How does the IRS look at anonymous bitcoin?

[zasad@]

And as far as exchanging it for cash, this is useless. 1) You cannot do anything with cash other than buy small purchases, 2) They will eventually ban cash, so you will have nothing

As far as I can tell, you are trapped in BTC. Since it's too much too cash out, and it's too little to start some sort of tax haven structure (and there's still risk anyway)

I think you are fantasizing. The amount of cash can be reduced or a very small country like the Vatican can be controlled. But it can't be done in most countries or unions like USA, Russia, Europe. As soon as governments start imposing restrictions, shadow markets will appear.

[BlackHatCoiner]

In practice you are gambling that they start an investigation and once it starts the consequences are unpredictable.

Indeed, it's gambling. Especially in places like I live, where there isn't a tax framework to begin with. The tax collector can assume you're okay, just as he can assume you're laundering money.

1) You cannot do anything with cash other than buy small purchases

Depends on what you consider small. Buying an iPhone, a smart TV, and a PS5 isn't going to raise eyes. If you're buying a hundred bitcoins, then a yacht, and then two houses, then yeah, sus. 

2) They will eventually ban cash, so you will have nothing

You'll have bitcoin.