Re:Coinbase Ordered to Turn Over Identities of 14,355 Crypto...
by sf_rob on Thursday November 30, 2017 @12:09PM
(#15817365)
This may have been good advice previously, but the IRS has issued guidance on buying/selling BTC and mining. The former is treated as capital gains, the latter income. AFAIK they have not issued guidance on coin conversions (probably capital gains events) or hark forks.
Re:Coinbase Ordered to Turn Over Identities of 14,355 Crypto...
by lucaspiller on Thursday November 30, 2017 @01:00PM
(#15817879)
Here is the UK’s HMRC equivalent for anyone wondering:
https://www.gov.uk/government/publications/revenue-and-custo...
Re:Coinbase Ordered to Turn Over Identities of 14,355 Crypto...
by tc313 on Thursday November 30, 2017 @12:07PM
(#15817347)
Wouldn't you be able to deduct the cost of the cocaine? I'm not saying it'd be smart, just legal from a tax standpoint.
Re:Coinbase Ordered to Turn Over Identities of 14,355 Crypto...
by sandworm101 on Thursday November 30, 2017 @12:17PM
(#15817443)
You could, and sometimes people do actually do this. But that means admitting to the cocaine. You would need to find a rare situation where the statute of limitations for the illegal goods issues has run, but you are still wanting the deduction. A few generations ago people did sometimes pay taxes on totally illegal income, albeit without itemizing where it came from. They did this so they couldn't be charged for tax evasion. They had paid, just with some paperwork errors not listing where it came from.
Re:Coinbase Ordered to Turn Over Identities of 14,355 Crypto...
by jstarfish on Thursday November 30, 2017 @01:05PM
(#15817937)
It's still possible (and advisable) to declare lump sums, but you lose the ability to take any deductions on non-itemized income. There is no obligation to admit to or report the source of said income.
Re:Coinbase Ordered to Turn Over Identities of 14,355 Crypto...
by prepend on Thursday November 30, 2017 @02:24PM
(#15818681)
The IRS cannot share information with law enforcement agencies without warrant. So it’s not like they would tell the DEA or FBI about your $1M cocaine cost of goods sold.
Of course when you get busted for drugs, it’s pretty likely that your tax records will be gone through.
I saw a documentary where sex workers had accountants and such and declared all their illegal income. It was pretty interesting. But prostitution isn’t as severely prosecuted as drugs.
Re:Coinbase Ordered to Turn Over Identities of 14,355 Crypto...
by sandworm101 on Thursday November 30, 2017 @03:05PM
(#15819014)
Well, they should not. They are perfectly capable of doing so. Try telling them that your business building and selling pipebombs is paying well. Law enforcement will get wind.
First principal of TaxLaw: It is all income unless it isn't. It is always taxable unless you can find language in the code exempting it. I'd go a little further in saying that the taxable amount isn't "Y-X", ie the profit. The taxable amount is actually just Y, the sale price. Income is all money literally coming into you. You then need to find a deduction for X, the cost of purchasing the asset. Maybe you find one, or maybe you bought your bitcoins with cocaine and so owe on tax on the entire sale price. Or maybe you have already deducted that cost in a previous year and so cannot deduct it again now. Or maybe you traded your bitcoins for some other bitcoins last year, realized the gain then, and now have to start reviewing the like-kind exchange rules. (I'm in that 0,01% of people who actually enjoy tax law. It's actually very eloquent.)