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Comment by eruci | Hacker News Reader

Does anyone pay taxes on crypto?

Yes. I pay my taxes, and I suspect many other people do, too. Tax compliance in the US is generally pretty high.

I also don't steal books from the library, even though I'm pretty sure I could get away with it.

Tax compliance can be high because the people with the most to lose just buy themselves loopholes - eg there's no requirement to file an FBAR for fine art! Enforcement resources can then be focused on keeping the middle class in line.

Pay unto Caesar and all that. But avoiding taxes through financial privacy is not equivalent to stealing. And certainly don't imply that an empire's aggressive wars are in any way akin to local community services!

Tax compliance is high when counterparty (employer or broker) reports income. Tax compliance on cash transactions is lower.

I don't think stealing books from library at any kind of scale approaching the value of tax evasion is so easy to get away with.

> I don't think stealing books from library at any kind of scale approaching the value of tax evasion is so easy to get away with.

Sort of offtopic but ontopic to your comment: When bored and reading state statutes I've discovered librarians in NJ are the only group of people aside from law enforcement officers that are relieved of most liability when arresting someone. (anyone else that does a wrongful arrest can be hit with all sorts of charges and civil lawsuits)

Since then I've been raising awareness among the librarians of their ability to beat the shit out of people stealing books.

So yes, you are correct. I would expect that it would be more difficult to get away with at scale in the same sense it wouldn't be wise to steal office supplies from the local police station.

sources needed please.

> sources needed please.

https://law.justia.com/codes/new-jersey/2018/title-2c/chapte...

> I don't think stealing books from library at any kind of scale approaching the value of tax evasion is so easy to get away with.

I think you missed what the comment was trying to say.

Yes, it is quite easy to pay taxes on crypto and quite difficult to explain during audit how cash ended up in your bank account without associated tax payments.

Pay your taxes!

> Yes, it is quite easy to pay taxes on crypto

I only ever played with small amounts for fun, and in the long term, I took losses. But it's very difficult for me to compile all my trades for tax reasons. I set up automated trading on half a dozen different exchanges (some of which no longer exist) using half-baked python scripts with no logs. How on earth do I compile a Form 8453 showing all of those thousands of trades? I could spend months tracking down all the public keys I used and use blockchain explorers to compile a list of transactions... but I would not describe this as easy

I agree with this. Normal trading on exchanges might be relatively easy since you can just export transactions and dump them into a tool like this, but it can get a lot more complicated than that.

Some examples of things that are complicated:

- Trading ERC721 tokens (there are no tools to track down these transactions, track cost basis, etc - I ended up spending days hand crafting scripts to retrieve this data)

- Opening a cdp on something like Makerdao (which parts of this are taxable events / how do I file it?)

- What counts as a wash sale? [0]

- What are allowable methods of tracking cost basis?

- How do I handle hard forks?

Some of these are partially answered, but none of it is clear at all.

[0] https://help.cointracker.io/taxes/us-taxes/do-wash-sales-app...

> How on earth do I compile a Form 8453 showing all of those thousands of trades?

By planning to do so from the beginning. "I forgot to keep records" isn't going to be something the IRS really cares to hear.

Yes, hindsight is 20/20. In my case, I doubt they'll care, given the small amount and the fact that there were no taxable profits. But I have to imagine that I'm not the only one who did this.

I'm sorry you decided to conduct algorithmic trading of digital assets on multiple exchanges without ever considering taxes. But services such as those linked by the OP (and others like bitcoin.tax) automatically import trades from all major exchanges and calculate the most advantageous method to minimize taxes.

I was doing various cryptocurrency mining in 2011 and trading in 2012, long before bitcoin.tax existed. Many of the exchanges I used have since shut down.

> How on earth do I compile a Form 8453 showing all of those thousands of trades?

Just use bitcoin.tax to keep track of it like everyone else does. Or presumably OP's new tool.

Yes. I've used bitcoin.tax the past few years. This one looks nice although it's missing a couple exchanges that I would need to use it next year (maybe they'll have them by then).

What exchanges would you like to see added? Constantly working on new additions.

HitBTC and COSS

Tokentax.co has these out of the box

Thanks!

yes, the IRS concluded that "less than 800 people pay taxes on crypto" using a flawed and simplistic search string. I looked at how I reported various gains filed in 2014 and 2015 and it would not have included me in those 800 people.

the best thing about bubbles getting larger is that more people with more personalities and expertise are aware of what these things are. A judge wouldn't rubber stamp a subpoena on such basic and flawed logic, a treasury secretary wouldn't trust their employee with as shoddy an analysis, influential senators wouldn't believe it as their own altcoin trades wouldn't be counted. speculation drives innovation.

Yes.

Since we've just had our Happy New Tax Year, other UK readers might be interested in this Reddit thread, if only because of the tax-related links: https://www.reddit.com/r/BitcoinUK/comments/ba8d89/tax_threa...

I don't do crypto, if I do I wouldn't. Just like I would not for cash transaction. I know legally I should and there is some risk but the risk is low enough.

legal answer: yes

pragmatic answer: only if you interacted enough with the US financial system that the IRS might catch you.

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