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1  Bitcoin / Legal / Interested in USA tax consequences/various "creative" accounting / avoiding flag on: March 21, 2017, 10:22:21 PM
It is tax season in the USA.

Anyone interested in talking about USA tax consequences and various "creative" ways that BTC accounting might accomplish ways to adequately deal with Bitcoin trades (transactions) that might otherwise get flagged by the IRS in the event that a proper accounting (or reporting) is NOT made?

I mean our goal as BTC holders or traders is to appear to be "avoiding" taxes and NOT "evading" taxes, right?  

So we have to figure out ways to make sure that we do not raise any red flags with the IRS in our accounting methods and to transgress into the "evading taxes" category, right?

Personally, I have several bitcoin accounts; however, I only used one account (My circle account) in 2016 to cash out bitcoins to my USA bank and into dollars.  

In total, I have used four accounts to transfer from USA banks to my various bitcoin accounts.  And, we know that once bitcoin is in bitcoin, then we can move it all over the place and back again, right?

Here's a summary of the status of my 2016 bitcoin accounts that are connected with USA banks.

Uphold - (only used this account to deposit from fiat into bitcoin in 2016)

Coinbase - (only used this account to deposit from fiat into bitcoin in 2016)

Gemini -  (only used this account to deposit from fiat into bitcoin in 2016) they issued me a 1099k, which seems to reflect amounts that I paid into them and not amounts that I transferred to my USA bank.

Circle - (used this one quite a bit for cashing out of bitcoin and into my bank in 2016).  I think that I had cashed out more than 100 times through the year but Circle did not issue me any kind of 1099 form regarding my transactions (whether that is the form or 1099B or 1099K.  

I am kind of wondering, since Circle went out of the buy/sell BTC business, are they going to be reporting to the IRS - and wouldn't they also issue a 1099 form to me?
My usual practice would be to cash out BTC on Circle while simultaneously buying back BTC on some exchange that I have dollars (more or less an equivalent amount of BTC in order to take advantage of arbitrage gain opportunities. Some of the other Circle transactions were merely someone paying me with bitcoin for some kind of goods or services and I would convert those BTC to dollars the same day (and accordingly cash out).  

I have created a list of my BTC transactions that are connected to my cashing out of BTC and into my bank account in which I am planning to report all of those trade cashing outs; however, I was not planning to report the payment of goods and services transactions.  My thinking is that the transactions where I get paid in bitcoin and cash out into dollars right away are not substantial and/or necessary to account to the IRS.

Part of my current dilemma is this:

Some people think that you only need to count the BTC transactions that go through your bank, and other people think that you should be more thorough with your BTC accounting.  Part of my dilemma also is that I am reporting something that Circle appears to not going to report; however, I have so many Bitcoin transactions, that I would run a major risk if I do not  say something and account for a decent portion of those BTC cashing out transactions.

As I said, for the most part, my deal that I intend to report has been to buy back back the BTC, within about a day of when I cash out through the bank - kind of taking advantage of arbitrage opportunities.

So far I have:

Filled out schedule D (which is a 1040 attachment) to link short-term capital gains (seems to be cheaper than if I attempted to count those transactions as long term gains, especially when I had already established a practice of buying back BTC right away).

I also used form 8949 (which is an attachment to schedule D) to list the bitcoin transactions on a monthly basis.  Therefore, I put the totals of the BTC transactions for each month, and the gains in each row, and at the bottom I added up all of the months to come up with a grand total for transaction amount and a grand total for gains.

I also used schedule C-ez (which is an attachment to the 1040) to report expenses and losses.  One time in 2016, I had a guy who did not pay me for the bitcoins that I sold by reversing his Venmo payment to my bank, so I counted that transaction as a loss.

Anybody have any tips and tricks regarding how they are doing this, and do you think that my method or my thinking is screwed up?  I am working on finalizing my tax forms in the coming days, and probably going to finalize them and to file them in about the coming week.
2  Bitcoin / Bitcoin Discussion / Anyone open an Open ledger account for the purpose of BTC trading? on: October 13, 2015, 06:13:21 PM
Since Open ledger is supposed to be starting up today:

Anyone open an Open ledger account for the purpose of trading (mostly I am considering trading BTC and dollars)?

It appears that that the fees are going to be pretty low, no?

And, seems to be fairly secure to download the software, like NO ONE is going to run off with your coins, no?

In reviewing some of the materials, I am a little bit nervous about the whole decentralized process (which I understand is one of the whole purposes of bitcoin).  Currently, I keep my bitcoins with a variety of quasi-centralized arrangements (such as Circe, Coinbase, Blockchain and BTC-e).

I would like to hear about some of the experiences of others regarding this open ledger matter before I delve into it.

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