Only 0.04% Of Taxpayers Are Reporting Any Bitcoin Gains To The IRS

With the US tax deadline just one day away, crypto investors who traded actively during the market's run-up and inevitable meltdown should have a lot of activity to report to the IRS.

But according to a survey conducted by Credit Karma, only a handful of people who have filed their taxes using Credit Karma's tools have reported bitcoin holdings or holdings of some other cryptocurrency - fewer than 100 out of a total of 250,000 filers, or a whopping 0.04% in total.

Bitcoin

In all likelihood, this means that (tens of) thousands of bitcoin traders are refusing to pay the IRS, either betting on the anonymity of the blockchain to conceal their identities, or perhaps in some cases they simply don't have the money to pay, having lost most of their profits during the market's spectacular meltdown, as was the case for one anonymous trader who complained on Reddit that he owed the IRS $50,000 that he didn't have, according to CNBC.

"If I had to guess, there's probably a lot of underreporting," said Elizabeth Crouse, a Seattle-based partner at law firm K&L Gates. "Most of the people in the cryptocurrency world tend to have a pretty high risk tolerance."

Bitcoin had its best week in four months last week as selling pressure that appeared to coincide with the US tax season appeared to dissipate.

Meanwhile, Fundstrat's Tom Lee and other analysts have predicted that "a massive outflow" of cryptocurrency to fiat ahead of tax day in the US had created a massive overhang, and that the bitcoin price could shoot higher after tax day.

In a report last week, Lee noted that, since US households owe an estimated $25 bln in capital gains taxes due to their crypto holdings, and crypto exchanges also will owe income taxes, both households and exchanges will be selling their crypto to pay the US government:

“We believe there is selling pressure by crypto exchanges who are subject to income tax in U.S. jurisdictions. Many exchanges have net income in 2017 [of more than] $1 bln and keep working capital in [Bitcoin]/[Ethereum], not USD — hence, to meet these tax liabilities, are selling BTC/ETH.”

While it's possible that crypto traders just aren't using Credit Karma for whatever reason, the data should be a concerning sign for Lee and other crypto bulls. It means that the forced selling might not be over - and in fact could be just getting started - as nonreporters are hunted down by the IRS.

In the past, crypto traders have mostly ignored warnings and guidance about reporting crypto-related gains. Of course, traders who ignore the IRS do so at their own peril. They could be subject to fines or other penalties once the federal government learns their identities. But as one might suspect given their high risk tolerance, like Crouse mentioned above, some crypto traders might be crazy enough to mix it.

Comments

???ö? toady Mon, 04/16/2018 - 22:59 Permalink

Another bullshit article which conveniently forgets that gains do not have to be reported until they are taken, and typically not paid until the tax return is filed for the year in which the gains were made, (offset by losses), which unless you were a genius in the final weeks of 2017, is probably going to put gains into 2018 or later, for which filing is not due until April 15, 2019. 

So enough of these fucking non-compliance, obsessive articles.

In reply to by toady

Coinista M O B Mon, 04/16/2018 - 23:26 Permalink

This is gonna piss off the jealous, loser, no-coiners.  All of the anti-science, short-bus, types sitting in their decrepit hovels are hating life while us Bitcoin geniuses are jetting back and forth to sunny Puerto Rico, enjoying the fresh, young, Puerto Rican women.  All the while, getting around Uncle Charlie, living the good life.

BUY BITCOIN!!! Losers.

In reply to by M O B

lookslikecraptome Bud Dry Tue, 04/17/2018 - 01:11 Permalink

COINISTA has an 8 point credit Rating on CREDIT KARMA. Considering the La LA Land of cryptos, Credit Karma is a brilliant marketing scheme. AND, YES, block-chain technology will keep coinista well hidden. Awesome, who wants to find him.  It will also keep the "science" of cryptos away from the masses. I guess that is a good thing. Do not want the proprietary awesomeness of junk science being misused. If out in the wild, ( I am trying to elevate my status here by using anti computer virus terminology, I hope it works) that junk science could do severe damage to the banks and those that believe in borders of financial process. 

 

BUY TOILET PAPER LOSERS

If u can with Cryptos

TY 4 the fun (B)uttman and his little gay sidekick. Had my fun. Carry on and keep playing with the like and dislike buttons.  

 

Gotta do something when u have ADD/ADHD

Time to cut a trail. Later Days and ADIDAS 

In reply to by Bud Dry

lookslikecraptome Bitchface-KILLAH Tue, 04/17/2018 - 00:30 Permalink

u do not know how to edit. or u just like to splash that artistic avatar    what is it any way. cant make it out. Is it a B indicating you are getting rammed in the butt. 

 

 

EDIT: We all need to face adversity to become stronger.  The down votes build my character. Thanks to the dude with the (B)utt rammer for his avatar and his gay little side kick. I am stronger this moment because of u. K I will put the sarc tag in, #sarc, so they get it. 

Carry on Butt and side kick. 

In reply to by Bitchface-KILLAH

lookslikecraptome Bitchface-KILLAH Tue, 04/17/2018 - 01:31 Permalink

K look u little three toed hill billy sista mommy fucker with the brain of a pissant. Me thinks u need a lesson or two in the world of snarc and the rudimentary aspects of the application of snarc, in a setting in which the public is present and readily available to engage in an immediate evaluation of ur inability to utilize, surgically, and applicably, in such a setting as noted above, not to be confused with ur bathroom, bedroom, or ur mommy's basement as a party to an ongoing dialogue, of that which you show no propensity for understanding, nor discernment, in any discrete manner. There has been no negative, let alone a double or triple negative, applied, thusly, so u can comprehend that which is b4 u. 

In reply to by Bitchface-KILLAH

lookslikecraptome chumbawamba Tue, 04/17/2018 - 00:21 Permalink

no worries. u still appear miles ahead of coinista in the smarts department.

BTW what ever happened to all the Chinese/Asians that were gonna invade bitcoin with BUY orders after some holiday.

Guess they are still on holiday. What a BS story and pump and dump that was. Now that was a BS story, 

The Chinese can trade BC on the net while eating won ton the same way Javier in Bolivia can buy it while eating beans.

 

In reply to by chumbawamba