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

a reply to: Xenogears

Owning an item isn't taxed. Selling/trading it is because of the gains you got for it. If you're bartering, the items you got in exchange for whatever you traded away still hold value. If those items are worth more than the cost to obtain the item you traded away... that's profit.

An autograph isn't worth anything until you go to sell it.

originally posted by: Xenogears

originally posted by: Aazadan

originally posted by: Xenogears
Bartering shouldnt be subject to taxes.

Why? If you gain a profit in the transaction, why shouldn't it be taxed?

Profit?

Who decides what's profit?

If a famous person trades you a personal item even a 5$ dvd, it may be worth tens or hundreds of thousands in the open market. Say George Lucas had a vhs of the original star wars. That'd be worth a pretty penny especially if authographed.

Should someone under say the poverty line be penalized with thousands in taxes for getting an authograph?

If it's worth more when you sell it or exchange it than it was when you got it then it's a profit.

There is a threshold before capital gains kicks in so most people below poverty line would not pay capital gains.

originally posted by: Xenogears
Bartering shouldnt be subject to taxes.

Take it up with the IRS, the United States tax code makes bartering a taxable exchange.

William Shatner sold a kidney stone for charity. If instead he gave it to a fan. Does the fan have to pay taxes as if he got 10s of thousands of dollars?

If he sells it he pays taxes on the gain.

originally posted by: ScepticScot

If the value of an asset increased and you use that asset to buy something directly, even if you never transform it into dollars, than you are still liable for capital gains on the increase.

Tax liability in the US is calculated in dollars even if you don't use them.

That doesn't make any sense.

If I collect baseball cards, and I buy a particular card that goes up in value while I hold it, then I trade that card for two other cards from a friend of mine, do I pay tax on the increased value of my baseball card because I exchanged it for other cards?

Who decides what the "dollar value" of the exchange is worth, when cash wasn't used?

How do I even report the "dollar value" of the transaction when it was simply an exchange of goods, with no cash inter-mediating the exchange?

If "legal tender" isn't used in a transaction, then there's no tax. There can't be, because there was no "market discovery" of the price of these things involved.

When everybody is using bitcoin to exchange goods, and avoiding all "legal tender", how would the government even determine the price of things in terms of USD?

a reply to: AMPTAH

There is constantly updated market price for bitcoin. Determining value/ profit is straightforward.

Check with the IRS if you don't believe me.

originally posted by: AMPTAH
If I collect baseball cards, and I buy a particular card that goes up in value while I hold it, then I trade that card for two other cards from a friend of mine, do I pay tax on the increased value of my baseball card because I exchanged it for other cards?

Yes, it's called capital gains.

When everybody is using bitcoin to exchange goods, and avoiding all "legal tender", how would the government even determine the price of things in terms of USD?

Income taxes. They don't apply to only USD earned.

originally posted by: Aazadan

Income taxes. They don't apply to only USD earned.

I only report and pay my taxes in USD.

So, if I only have bitcoin and goods, there's no tax to report or pay.

When the IRS starts accepting bitcoin, then things may change.

For now, I'm only responsible for the USD value of things that go up in value that have been bought by and exchanged for USD. Intermediate transactions that involve the exchange of goods for other goods are outside the domain of the IRS law.

If the IRS disagrees, they can always send me a note with an assessment of the value in USD, with a detailed explanation of how they are able to arrive at that value for a good that never traded in USD.

I'm only responsible for reporting the things I understand, and know how to value. Transactions outside the USD marketplace are beyond my ability to assess.

If I smile at a woman, and she smiles back, I don't know how to value that transaction of exchange of smiles in terms of USD. So, I pay no taxes on those things

originally posted by: AMPTAH

originally posted by: Aazadan

Income taxes. They don't apply to only USD earned.

I only report and pay my taxes in USD.

So, if I only have bitcoin and goods, there's no tax to report or pay.

When the IRS starts accepting bitcoin, then things may change.

For now, I'm only responsible for the USD value of things that go up in value that have been bought by and exchanged for USD. Intermediate transactions that involve the exchange of goods for other goods are outside the domain of the IRS law.

If the IRS disagrees, they can always send me a note with an assessment of the value in USD, with a detailed explanation of how they are able to arrive at that value for a good that never traded in USD.

Just because you want something to be true doesn't make it so.

originally posted by: ScepticScot

Just because you want something to be true doesn't make it so.

That's ok.

We all do what we think is right.

The burden is on the IRS to prove me wrong.

I pay my taxes "voluntarily".

So, I can only volunteer what I understand I need to pay.

The case began in November of 2016 with a request filed on behalf of the IRS to serve a "John Doe" summons on all U.S. Coinbase customers who transferred Bitcoin, a convertible virtual currency, from 2013 to 2015. A "John Doe" summons is an order that does not specifically identify the person but rather identifies a person or ascertainable group or class by their activities. The IRS argued that the "John Doe" summons was necessary because they had found evidence of noncompliance and underreporting among Coinbase customers - the agency just couldn't identify the exact identities and scale of the problem without more information. The IRS was initially seeking all records, including third party information, related to Bitcoin transactions conducted by U.S. Coinbase customers over the 2013 to 2015 time period.

No skin off my nose.

I wasn't a customer back then.

originally posted by: AMPTAH

originally posted by: ScepticScot

Just because you want something to be true doesn't make it so.

That's ok.

We all do what we think is right.

The burden is on the IRS to prove me wrong.

I pay my taxes "voluntarily".

So, I can only volunteer what I understand I need to pay.

That does not sound like a very solid defense.

originally posted by: hopenotfeariswhatweneed


That does not sound like a very solid defense.

You must be able to put a USD price value on something before you can tax it.

Goods used in exchange of other goods have no "certain" USD price connected to the transaction.

So, who is going to tell me what tax I owe?

When the IRS tells me what tax I owe, and proves to me their method of determining it is right, then, of course, I pay the tax.

But, I don't know how to do this on my own.

Nor can I be expected to know, since I didn't use USD in my transactions.

a reply to: AMPTAH

I get what you're saying, I assume it would be the enforcement arm of government being the IRS, in my experience they send you a bill and it's up to you to prove to them you don't owe them anything.

a reply to: hopenotfeariswhatweneed
The reality is though, the enforcement arm wouldn't have any idea that a bill needs to be sent - unless of course you've voluntarily declared the gain. Of course in instances where the assets are "big" and "obvious" like a house or car, that might get their attention - but in cases where we're talking small/inconspicuous or "everyday items" purchased with cryptocurrencies (which will inevitably be more common/possible in the future) - there is very little they can do to see and therefore enforce any capital gains tax owed.

Their best bet at that point would be to make the acceptance of cryptocurrencies for purchases illegal (at least on a retail level).

a reply to: Navieko

I think you outlined the best possible reasoning for a use tax.

a reply to: JinMI
But isn't a use tax still reliant on the taxpayer to voluntarily calculate and declare the amount owed?

Or are you referring to a kind of "transaction tax" (paid at the point of transaction) - which in theory - if almost all transactions were done digitally, could remove the need for just about any other type of tax. The tax departments at that point would no longer be necessary. It would however require the complete transition to digital currencies, and an widely adopted interface/framework for converting, calculating & delivering the payments to all concerned parties.

Might be heading in that direction - which I actually think could be the way to go - but probably still a while away (even though the technology to do it is already here).

originally posted by: hopenotfeariswhatweneed
a reply to: AMPTAH

I get what you're saying, I assume it would be the enforcement arm of government being the IRS, in my experience they send you a bill and it's up to you to prove to them you don't owe them anything.

That's fine. But, there's nowhere on the tax forms where an individual reports the exchange of goods for other goods. So, since the IRS doesn't have a mechanism in place for reporting such transactions, they wouldn't even have the information to make an assessment, even if they had some magical formula for interjecting USD price information into such intermediate exchanges. So, they are not going to send me any bill

a reply to: Navieko

In theory here as no one has really put one fourth.

Yes, transaction tax. Taxed at the p.o.s.

The tax departments at that point would no longer be necessary.

Exactly. A trust-less ledger would decrease rampant bloat in many accounting sectors.

a reply to: JinMI
Yeah I could get behind that. Though I feel it's something that can only be "evolved" towards over a period of trial/error of other systems - as opposed to a split decision made and implemented. This thread is proof that we're currently in that trial/error period though - so hopefully not too far off.

The technology is there, but it's a mighty big shift and still a lot of variables that need to be played out and exhausted before the inevitable solution arrives en mass.

a reply to: Navieko

Oh, sure. The internet wasn't built in a day. Over the course of a few years however, big changes could happen.