 that mined/bought/sold bitcoin so they definitely see there is a problem.