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Comment by mike_hearn | Hacker News Reader

Selling something to the black market doesn't magically make it tax free. It's almost the opposite. The money is going to show up in your auditable accounts sooner or later, so it's best to pay tax on it, but you'll also have to come up with a fake but auditable story of where it came from, meaning you'll have to engage the services of professional money launderers. They will also take a cut. So, it's like paying tax twice.

Getting paid in cryptocurrency isn't necessarily a dodge either because even if you claim you mined it or something, the authorities have got wise to this a while ago IIUC and will expect to see evidence to back that claim up too.

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Up to here you weren't committing any crimes.

> but you'll also have to come up with a fake but auditable story of where it came from

And now you did.

Dubious; seems like if you know you're selling exploits to criminals you could be done on a conspiracy charge.

Sorry, do you mean the comment was describing hypothetical crimes, or literally the comment itself was criminal?

Lying to government officials is a crime. Including saying you mined the crypto instead of getting paid for selling a vuln

The money itself might not be dirty, couldn’t you just claim something like “I sold a secret, highly valuable algorithm to this guy”? Tax would still need to be paid of course

Immediate follow up questions from the tax man, and then shortly afterwards the police "who is this guy? where is the invoice? what is his phone number?"

No, it doesnt typically work that way at all. The tax man just wants to get paid.

I grew up in an area known for people growing cannabis before it was legal. An enormous amount of taxes got dodged through cash land deals, but tons of people just claimed the income under various categories and no one ever came knocking because of that.

Its usually the other way around. If you caught the Fed's eye, then they might try to get you on tax evasion or something. Although, frankly even that was very rare. There are just a lot of very obvious fish to fry.

Are you talking about the IRS at the Federal level or someone else in the US?

“I didn’t see these specific people get caught much in this specific situation therefore in general it works this way” - do you see how silly this sounds?

And when they ask you who “this guy” is?

For the people downvoting, that's unironically a thing:

https://www.irs.gov/publications/p525#en_US_2024_publink1000...

>Illegal activities.

>Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Schedule 1 (Form 1040), line 8z, or on Schedule C (Form 1040) if from your self-employment activity.

You underestimate the tax auditors.

If you get paid in crypto, leave it in crypto, and just trade crypto for goods or services uncle sam is none the wiser.

Terrible advice

Selling an exploit is not illegal so why bother with money laundering?

Because the people buying it don't get their money from legal sources, nor engage in legal business activities.

They also have every incentive to make sure you're guilty enough to not go blab to the authorities later, or sell it to someone else.

And since you're trying to be anonymous in this, you aren't going to be getting a regular tax receipt either.

If you did not commit a crime to receive the money, there is no reason for money laundering (at least in the US). The IRS does not care as long as you claim it. You don't need a fancy story or anything, just claim the income.

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