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ETax847

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There are no "bitcoin companies."  The blockchain is public, and the buyers/sellers are anonymous, which is one of the major points of the cybercurrency.  There are exchanges and people have cyber "wallets" to hold their coins, but those are anonymous as well.  IRS tried to get one of the big exchanges to reveal the owners with a John Doe summons.  The exchange refused because the summons was too broad (all its clients), so the IRS rewrote with some more restrictive request.  Don't know how that's been settled.  For now, it seems people will have to self-report.  We know how well that's worked out for the self-employed.

I have a client who mines bitcoins and we've been reporting his gains for a few years.  Last year he came in and enthusiastically showed me some IRS message that said only 830 people reported bitcoin transactions on their returns.  He was quite proud that he and I were among the elite group.  (Don't know why he included me--I just report his and don't own or even know how to buy one.)  I sure hope he cashed in his entire wallet this year.  At what, $5-6k each lately, he can certainly retire 20 years early.

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Most people are afraid of the risk associated with bitcoins, because there is nothing of substance to anchor their value.  I am one of those who are thus afraid.

Supporters admit there is nothing to back up the value, but add that the major currencies of the world have nothing to back up their value either, including the U S Dollar.  With no publishing of the money supply by the Federal Reserve, the Dollar (including the deficit) is nothing but "funny money."

It is going to be tough to catch up with the founders and progenitors of the bitcoin, but I believe the government will eventually do so.  If the bitcoin becomes too much of a threat to the U S Dollar, they will fall into the same persecutory status as counterfeiters.

 

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Edsel:

You and me and a little bit of software can set up a "bitcoin" like site.  Then one day, we decide to "cash out".  We convert others Bitcoin to other legal tender, and leave everyone else to fight amongst themselves for whatever is left.  It has already happened a number of times....

I would call that a Ponzi like scheme. 

The US Dollar may be "funny" money, but it isn't nearly a humorous as these blockchain "currencies".

Rich

 

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On 10/26/2017 at 8:58 AM, ETax847 said:

will bitcoin companies be issuing 1099B's at tax time or what will clients be receiving tax form wise who trade in this space?

No. Technically they are supposed to report their trades but reality is it isn't traceable for most people. When one sets up a wallet or trading account, the SSN information isn't exchanged. A bank account or credit card number MAY be exchanged.

A company that pays with bitcoin and would normally be required to issue a 1099 is still required to issue a 1099.

The IRS is supposedly trying to figure out how to monitor who is trading but part of the allure of bitcoin is that this isn't really possible. That's why the majority of the coins are owned by foreigners (and criminals) looking to avoid government oversite. Very few of the public owned bitcoin actually ever circulate and that's why the price has skyrocketed. The last time I checked, the US Government is one of the biggest owners of Bitcoin and they can't sell it because it is evidence.

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