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Actually, I think you lost track of the start of this thread which was explicitly about honest actors and whether they get swept up with the dishonest ones.

Yes, you're right. :-(

Sorry about that. I would go back and edit my OP but it's locked already.

The point is that if your records are a mess, then it's your problem - once the taxman gets note of a part of "cashing out" (either by seeing the BTC->dollars transaction, or seeing whatever large you bought for these dollars), they don't need to find out if you earned these bitcoins or at what price you bought them.

They can simply ask you to provide the evidence yourself, and if you cannot, then tax the full rate on the full amount.

The same way as you deal with all other kinds of money - you enforce at the transaction points. If you're spending more than you're earning, or your bank account has unexplained cash, the tax man will ask you what's going on.