You might consider hiring a CPA to do your returns if you're making good money trading.
No one beside an idiot will go through so much hassle to declare something the government isn't even aware of you hold it. The far majority of the people 'silently' continue their trading sessions every year, and that's how it should be -- if there is no need to unnecessarily declare anything, then it should not be done.
That's all well and good if you are okay with evading taxes. Personally, I don't care regarding other people -- I think taxes are generally unjust. But I've had hundreds of thousands of dollars enter my bank accounts from Bitcoin exchanges. If you think I will play fast-and-lose with the IRS, you'd be wrong. If you're going to cook your books, be very smart about segregating funds and know that if Bitcoin is worth $1mm someday that it's going to be difficult to explain where all the money came from when you haven't been paying taxes on your income for many years. Merely using crypto does not absolve everyone from following laws.
This is really bad advice. Capital gains taxes are calculated based on your annual net trading gains (in addition to investments you may have liquidated during the tax year). You think stock traders can avoid paying taxes just by leaving gains in their E-trade account rather than withdrawing it? To the IRS, every transaction is potentially taxable. Withdrawals are not taxable.
Nice rant, but right out of touch with reality. Bittrex doesn't trade fiat, and stock traders don't trade one stock for another without passing though fiat. They are completely different. In order to calculate capital gain or loss, you need a fiat value. A better analogy would be casino chips, profit of loss is calculated when you turn them back into fiat, the rest of the time they are an internal token of the casino. Not unlike the IOU token WEX and Bitfinex issued this year, their credit is useless anywhere else but inside the exchange.
How is it out of touch with reality? As I said: "traders will probably be able to
get away with a lot. But that doesn't mean that taxes aren't technically due." And it doesn't matter if you are trading against Bitcoin. The IRS has very clear guidance about determining the market value of assets for determining capital gains. The IRS doesn't care whether you use USD or not. They regulate taxable
income.
Income is clearly defined and has nothing to do with "fiat." If your income is paid in gold, you still need to pay income tax.
If we could all legally avoid paying taxes just by transacting in another currency, why would anyone pay taxes at all? Why would corporations not be taking advantage of this?
When you Etrade a stock, ownership changes hands, that is not the case with a crypto exchange.
When I trade LTC for BTC on Bittrex, ownership of coins doesn't change hands, therefore there has been no trade off the assets, just an IOU in the exchanges's database. Only when the public key on the blockchain changes is the ownership transferred, and this happens at the time of deposit and withdrawal on Bittrex.
Ownership absolutely changes hands when orders are executed. Otherwise all the exchanges are frauds -- unlikely. If what you say is true, the exchanges technically have no custodial obligations and can freely steal everyone's money. After all, coins you send them aren't "owned" by you, nor are coins received in a trade "owned" by you. Why should you be able to withdraw them if you don't "own" them?
The truth is that you very much "own" them and the exchanges are liable for these obligations.
