The Government Is Coming For Your Bitcoin

Authored by Simon Black via SovereignMan.com,

The same day Bitcoin cracked its all-time high above $11,000, the government dealt its first blow to the crypto world...

On Wednesday, a federal judge in San Francisco ordered the popular Bitcoin exchange, Coinbase, to provide the IRS with information on over 14,000 account holders.

The taxman noticed that only 800-900 people reported gains related to Bitcoin in each of the years between 2013-2015. It seemed unusual given Bitcoin’s meteoric rise.

So the IRS went for its pound of flesh.

Initially, the government wanted complete data on every Coinbase user that transacted between 2013 and 2015. The exchange’s website says it has 13 million users (more than the number of Schwab brokerage accounts).

But Coinbase pushed back… and the government agreed to only take limited data (including name, date of birth, address, tax ID number, transaction statements and account logs) for accounts that have bought, sold, sent or received at least $20,000 worth of Bitcoin in a given year.

Don’t say I didn’t warn you about Coinbase. I told Sovereign Man: Confidential readers last month:

If you’re tempted to purchase Bitcoin from the popular Coinbase exchange, don’t bother.

 

They’ve sold out to regulators.

The IRS is calling this a “partial win.”

But you can be sure, there will be a public beheading. This is something governments almost always do.

They’ll find a prominent Bitcoin person, someone that’s polarizing to the public – like “pharma bro” Martin Shkreli.

It will be a very public trial… and they’ll throw his ass in the slammer.

Government’s always do this because they want to scare people.

Kim Dotcom is the perfect example. Kim founded the popular file-sharing site Megaupload.

The government wanted to stop illegal downloads, so they raided his guy’s house in New Zealand for violating US law.

The government also does this for taxes… everything, really.

Look at Wesley Snipes. The IRS accused him of felony tax evasion. He spent three years in jail.

They had to take a celebrity and throw him in jail to scare everyone else.

Back to Bitcoin…

Now that it’s at all-time highs, the government wants its piece.

I read the 400+ pages of the proposed tax code. How many lines in there do you think deal with cryptocurrency? ZERO.

How many lines deal with e-commerce? ZERO.

The government had every opportunity to set the rules for the 21st century. And they failed miserably.

So the rules remain as clear as mud.

Instead of trying to make it clear, their tactic is intimidation, force and coercion.

This is just the beginning. There will be more.

And my advice is don’t be one of those guys.

Every transaction that you make in Bitcoin is potentially a taxable event.

Let’s say you bought Bitcoin for $1,000 and after it went to $10,000 you buy a business class trip to Australia for $10k. When you pay the airline with one Bitcoin, you’ve just triggered a taxable event.

The IRS would say that you essentially sold your Bitcoin, have a $9k gain and used those proceeds to buy the ticket.

Which means you owe the IRS capital gains tax on $9k, which is 20% plus the Obamacare surcharge.

So, don’t be that guy. If you’ve been doing this, trust me, you don’t want the IRS find out.

You’d rather come forward yourself and disclose it and pay taxes… Rather than be the next Martin Shkreli.

And to continue learning how to ensure you thrive no matter what happens next in the world, I encourage you to download our free Perfect Plan B Guide. Because... If you live, work, bank, invest, own a business, and hold your assets all in just one country, you are putting all of your eggs in one basket. You’re making a high-stakes bet that everything is going to be ok in that one country — forever. All it would take is for the economy to tank, a natural disaster to hit, or the political system to go into turmoil and you could lose everything—your money, your assets, and possibly even your freedom. Luckily, there are a number of simple, logical steps you can take to protect yourself from these obvious risks.

Comments

SWE_Misanthrope Sat, 12/02/2017 - 21:02 Permalink

laughing in you fucking disgusting bitcoin shills faces... go ahead and invest in your fucking bitcoin i dont give a fuck....im laughing in your fucking disgusting faces as you walk in the trap of total economic capitulation to the new world order. go ahead sheep...give up your rights...you dont deserve to be called an american anyway...fucking cowards

38BWD22 BlindMonkey Sat, 12/02/2017 - 23:01 Permalink

  Apparently it's all a settled issue: if you sell Bitcoin (or trade it, or buy something with it) and you made a profit, then you will/should pay Capital Gains Tax.  Keep records of your BTC purchases and sales/trades too.Not worth the risk of incompliance.  Pay your taxes that are legally due. And then let's try to change the CongressCritters that perpetrate this on us...

In reply to by BlindMonkey

monkeyshine 38BWD22 Sat, 12/02/2017 - 23:20 Permalink

It may not be so simple.  If you bought BTC with cash that was already taxed then probably yes. But if you transacted in BTC in business dealings then some of that BTC could be considered income and taxed at the state and federal income tax rates. Just an example - you bought a used motorcyle for $1000 cash and spent $500 cash for parts to fix it and then sold it for 1 BTC when BTC was worth $3000, then you may owe tax on the $1500 profit.  If you sold that BTC for $10,000 more than a year later they might say you owe tax on $1500 in income tax, and then long term gains on the remaining $7000.  But it could be worse than that because consider BTC was $3000 in July 2017 and now $10,000 in December 2017. If you held your BTC for less than one year - whether you bough it was cash or received it in a business transaction - then they may insist you owe short term gains taxes on the trade - short term gain is the income tax rate.And it could get even more complicated. If the IRS considers BTC to be an investment (not cash) then it is subject to "first in first out" taxation unless you specify otherwise. So if you deal in BTC often you could be forced to keep track of what came in, when it came out, what it was worth at the time etc... as complicated as if you were a daytrader but with the added complication as if you not only bought and sold stock but exchanged stock for goods and services.   They could make it very complicated indeed if they wanted to. IANAL nor CPA. 

In reply to by 38BWD22

Antifaschistische monkeyshine Sun, 12/03/2017 - 09:37 Permalink

as a expert at having the IRS crawl into my orifices...I will tell you what the can DO!.   If they smell the $10,000 coin sale.  They will look into their database...if there is no record of your purchase, they will assign that item a ZERO basis and send you the tax bill based on a 10k capital gain.   It will be 100% YOUR responsibility to prove your cost basis if it is greater than ZERO.I would strongly urge crypto collectors to start immediately collecting mining costs details.  I'm also guessing there are forums on this somewhere in the crypto world.  get educated.

In reply to by monkeyshine

Urban Roman monkeyshine Sun, 12/03/2017 - 12:15 Permalink

Eventually it could simply be your guess vs. the IRS's guess as to how much value was exchanged in a business deal.Gold is a good analogy -- if you swap some gold bullion for something, and profited by the swap, the IRS can claim some of the profit. But it's kind of fuzzy how the values and basis costs should be calculated .. Gold fluctuates in dollar value. I assume they  have a thick book of rules.Likewise, if you bought BTC in 2013 for $100, the IRS will want some of the vig when you spend it.But they aren't "coming for your Bitcoin". They WILL want your Dollars, however, whether you actually received any or not in your transaction.

In reply to by monkeyshine

jin187 38BWD22 Sun, 12/03/2017 - 08:55 Permalink

That's the thing. It's not legal. BTC is not a recognized currency, so it's only subject to capital gains when it's sold. As long as BTC is not considered currency, it has to be treated as property. People do this all the time. Trading stocks, real estate, and so on for other property. If I obtain a stake in a company with a speculative value of 1 billion for 500 million worth of another stock, I don't have to immediately turn around, and hand the IRS capital gains based on speculation of the value of my new stock.

In reply to by 38BWD22

fattail 38BWD22 Sun, 12/03/2017 - 09:17 Permalink

I thought one of the selling points for BTC was its anonymity?  How can the government know which part of the blockchain is you and which BTC is yours?Then there was this...  https://www.chainalysis.com/Add to this the never ending forking and new ICOs, and the deflationary characteristics of all things software, it appears there will be a never ending supply of tokens for your fiat currency.It is a great speculative product, and if you want to gamble, do it.  It does appear to be a significant amount of dumb money flooding in right now.  i would say the volatility in BTC is some of the large hands booking some, now taxable, profits at the expense of the new money.

In reply to by 38BWD22

RedBaron616 greenskeeper carl Sat, 12/02/2017 - 21:41 Permalink

I don't laugh at those in Bitcoin now or in the future, but I knew the IRS wouldn't sit still long with that much money and potential profits not being brought into the U.S. Treasury. If you were smart, perhaps a VPN through some remote country (a different one each time) and using strictly overseas exchanges, you MIGHT get away with it, but no guarantee.

In reply to by greenskeeper carl

Carpe Tutti Bastardi logicalman Sun, 12/03/2017 - 11:53 Permalink

I realize you were being /s sarcastic (euphemistically so) when you concluded I forgotbut did you mean because of my 78 years of age (senility) or just what happens as time passes.In any case I did not mean to imply that I trust Microsoft....heaven forbid. It was just mentioned in passing.I really don't trust anything too much when on the internet. And that's the pity!

In reply to by logicalman

Carpe Tutti Bastardi Yellow_Snow Sun, 12/03/2017 - 09:28 Permalink

Thanks, I will try AnonymoX. I don't know about Tor.Many years ago I tried Tor (on Linux) but if I remember correctly I couldn't use it for my intended purposeas  MLPF&S (my broker at the time) didn't have it's Market Pro (or equivalent) working in Linux system.Linux being less well known and used it afforded some protection as it wouldn't or couldn't or not worthbeing hacked as there were so few users.Although I use Win 10 mostly now, Linux being beyond my lazy learning skills at my age (78).[Aside note] did you ever notice the terminology of the market (i.e. the firm that makes you broke is calleda 'Broker' and when you make a trade its called 'executed'...... yeah they just executed your monies!

In reply to by Yellow_Snow

jin187 RedBaron616 Sun, 12/03/2017 - 09:08 Permalink

The exchanges are the reason I stay away from BTC. They're the weak link. Having BTC stored at an exchange is the equivalent of handing cash to someone you see on the street, and saying "hold this".

Hell, you think if an exchange went poof tomorrow, you're getting a lick of government help in getting your money back?

In reply to by RedBaron616

house biscuit UndroppedClanger Sun, 12/03/2017 - 08:45 Permalink

Those who invested in BitCoin over the past few years were forward-thinkers who took small risks, made huge gains, & should be applauded for itWhat becomes interesting at this point is the benefit-risk balance for new BitCoin investment, now that entry into the game is no longer a trivial priceThis does not change several underlying suspicions, which I believe to be fact#1: Cryptos are part of a broader plan for control &, while designed to disrupt, were not designed a priori to befriend the common man#2: Be careful with your profits because the gov't thiefs can & will track you & punish you. Aamof, it is at least a theoretical possibility that BC was desgined to trace & entrap 

In reply to by UndroppedClanger