Opinion The IRS Is Making Crypto Compliance Impossible

[nutildah]

So every time you want to use Bitcoin to buy a gift card, pay a bill, buy any physical or digital good, cash it out in a fiat currency other than the US dollar, its a capital gains event.

Stupid as all hell.

Clearly the government is not getting our best and brightest. To be frank I've only ever met a handful of "smart" government employees. And their jobs were incentive-based, not just a flat salary, which partially explains it.

I understand part of it is they want to make Bitcoin as inconvenient to use as possible so people will stick with the dollar, but in the long run I just don't see that happening. They can attempt to do it through threatening legislation, but its simply not going to work, mark my words.

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[zasad@]

so i guess 2 wrongs really do make a right when it comes to uncle sam. he can do anything he wants to. including running up a huge debt that he'll never repay. the higher bitcoin goes in price the more they'll try and make life miserable for crypto users i would imagine.  bitcoin users in particular.

What is the relationship here?
If the capitalization of cryptocurrencies is 1.4 trillion dollars, then we know for sure that the majority of USDC and USDT reserves are already invested in treasuries. But capitalization is a bubble, where there is very little real money, but most of this cryptocurrency capitalization is already working for the US economy. Therefore, it is beneficial for America for these stablecoins to dominate the cryptocurrency market. And if something happens, then all the blame can be shifted to the leaders of these companies.

[philipma1957]

So every time you want to use Bitcoin to buy a gift card, pay a bill, buy any physical or digital good, cash it out in a fiat currency other than the US dollar, its a capital gains event.

Stupid as all hell.

Clearly the government is not getting our best and brightest. To be frank I've only ever met a handful of "smart" government employees. And their jobs were incentive-based, not just a flat salary, which partially explains it.

I understand part of it is they want to make Bitcoin as inconvenient to use as possible so people will stick with the dollar, but in the long run I just don't see that happening. They can attempt to do it through threatening legislation, but its simply not going to work, mark my words.

These laws are from Congressman Senators and the President.

the IRS does not make them up.  Having worked for them three years And my wife worked for them thirty three years and my mom worked for them for twenty three years. the IRS are more like cops or meter maids. They are given a set of laws and make rulings on them. The last admin Trump and co ended the trade A btc for some ltc rule in 2018. No longer like kind.

They only allow real estate as like kind trades.

And not an apartment house for a home.

But a house for a house or an apartment house for an apartment house.

All my trades are fifo and the paper work is fucking nuts and I have a degree in accounting.

dca buy and hodl is the single best thing to do .

if I knew that I never would have mined since 2012.

I do 200 and 250 page returns and some years I make under 15000 usd.

[bbc.reporter]

So every time you want to use Bitcoin to buy a gift card, pay a bill, buy any physical or digital good, cash it out in a fiat currency other than the US dollar, its a capital gains event.

Stupid as all hell.

Clearly the government is not getting our best and brightest. To be frank I've only ever met a handful of "smart" government employees. And their jobs were incentive-based, not just a flat salary, which partially explains it.

I understand part of it is they want to make Bitcoin as inconvenient to use as possible so people will stick with the dollar, but in the long run I just don't see that happening. They can attempt to do it through threatening legislation, but its simply not going to work, mark my words.

There are lawmakers like old Elizabeth Warren who are already beginning to campaign for KYC on every nonhosted wallet. This is very headshaking because they want to control one of the cryptospace's best developments which is anonymity and the self custody of your cryptcoins, NFTs and tokens. They want to take our freedom away from the cryptospace.

There people in this forum that laugh at Robert Kennedy Jr, however, only he might be bitcoin's best chance to stop these politician's campaigns against the cryptospace.

[nutildah]

There are lawmakers like old Elizabeth Warren who are already beginning to campaign for KYC on every nonhosted wallet. This is very headshaking because they want to control one of the cryptospace's best developments which is anonymity and the self custody of your cryptcoins, NFTs and tokens. They want to take our freedom away from the cryptospace.

Yes I remember that canned spiel from her about how criminals are finding "new ways" to perform transactions, including the use of self-custodial wallets, which are, and I quote, an "evermore sophisticated cryptocurrency technology."

I don't believe she is actually this stupid. I do believe she is a sociopath who will say anything to further her own career, including telling bold-faced lies to the nation, but this was written by one of her handlers who thought by saying this she could push her agenda in the right direction. The more people that find Bitcoin, the harder this will backfire on her.

[larry_vw_1955]

I do 200 and 250 page returns and some years I make under 15000 usd.

what are all those pages containing exactly? that sounds like something i would want to avoid at all costs to be honest. add an extra 0 onto that 15000 usd and maybe it would make sense then. 

There are lawmakers like old Elizabeth Warren who are already beginning to campaign for KYC on every nonhosted wallet.

that's why we really need something like opendime but WAY more cheaper. something that would cost fractions of a penny but you could just hand to someone and they become the new owner of that bitcoin without any record of it on chain. they wouldn't be able to then tax every single "sale" because there wouldn't be a record of them on chain so it would make it almost impossible to regulate.

[o_e_l_e_o]

They want to take our freedom away from the cryptospace.

FTFY.

Everything you do is monitored by the government. The surveillance state which we know about is massive, and the things we don't know will be several times more invasive than that. Look at the technology that most people use these days. Most operating systems track everything you do. Most browsers track everything that you do. Most ISPs track everything that you do. Most mobile phones track everything that you do, every message you send, every place you go, every website you visit, record everything that happens in their vicinity, every word you type, and more. Every purchase you make with any electronic means of fiat - transfers, credit cards, Google Pay, Apple Pay, whatever - is being tracked. People voluntarily bug their own houses with listening devices just so they don't have to manually turn on some music. Your smart TV spies on you. Your car spies on you. The majority of the population turn a blind eye to all of this, or worse, actively give away their privacy for the tiniest convenience.

They want to take all your freedoms away. Once they succeed in abolishing cash and replacing it with a CBDC, bitcoin will be the last solution for any financial privacy.

[Synchronice]

you guys better hope this little rule doesn't pass because if it does then you are screwed if you live in the usa.

Maybe it's a good idea to give up on US citizenship and move somewhere else? I don't think America looks like a dream country anymore. Probably, being a footballer or digital nomad is the best thing today. The more you study, the harder you work, the more you suffer mentally and in the end, new bullshit arises every time you slightly achieve a piece of mind.

Migrant crisis has US taxpayers on the hook for up to $451B, House GOP report says

We've been over this before. The media are experts at taking numbers out of context and selectively reporting the things they want you to be angry about. National Health Expenditure was $4.3 trillion for 2021. We spend significantly more money than any other developed country and yet have significantly worse health in return, because our healthcare system is uniquely filled with unnecessary middle men who only care about making profits for themselves:

American healthcare is more likely a drugcare or poisoncare or profitcare. American doctors prescribe amphetamines and oxys like candy. In what sane world does it make sense to give as powerful drug as amphetamine is to 12 years old kid? They give Adderall or Vyvanse to kids, ruin their brain chemistry, make them dependent on Addy, these kids then have heart problems, depression, can't function without it. That's insane. Yes, ADHD and ADD really exist but working on fixing this behavior is way better solution than giving these drugs to kids. Don't get me wrong but there is a massive degradation in America especially, this gender, identity thing where some people think they are member of wolf pack, doesn't make sense. And oxys? They prescribe it like a candy. Oxys, SSRI/SNRI, benzos, prescribed like a candy but I know this is not th main problem that people complain, there are insane prices on every medical service. My friend lives in America and she always travels in Turkey or Eastern Europe to get medical and dental service. I can't swear but I have heard that medical field is so unregulated in the USA that doctors can charge you whatever they want.
It's unethical to make money from someone's health but still, everyone forgets ethics but after all, one shouldn't milk people by increasing insulin prices up to unreal levels.

People voluntarily bug their own houses with listening devices just so they don't have to manually turn on some music. Your smart TV spies on you. Your car spies on you. The majority of the population turn a blind eye to all of this, or worse, actively give away their privacy for the tiniest convenience.

They want to take all your freedoms away. Once they succeed in abolishing cash and replacing it with a CBDC, bitcoin will be the last solution for any financial privacy.

While it's true that we are all tracked, I don't think anyone cares on those statistics at individual level unless you are a millionaire or something like that. Majority of poeple turn a blind eye to all of this because average Joe on an individual level doesn't really matter for anyone, it's collective statistics that matter. I'll be frank, democracy is probably the most stupid concept. Democracy means majority of people, i.e. average Joe, deciding your fate. Average Joe is not a smart person, nor has any idea about life and what's good for him. Average Joe is a slave in reality.

[bbc.reporter]

There are lawmakers like old Elizabeth Warren who are already beginning to campaign for KYC on every nonhosted wallet. This is very headshaking because they want to control one of the cryptospace's best developments which is anonymity and the self custody of your cryptcoins, NFTs and tokens. They want to take our freedom away from the cryptospace.

Yes I remember that canned spiel from her about how criminals are finding "new ways" to perform transactions, including the use of self-custodial wallets, which are, and I quote, an "evermore sophisticated cryptocurrency technology."

I don't believe she is actually this stupid. I do believe she is a sociopath who will say anything to further her own career, including telling bold-faced lies to the nation, but this was written by one of her handlers who thought by saying this she could push her agenda in the right direction. The more people that find Bitcoin, the harder this will backfire on her.

Also, something was brought to my attention by @o_e_l_e_o and I do not quite think that this is noticed by much of the people in the cryptospace. The government is changing the words we use in the cryptospace like self custody is changed to nonhosted wallets to make it sound that we are doing something illegal.

This is very much similar to how they changed global warming to climate change. It makes the damage on the environment sound less concerning.

[takuma sato]

So every time you want to use Bitcoin to buy a gift card, pay a bill, buy any physical or digital good, cash it out in a fiat currency other than the US dollar, its a capital gains event.

Stupid as all hell.

Clearly the government is not getting our best and brightest. To be frank I've only ever met a handful of "smart" government employees. And their jobs were incentive-based, not just a flat salary, which partially explains it.

I understand part of it is they want to make Bitcoin as inconvenient to use as possible so people will stick with the dollar, but in the long run I just don't see that happening. They can attempt to do it through threatening legislation, but its simply not going to work, mark my words.

The whole goal is obviously making any OTC operative impossible at the regulatory level, to the point users feel asphyxiated and wouldn't even bother withdrawing their funds out of exchanges. That's the whole point of the ETF's. Investors with relevant amounts of money willing to buy BTC are never going to bother holding the money themselves. If it's hard by itself being a self-custodian due all the things involved from a technical POV and the high responsibility it takes, now add in the fact that you'll have to document every single movement your wallet does and they'll just not bother and stick to regulated instruments, whether buying on the exchange and not withdrawing or by buying the ETF. Once they are main custodians on BTC I can see them attempting a fork of sorts. I hope everyone is aware of this possibility.

They also want to do this so when they ban physical cash, people are scared to use BTC as a cash substitute since every transaction would mean some sort of liability against the assorted taxman.

[larry_vw_1955]

Also, something was brought to my attention by @o_e_l_e_o and I do not quite think that this is noticed by much of the people in the cryptospace. The government is changing the words we use in the cryptospace like self custody is changed to nonhosted wallets to make it sound that we are doing something illegal.

very good catch there! they put the "non" in front of whatever the thing is they WANT people to do to make it sound like it is illegal. that would make sense to me.

The whole goal is obviously making any OTC operative impossible at the regulatory level, to the point users feel asphyxiated and wouldn't even bother withdrawing their funds out of exchanges.

yeah that's what they want is all bitcoin only owned by centralized 3rd parties. eventually maybe they own it themself and keep the private keys in a big vault and then just issue IOUs against what they say is in the vault but then oneday they decide to go off the bitcoin standard and just print IOUs that aren't even backed by real bitcoin. Thus removing all bitcoin from circulation bitcoin has been destroyed.  

[o_e_l_e_o]

The government is changing the words we use in the cryptospace like self custody is changed to nonhosted wallets to make it sound that we are doing something illegal.

Correct. It gives it a negative connotation. Self custody changed to non-custodial changed to non-hosted. The next step will be "non-compliant" wallets, or something similar.

yeah that's what they want is all bitcoin only owned by centralized 3rd parties. eventually maybe they own it themself and keep the private keys in a big vault and then just issue IOUs against what they say is in the vault but then oneday they decide to go off the bitcoin standard and just print IOUs that aren't even backed by real bitcoin. Thus removing all bitcoin from circulation bitcoin has been destroyed.  

Centralized exchanges already do this, and most (if not all) are already running fraction reserve scams and simply issuing IOUs they cannot honor. This is indeed their ultimate goal. Once centralized exchanges hold all the bitcoin and people only trade IOUs back and forth, then they will have achieved complete centralization, complete surveillance, and complete control.

[zasad@]

yeah that's what they want is all bitcoin only owned by centralized 3rd parties. eventually maybe they own it themself and keep the private keys in a big vault and then just issue IOUs against what they say is in the vault but then oneday they decide to go off the bitcoin standard and just print IOUs that aren't even backed by real bitcoin. Thus removing all bitcoin from circulation bitcoin has been destroyed.  

Now there are a lot of exchangers that do not use KYC and also NO-KYC Level Exchanges, Soft-KYC Level Exchanges where data is not verified, and so on. And also decentralized exchanges and bridges for EVM coins.
https://archive.ph/CpS0W
Until you transfer your coins to a centralized service, then you own your coins.

[bbc.reporter]

Also, something was brought to my attention by @o_e_l_e_o and I do not quite think that this is noticed by much of the people in the cryptospace. The government is changing the words we use in the cryptospace like self custody is changed to nonhosted wallets to make it sound that we are doing something illegal.

very good catch there! they put the "non" in front of whatever the thing is they WANT people to do to make it sound like it is illegal. that would make sense to me.

It was not my catch. The credit certainly goes to @o_e_l_e_o. I thought I had a very skeptical mind, however, it appears that it is not skeptical enough hehehe.

[nutildah]

The whole goal is obviously making any OTC operative impossible at the regulatory level, to the point users feel asphyxiated and wouldn't even bother withdrawing their funds out of exchanges.
...

The only upside is not every country feels the same way about this issue. All of the giant surveillance state governments do (US, Russia, China), but there are some countries that have taken a more laissez-faire approach because they see Bitcoin as being able to help their people save money by not having to pay it to remittance companies like Western Union. For example, the Philippines has made it rather easy for e-wallet providers to support crypto -- why should they care if it takes a chunk out of profits for Western Union and Moneygram? If it can help their overseas workers send more money back home and into their own economy, they're all for it.

[larry_vw_1955]

For example, the Philippines has made it rather easy for e-wallet providers to support crypto -- why should they care if it takes a chunk out of profits for Western Union and Moneygram? If it can help their overseas workers send more money back home and into their own economy, they're all for it.

I think the Philippines government takes out a fee on Western Union money transfers there. Not a huge amount but it's some tiny percentage. They've got Western Union regulated big time on that. Not sure about Moneygram or others. While the government there might want their overseas workers to benefit from crypto, there's alot of foreigners living in the Philippines too and if all of those foreigners started using crypto to bypass paying taxes/fees there would be a big problem I would assume. you would see some regulations then if there aren't already. Also I have to assume these e-wallet providers like coins.ph probably give a crappy exchange rate for btc to philippine pesos but I couldn't say for sure it would just be a guess. Maybe there's a money changer on every street corner that gives a better exchange rate I dunno 

[nutildah]

Also I have to assume these e-wallet providers like coins.ph probably give a crappy exchange rate for btc to philippine pesos but I couldn't say for sure it would just be a guess. Maybe there's a money changer on every street corner that gives a better exchange rate I dunno 

For a long time coins.ph was the only game in town and for most of that time they've charged a flat 3% fee... This has now come down to ~2% because within the last few years a bunch of competitors have come onto the scene.

Its still better for the money to go to local companies than behemoths like Western Union... now people only use WU if they have no clue about how to move money at all.

[larry_vw_1955]

For a long time coins.ph was the only game in town and for most of that time they've charged a flat 3% fee... This has now come down to ~2% because within the last few years a bunch of competitors have come onto the scene.

that makes sense that fees should go down with more competitors and that's a good thing. But I wouldn't call 2% a great deal. I think there's services where one can pay a flat fee and send whatever they want. Like $1000 costs the same as $100. so paying a 2% flat fee is a ripoff. Unless you have some really good reason for doing it like using crypto. and have no other options. 2% of $1000 is $20. you can probably find a way to send that same $1000 for a flat fee of less than $5. but maybe not with bitcoin being involved. 

Its still better for the money to go to local companies than behemoths like Western Union... now people only use WU if they have no clue about how to move money at all.

I think in the last 10 years western union has revamped their fees so that they don't rip people off on fees like they used to but their exchange rates suck.

[philipma1957]

I do 200 and 250 page returns and some years I make under 15000 usd.

what are all those pages containing exactly? that sounds like something i would want to avoid at all costs to be honest. add an extra 0 onto that 15000 usd and maybe it would make sense then. 

There are lawmakers like old Elizabeth Warren who are already beginning to campaign for KYC on every nonhosted wallet.

that's why we really need something like opendime but WAY more cheaper. something that would cost fractions of a penny but you could just hand to someone and they become the new owner of that bitcoin without any record of it on chain. they wouldn't be able to then tax every single "sale" because there wouldn't be a record of them on chain so it would make it almost impossible to regulate.

  I RUN all the mining through coinbase.
  I make payments to 3 partners and myself. (4)
  Since pools bust out. I use at least 2 pools and pull the coins 2 times a month.
  I stack all those pulls and send the coins 1 time a month.

I also sell and take any coin for payment (well any POW coin that coin bases takes)
 So if I do 100 sales in a year that is a lot of entries.
 And when these coins are moved it creates reportable tax events. (you don't always  need to pay but you need to report)
 and I am too small to fully automate.
 and I have the tax background.
here is a typical set of generated info
 So mine 2000 doge Jan 1 to Jan 15  this is income  at least 1 entry for the income and 1 entry for its cost
 Mine 2000 doge Jan 15 to Jan 31     this is income at least 1 entry for the income and 1 entry for its cost

Total of 4000 doge Jan 1 to Jan 31

distribute it 4 ways  4 entries of expense  and cap gain or loss is reported on each one.

2 pools mining doge so double this. And for 1 month just Doge over 24 entries x 12 months so just for doge mining 288 entries.

figure btc 288
and LTC 288

mining at a minimum = 864 entries

that does not include buying with crypto (gpu or asic or pc or parts) normally 25 to 50 buys a year. but many are cc so say 25

now 864+25= 869 entries.

A few trades each month = 12 x 5 = 60  so 869+60 = 929. Last year's return was ½ the size of 2021's

I made good money in 2021
I did meh in 2022 and
I will do meh in 2023

so say 150 pages for taxes 2021 taxes
then 75 pages and 2022 taxes
the 75  pages and 2023 taxes

I can tell you 2021 was good enough to make 2022 and 2023 doable.

But if I don't do better in 2024 I am really tired of buying bitcoin.tax and spending a long time to do my taxes.

[larry_vw_1955]

so say 150 pages for taxes 2021 taxes
then 75 pages and 2022 taxes
the 75  pages and 2023 taxes

what would happen if you just didn't even file all those pages and just made a schedule C reporting your overall gross sales and gross cost and profit? seems like some people would do that and maybe not even report the true nature of the business trying to kind of keep the business name or industry kind of generic like "financial services"...

But if I don't do better in 2024 I am really tired of buying bitcoin.tax and spending a long time to do my taxes.

yeah it almost sounds like preparing your tax return is harder than doing the actual mining. or at least a bigger pain in the ass.