COINBASE REPORTING COIN TRANSFERS OFF PLATFORM AS A TAXABLE EVENT.
What you need to know about COINBASE for Tax Purposes.
Rosie from Coinbase here:
All outgoing transactions are reported as sell orders and show the gain or loss of those bitcoin.
It is up to each user to calculate and report taxes associated with their bitcoin trades. Coinbase provides a report as a tool to assist users in this process. Using Coinbase's tax report does not determine your tax liability or lock you into filing your taxes based on the report.
By default, transactions into or out of your Coinbase wallet are reported as buys or sells at the current market price because we do not have visibility outside our platform. Users are free to apply any appropriate accounting method in calculating their taxes.
So if you purchase some crypto currency on Coinbase and move it to a private wallet or to another exchange Coinbase treats that as a sale for tax reporting purposes to the IRS; whether you sold it for FIAT elsewhere or not. It likewise treats deposits as a buy for tax purposes whether you purchase crypto currency or not.
We know Coinbase just lost the battle over customer records to the IRS and we know that the IRS is going to find rampant tax evasion in those records.
IRS notes that only 800 to 900 taxpayers reported gains related to bitcoin in each of the relevant years.
Yet we now know that more than 14,000 Coinbase users either bought, sold, sent or received at least $20,000 worth of bitcoin during this time frame. This is pretty damning evidence that many Coinbase users either did not know, or intentionally failed to report bitcoin gains. This is just the $20,000 plus crowd.
If the IRS can prove, which they likely will that 50,60,80 percent of users where avoiding taxes they are damn sure going to be coming back for the rest of the user records with a good argument as to why they need them.
Its going to be a real mess, I promise you that. A great many people are about to learn the Mafia like interest rates charged by the IRS for unreported income owed years back. For example if you owed $1000 in 2013, you would owe them $1700 now. Basically you still owe the $1000 plus another 70% in penalties.
Also the IRS does not play, they take your house, your car, your bank account and still have the option of imprisoning you based upon the severity and/or intent behind your failure to report your gains. Ignorance of the law being no excuse.
Keep this in mind when using Coinbase. Simply moving coin off of the platform is recorded as a sale according to them for later reporting to the IRS.
Good article, Thank you.
As we all know, $20,000 is not that much in the Bitcoin world these days. The bottom line is that the IRS is a corrupt, thieving den of iniquity. They are a terrorist organization dedicated to destroying peoples lives, property, and peace of mind.
This thing with Coinbase and other exchanges folding and giving out information to "the man" will only serve to encourage people to reclaim their own privacy and shun the big public exchanges. Also to accelerate the adoption of direct buying and selling using crypto, cutting out the fiat exchange completely.
😄😇😄
I can certainly see that as a possibility.... Yeah the IRS sucks....
I move my coins off of Coinbase. Oh no my coins got hacked. That's a loss.
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Very informative.
Shouldn't be an immediate problem for HODLers. Keep your buy/sell and transfer records and if you are audited you can show that you still own the coins and therefore haven't had a capital gain regardless of what Coinbase does.
Agreed, I was under the mistaken assumption that only my trades were reported not every time I transferred coin..