Trading on BTC-E

[justmyname]

If I just trade one crypto for another, do I have to worry about taxes? or do I just worry when trading back to Fiat? I'm a US citizen if that helps.  Thanks in advance for all the expert advice.

[Stephen Gornick]

If I just trade one crypto for another, do I have to worry about taxes? or do I just worry when trading back to Fiat? I'm a US citizen if that helps.

Generally the taxable event occurs when you close a position.  So if you are selling bitcoins it won't matter if the exhange is to dollars or another virtual currency, you have a gain (or loss) on the original position.

Disclaimer: I'm not a tax accountant.

Some more info:
 - http://en.bitcoin.it/wiki/Tax_compliance

[Stephen Gornick]

Also, I just noticed the subject title reads specifically BTC-E.

Sometimes people are asking not whether the tax laws apply to a certain transaction but instead are trying to learn specifically about non-compliance.

BTC-E can be accessed via Tor -- which provides a way to transact without the exchange having your IP in any logs.

BTC-E allows anonymous accounts.

Anonymous accounts (or any account that hasn't had a bank transaction ... as a deposit or as a withdrawal, and hasn't had to verify the account for AML/KYC purposes) can trade digital currencies and the account can be defunded (all funds withdrawn) without providing identity, up to certain limits -- though there are some exceptions.

The exchange still likely has a log showing which Bitcoin addresses were used to add funds to the account, and which alt-coin addresses those funds were withdrawn to so there's the possibility of tracing your deposit to your withdrawal even though no bank account or identity had ever been used.  Mixing services might lessen the traceability.    I've no idea if that level of tracing happens but you should know it is possible.

[justmyname]

I never used a Bank. I just zipped some BTC up there and traded for LTC. Then zipped them back to a wallet on my PC. I guess Torr is the way to go but I never have used it yet. 

[RichG]

My parents would kill me if I used Tor.

[bernard75]

My parents would kill me if I used Tor.

Your parents know what Tor is?!?

[RichG]

My parents would kill me if I used Tor.

Your parents know what Tor is?!?

Well, they both invest in bitcoin...

[No 1]

My parents would kill me if I used Tor.

Your parents know what Tor is?!?

Well, they both invest in bitcoin...

very smart parents you have

[leopard2]

My parents would kill me if I used Tor.

Your parents know what Tor is?!?

Well, they both invest in bitcoin...

very smart parents you have

Not really if they live in the US and don't like TOR

If they know Bitcoin they should know what PRISM is