Is the cost basis calculated by the US dollar value of each at the time of the exchange? Or based on the exchange rate of the two currencies?
Scenario:
1. I buy 1 ETH for 1 USD when rates are 1 ETH/USD, 2 ETH/BTC.
2. I trade 1 ETH for 1 BTC when rates are 2 ETH/USD, 1 ETH/BTC.
Option 1: I’ve incurred a loss, because the sale is reported as first a sale of ETH for USD, then a purchase of BTC at whatever the cost basis between BTC/USD.
Option 2: I’ve incurred a gain, because I traded directly from ETH to BTC, and the relative value between ETH and BTC has gone up.
It's driven off whats called your dollar cost average.
So in your scenario
Buy 1 ETH for say $500, your cost base is $500.
If then trade the 1 ETH for bitcoin, it only depends on what ETH is worth at that moment.
If 1 ETH is now worth $400, then you have a $100 loss, if ETH is worth $500 then no taxable gain or loss, if 1 ETH is wroth $600 then you owe tax on $100 of capital gains.
What bitcoin is worth is irrelevant until you sell the bitcoin.
EDIT Just assume that every transaction between crypto currencies has an implicit, convert to USD first and then buy the other Crypto with USD.
Also, There is always a USD price, what the price is, is a bit of an art, but its what ever price you can convince the IRS of.
It's driven off whats called your dollar cost average.
This is wrong for cryptocurrency, at least for Bitcoin. Because bitcoin is an asset for tax purposes, each coin (meant here as any quantity of cryptocurrency, not a specific unit) is subject to an individual tax computation, so you must use the actual price paid for each coin as the basis for computing taxes. You must also compare each coin's basis against the actual selling price of that coin at the time sold.
Note that this is generally also how you calculate gains/losses related to foreign currencies.
Thanks - given your comment it sounds like option 1 mentioned above where gains are calculated based off of USD value even if the currencies are traded directly. But as another commenter mentioned, I don’t see how this can work because the trade doesn’t involve USD at all, and the exchange rate for USD/ETH may vary widely between exchanges. And for more niche cryptocurrencies, a USD value may not even exist because there are no trades between USD and that currency.
It is the exact same as exchanging mutual funds at your brokerage.
Like an exchange I did just this morning: $10,000 VHDYX -> $10,000 VFIAX.
It creates two orders a sell and a buy. I'm taxed capital gains on the $10k sale (about $600 gain) and the buy has nothing to do with it, until I sell it in 5 years.
Saavy consumers will definitely evade this. However, this tax is likely targeted at finance companies looking to “get into crypto” and will do everything by the book
If you substantially understate[1] your income (including crypto-exchange income), the statute of limitations on your tax return never starts running. That means the IRS has until the end of time to audit you and assess penalties and back interest.[2]
[1] Currently that means excluding items individually or collectively worth more than 25% of the gross income actually stated on the return.
[2] If your omission of crypto-currency income is within 25% of your actual stated gross income, the IRS only has 6 years to audit you and assess penalties...unless they decide that the omission is a deliberate attempt to evade taxes, in which case the unlimited statute of limitations could apply.
There is no "real" sell on Vanguard to go from one fund to another, but regulations require them to mark it as a sale, and to denote the cost basis of the sale.
Interesting, I have never heard that term. I'm pretty uneducated in finance. I just have done great on my Vanguard Mutual Funds, and I keep them going.
Yeah, this is the confusing part for me - moving from BTC to other crypto. Also if it is based on USD price at the time of the transaction...then which one? Coinbase rates can be far different from other exchanges.
Some exchanges don't have usd. Even for those that do, it takes about 30-90 minutes to typically move ~100k in assets from one currency to another, double that if you're going between two altcoins via Bitcoin. During that time the effective usd exchange can have nontrivial swings.
Probably good news for investors long term. Bitcoin again continues to grow up and be treated as an equal to bonds, stocks, etc.
If you are a holder, or HODL as the kids say, then you get the benefit of long term rates, if you are a short term trader then you pay the short term capital gains rates, just like any other currency/commodity. trade.
Concrete rules will bring in more conservative money.
This was the last loop hole that some people were concerned about wrt to taxes and virtual currency trading.
without wash trades to pump up its value, what good is bitcoin for??
- bitcoin isn't usable as a transactional currency. it costs $30-40 per transaction. Plus other currencies are gaining steam, and offering other choices for people to transact
- bitcoin isn't rare to be a store of value.....everyday there's a new viable cryptocurrency springing up
- bitcoin isn't safer than dollar.....it can drop 90% in any day; no official entity is going to prop it up and make sure it doesn't crash. it can be banned by countries (and has been by a few)
- bitcoin isn't easy than square cash or visa or wires.....it can take several weeks to send money. plus the transaction fees are high
It’s a double edge sword I guess, because if these are treated as securities - many exchanges will need to subscribe to a lot more regulation and start providing tax paperwork (1099s included) - requiring them to have an SSN on file, removing loads of the anonymity people may be fond of.
But if this bill means that the IRS will only reject like-kind starting January 1, 2018, then those advisors (and their clients) made an expensive error-on-the-side-of-caution, didn't they? Perhaps even to the extent that people who followed that advice might dare to amend their 2016-and-earlier returns?
This year, the case for 'in-kind' exchange might be best for Bitcoin and its baby Bitcoins (Bitcoin Cash and Bitcoin Gold) – the functional differences are initially miniscule, though likely to grow in time.
TFA is explicit that it is reporting on a legislative change (expected but not yet signed into law) that'd be effective January 1, 2018. It strongly implies a more-favorable treatment is being lost, and that more-favorable treatment was still available for ty2016, and is still available 'now', and through December 31, 2017.
No, TFA is saying that a potential method of characterizing bitcoin exchanges is being explicitly eliminated. It never says that this method was acceptable. Unlike other forms of law, tax law can be retroactive (see, e.g., the loss-harboring tax shelter scandal).
You could always play with fire and try this for your 2016 and 2017 transactions, but if you get audited, expect penalties.
The article lede strongly implies that method is a currently operative tax advantage:
> Investors in bitcoin and other virtual currencies would lose a lucrative tax break…"
It also reports, without caveats (or attribution to "some say") that the characterization has been used successfully, so far, in the absence of an explicit prohibition:
> Under current law, such trades have been protected under a provision that allows investors to defer capital gains taxes on so-called “like-kind exchanges”
Several of the tax attorneys quoted advance the interpretation that this treatment will only stop on January 1, 2018 under the new bill.
Of course, there's a risk given the ambiguities also mentioned in the article. But the fact that it required legislation, with a future-effective-date, to clarify may give more cover to those using the treatment before that date – and focus discretionary enforcement on clearer cases in 2018.
I've spoken to several tax attorneys about this over the past couple years as well, and not one has said they'd be comfortable treating these as in-kind transactions. It was therefore surprising to me to read this article today.
Are exchanges going to provide us with necessary tax documents in order to pay these taxes? So far all I've found is a terrible csv export that shows the date and amount of purchases of various crypto currencies, but no information at all on the current price at the time of purchase or the amount sold for (this is on Coinbase). I'm starting to get a bit concerned.
I'm planning to use either cointracking.info or bitcoin.tax - they accept these exports, and use their own feeds for determining cost basis at purchase time.
Overall I've been pretty dissappointed by the recommendations put out by the IRS - I ended up having to talk to pay to talk to a tax advisor due to the conflicting advice on the internet.
I tried cointracking.info a couple of months back and figured that it would take some time for it to stablize. With different exhanges using different formats, and no support for all exchanges (at least the ones I am using), it is tough to tally. I finally used their export as basis and built my own excel sheet. I don’t think I have it all figured but I am happy with what I have. Now whenever I make any transaction, I add entries to my sheet.
I purchased $300 BTC the other day on CB and they wanted a $30 transaction fee to withdraw the BTC off their site. I wonder if this fee can also be considered part of the purchase?
That amount sounds suspiciously less like a CB fee and more like the network transaction fee to ensure your transaction winds up in the next block. The average is $41.69 as of this morning.
I believe this fee can be figured into the cost basis.
In the future when you are withdrawing from coinbase, you can transfer to gdax (their exchange platform) instantly, for free, and then transfer out to your wallet for free.
Brokerage fees, margin interest, anything related to making those capital gains the government is taxing is deductible. I am not an accountant nor anyone you should be taking tax advice from.
Technically there are graphs that recorded the history of price at any point in time. So you could fill your taxes even with that poor csv Coinbase gives. Now 100% aboard with you, exchanges need to get on it and deliver us some workable tax documents. It's already enough of a pain as it is now, no need to make my tax season any worse!
What I find stressful is calculating - not just the 'what was the USD price at the time of the exchange' that has to be manually entered and looked up into the exported CSV spreadsheet... BUT tying that to the movement of coin from Coinbase to the exchange. It's a pain.
I regret using Bittrex, as there's almost no tooling for this available.
A CSV file is a dream compared to what you might have to go through with on normal stocks.
My wife inherited a small amount of telecom stock from her grandmonther who worked for AT&T back in the early days. No records had been kept as to when the stocks were bought (they were part of her salary I think). Of course they were all acquired before the Bell breakup. So what she inherited was a big mess of baby bells and about once a year or so one of them will be bought out and they'll do a stock merger and automatically sell any fractional shares left after the merger so we have to pay the Capital Gains on that sale. I am still not sure how someone without a Lexus Nexus account is supposed to calculate the net profit on those shares.
Thus far most of them have been small and we've been calling the entire thing profit (purchase price of $0) but I know one of these days we're going to have to do it for real.
Something like that I'd collect all the paperwork, put a few stickies with whatever additional information, and give the pile to my accountant.
I can't for the life of me comprehend why people do their own taxes. A quality accountant costs maybe 400-500 bucks, which sounds a lot but depending on your salary, it can represents many thousands of dollars of savings. My theory is it's the do-it-yourself fix-the-house type mentality. But that mentality misses that the tax system is intentionally left complicated, requiring experts to help the rich save their riches.
I disagree with a solid 80% of government spending. Lots go against my core values and morals. Currently right now as a Canadian I even have to pay taxes for religious schools, a religion which was responsible for molesting my father as a child.
I pay against my will because the government holds a monopoly on violence. They will lock me up for not paying.
A society built on top of the threat of violence is not one I endorse.
Nor is it one I endorse, but it is the kind I have to live in.
I can pay taxes without grousing about it too much, so long as they're just taking my money. It's when they start taking my time that I start to get bitchy about it.
If it takes me 20 times longer to calculate the taxes associated with doing something than it actually took for me to do the thing, then that tax is simply not reasonable, no matter how much or how little it costs in dollars.
The worst part of the entire US tax system is the requirement to self-report on taxable events. If the IRS really wants to dig down in such detail to find out what I owe them every time I move money from my left pocket to my right, they can damned well send me a pair of tax-compliant pants. Write wallet software for US users that makes the tax compliance automatic and seamless, don't bother trying to collect taxes that can't be fairly enforced solely through self-reporting, or FOAD.
It's like they think we exist only to do their paperwork and write them checks. Do they even realize how much more I'd be willing to pay in taxes if I didn't have to do an annual ritual humiliation of proving to them through the submission of forms and reports that I am not trying to cheat? If they just sent me a freaking bill, so long as it explained why my regular payroll withholding wasn't enough, and the amount seemed plausibly close to correct, I'd probably just pay it. There is no particular need for me to fill out 12 pages of forms, so that I can figure out what I think I should owe, based on my own understanding of the tax code. Likewise, if I were due a refund, they could just send out a check.
It's not just based on violence. It's also based on institutional bureaucratic displays of social dominance.
Now what I want to know, why is it so hard for some to imagine that those who share your opinions around the world, would not eventually be self interested to use such tools like crytocurrencies to finance/allocate operations that end up helping to dismantle/replace/circumvent the systems that they don't want to pay for with those that they would?
Isn't that the only way governments' have come and gone on this planet?
Well of course if people seriously think locking up your tax chattel so they can not be productive at all (assuming they were locked up on tax evasion, yet still contributing goods/services to someone/thing else) is a effective allocation of resources, then there is no way to argue against that.
Can't speak for them, but for me the issue isn't all taxation, but it is the extent of taxation and what it is spent on. I mind being taxed when that money is going to corrupt government contracts, being used to kill innocent people, and a number of other positions which I would get varying levels of agreement with.
Taxes used for ensuring murderers aren't free on the street is a lot different than taxes used to put people in prison for pot.
This is especially true since we are at a point where most people are taxed without representation, because their vote buys so little in comparison to lobbying or other factors (such as us having first past the poll system of election in the US).
Spoken like somebody who has never had a taxpayer-funded clusterbomb dropped on their children.
Spoken like someone who likes to speak for someone else using a curious line of reasoning. You don't want to pay taxes because taxes pay for bombs. But they also pay for poor people to get health care (yes, even in the U.S., at least up until now), older people to get health care, and much more.
That is an excuse, not a line of reasoning. The fact that taxes are used for some good things is a really shitty excuse for the misery and slavery that empire casts upon the world.
Furthermore, I have every confidence in people to care for each other as brothers and sisters in the absence of the state. The internet will not tolerate the bombs and the fake money, but it will facilitate health care and, as you say, "much more."
Your taxes also help pay for the education of millions of children, among other things, so there’s that.
More to the point, your objection has some merit- but if you (or anyone else reading this) feels that way, are you protesting or otherwise politically agitating against war, or are you just sitting around feeling abstractly ashamed?
For me, prisons are a more front-and-center topic of activism. I've been involved with SSDP for over a decade. My only real anti-war activism (since the protests around the 2003 war) has been donating to Doctors Without Borders.
But that wasn't quite the point I was making. All I'm saying is that there's no reason to be proud per se of paying taxes.
And while I wish that education were better funded (and National Parks, and NPR), I don't think that it's reasonable to suppose that, so long as we make the mistake of delegating those things to the state, that it won't use our money mostly for misery and death.
I don't really understand this comment. I didn't make an analogy.
The state takes tax money and uses it to literally put people in cages and literally drop explosives and chemicals on children. I didn't mean this as an analogy - it's a literal statement.
Isn't that what we are doing? Not exactly shutting it down, but massive amounts of privacy destroying laws and related technologies are in place for this reason, but which are used more to enforce laws with far less agreement. We didn't shut the internet down, but we destroyed a part of it.
But I don't think it's fair to consider one nation in isolation; the entire world system has afforded hegemonic states for over a century now. Time to bring it to a close.
I agree, I picked a single one, though I could also have pointed at the UK, Ireland, Norway, Sweden, Finland, Iceland, Denmark, Germany, France, the Netherlands, Switzerland and so on. Curious what you mean by bringing it to a close, though.
Interesting, I think your point about equalization and homogeneity is a likely outcome. I think state sovereignty is interesting when viewed as hundreds of simultaneous experiments in different ways of self-organization. Since it seems nobody has quite perfected it yet (?) I think we're not quite ready yet, though the vision is an enticing one.
I'm actually British, Canadian and Polish, and I live in the US. I've lived in Canada, Australia, Saudi Arabia and Saipan. I've had the opportunity to live under many different systems. Of course, Canada has done shameful things in the past, as has virtually every other nation. I mean, Quebec was a world leader in the export of chrysotile asbestos until 2012. I hardly think you can point to past systems as a reason the current is deficient.
There are plenty of things Canada can do better, too: universal drug benefit, universal dental and vision, childcare, not exporting asbestos so much, etc. I can honestly say though, its a much better way to live up there than down here. You can point to what your taxes do, like allow you to live without the fear of crushing medical debt at any moment. So you pay them without the same amount of tooth gnashing.
No, I am trying to say that the, "You have to pay tax or be tortured" is ridiculous. You're not going to be tortured at all. You're going to be penalized just like you would if you failed to follow any other law on the books.
While it was deemed to be treated as property, IRS never gave guidance on ability to treat it as like kind transaction. Accountants have been asking for this clarification for years.
SEC treating ICO as a security. IRS needs to come out with more guidance, but doing taxes is going to be a pain with crypto to crypto. Not looking for trouble with IRS, especially when gains were plentiful for so many this year.
Pay your taxes, you don’t want to be the example the IRS makes. PR not going to look good for people in crypto, “majority of crypto owners refusing to pay taxes”.
That would have been so much clearer if they'd just written "…upon an exchange of virtual currency for other property, including other virtual currency."
But they didn't, and thus the 'other' can easily be read as "other kind of property" – leaving 'virtual currency' to 'virtual currency' unaddressed.
There is a segment of the crypto-currency community who got into it explicitly to avoid paying taxes and to be away from government oversight. They aren't going to be happy with the exchanges playing nice with the IRS.
> IIRC like-kind treatment was never made available, with the new tax plan or without.
They never clarified and now they'll never have to.
Like-kind treatment is given to property, with specific exemptions made by the IRS. If the IRS never made an exemption, but it did designate cryptocurrencies as property, then like-kind treatment applies.
Given that cryptographic hashes are the only thing trading in any distributed ledger technology, it doesn't matter what the name plastered on the network is, it would fit existing regulations and case law around like-kind exchange.
Now with the new law change from Congress, the agency or the courts will never have to deal with it if they don't challenge 2017 tax filings.
Can somebody explain something to me... I haven't been participating in the Bitcoin/cryptocurrency movement for better or worse, just following it from afar:
I thought the premise of these currencies was to avoid government and banking oversight/control... but with both the SEC and IRS putting controls around virtual currency (which I think we all expected to happen), how does that change the original inspiration? Do these virtual currencies become relegated to the same fate as all other currencies?
Was seeing this happen part of the experiment of crypto-currency as well? I keep trying to figure out the real motivation behind the basically unknown origins of the inventors (e.g. Satoshi Nakamoto).
- The fed does not exercise control over Bitcoin directly, so Bitcoin is still fundamentally different than fiat currencies
- All fiat onramps into crypto are controlled by governments, which is one way to regulate it (KYC, AML)
- You still have to follow the rules for your country, and if the government finds out you haven't, it can censure you; with crypto, it can be harder to see if someone followed the rules, but it's not impossible with the pseudonymous approaches used by most cryptocurrencies today
Fair enough, maybe this falls apart when we started talking about fiat currencies being exchanged directly for Bitcoin (i.e. when "real" money got involved). Prior to that really happening, it seemed like one could create new Bitcoin through mining, which was a conversion of computing power/electricity/time directly into crypto-currency value - not a direct conversion of fiat currency into crypto-currency value.
With mining now being cost prohibitive, it's not as reasonable of an avenue of gaining Bitcoin.. and "real" money has entered the game - and with that, comes regulation.
The vision behind crypto is more decentralized than the actual currency is. Some may applaud the SEC stepping in to combat shady ICO's, others see it as overreaching death throes by an increasingly anxious dinosaur.
Bitcoin was set up to disproportionally reward the early adopters. The early adopters were cyberpunks, cryptography enthusiasts, and darknet merchants. Since we can only speculate about the inventor(s), the motivation can range from a US-hostile government wanting to loosen the grip the US has on fiat and digital currency, to Libertarian Anarchists wanting to switch trust from bank-bailing-out governments to technology.
It seems one goal "to protect Bitcoin from the select few" is already close to impossible, as Bitcoin shows a highly skewed power distribution (a select few has thousands of Bitcoin).
Arguably one of the ways “Bitcoin” protects from the select few with it’s adoption is by only being one such currency. Since the many can create a new currency to place their faith in with relative ease - at least in comparison to fiat - they can combat “rich bitcoin jerks” through devaluation and other such mechanisms, in theory.
I also wonder how this will deal with crypto coins that are specifically designed to avoid monitoring.
Seeing as it's insanely easy to set up an alternate address in any coin, and that whatever the US government knows of my coins could just be a tiny percentage.. how would they know how much to tax me on?
It seems so difficult as to be almost useless. Makes me think they'd be better off just considering it a foreign coin, and only tax what goes into and out of USD. I dunno, clearly I'm out of my element haha.
What good is the coin if you can't ever spend it? Sure, you can hid it away somewhere the government can't find, and just sit on it... but then what? When you eventually want to spend it on SOMETHING, unless you're going completely black market, there's going to be a record. When the guy making $50k/year suddenly buys a $2.5 million house, the government is going to ask you where that money came from.
I never said anything about not spending it. Clearly though if you bring money over to USD, it's quite visible and taxable. To be honest, I don't know what your point is.
If I make 50k/y and buy a 2.5m house with cash, the gov is going to ask me where it came from too. What's this have to do with my comment questioning the governments ability to track anonymous coins?
Anonymous coins _(if working properly)_ are effectively the same as cash. So the same concepts and limitations apply regarding the governments taxation on it. No?
They track cash via audits. The same thing will happen with anonymous coins. So if your apparent income (tracked purchases) is larger than your declared income you can expect an audit, no matter where the extra money came from.
They can't and won't, anyone savvy enough can obfuscate it enough. This is just fear mongering for the masses, in other words, business as usual for the government
I don't think it was this change that put that to rest. I doubt Satoshi ever foresaw that BTC transaction times and fees would grow so large that you essentially cannot use it for everyday purchases. It is still not feasible to regulate BTC itself. They only really only regulating the exchanges.
I don't know how he didn't expect that. Isn't it designed in the system such that you can calculate the maximum transactions being handled?
I've seen some people blame the miners for the fees.. but when you have such a massive backlog, the variable fees are the only way it's even working at all right now. If not for that, it would be a lottery whose transactions actually got through.
I also have been a bit confused by the usability of BTC for ordinary people, due to the units of measurement. The fractional nature of BTC and cryptocurrency seems like it would not fit the necessary ease of use for most non-digital, day-to-day transactions. I think ordinary people would find it hard to buy bread if it cost 0.000127 BTC ($1.99 USD), for example.
I think things would start being priced using different units. With your example of bread costing 0.000127 BTC, that could also be written as 127 "bits" or μBTC. It would take a lot of getting used to, but it really isn't any more complicated than $1.99.
Wash sale rules still apply (as has been noted elsewhere). But it's pretty likely this government will start to aim for that as well.
The only policy lens by which this current congress's bill makes sense is on that "rewards existing businesses moving into new markets" as opposed to "new businesses competing with existing via new markets." And while I'm not a fan of the bill or its primary authors, I'm simply not able to accept the idea that they don't have a policy direction.
I believe so. The existing GOP agenda appears to be to reward large corporate donors by systematically opposing competition. They're actually much less of a capitalist party than the democrats.
This is why every libertarian should be doing everything they can do to piss on this tax bill. It's MUCH worse than the status quo.
Man, like-kind doesn’t even allow silver to gold. I can’t imagine even the most liberal interpretation would allow trading between different blockchains.
I'm American. I used to live in China. I bought some bitcoin in China. Later I changed some of that bitcoin for an altcoin. I now live in Japan and sometimes do more alt coin exchanges. How if at all am I taxed?
You should honestly consult a tax professional about this, as it's not a good idea to get tax advice from strangers on the internet.
But according to the IRS, you are only taxed at time of disposal when capital gains were realized. I am not at all familiar with Chinese or Japanese tax law, so I couldn't tell you what your liabilities might be there.
If I buy N btc every month for different price and then sell some fractional amount, what would be the cost base? It appears to be possible to name the lot being sold but I can't find the consensus, internet in general advises FIFO.
If it's like stocks, I reckon you can specify which lot is getting sold. That was one of the things up for debate under the GOP proposed tax reforms. FIFO requirement for sales didn't make it into the final bill.
This is the best resource I have found at a quick search. The answer is simply it depends on how you setup your cost basis.
That is literally the IRS's job. IRS funding at the margin directly increases or decreases tax revenues, because they have more or less resources to spend pursuing tax evasion.
Well if they contract out the chain analytics work to the most connected firms, I wouldn't be surprised if we found out that russian hackers are the ones behind helping americans launder their bitcoins/ether…
Maybe Equifax has some engineers working on this right now for them!
The trend is towards KYC compliance and automatic sharing with tax authorities. I assume after a while very few countries will tolerate exchanges not complying.
...and what exactly will they do about it? The question is about decentralized exchanges. Countries may choose not to "tolerate" whatever they wish, but the internet is under no compulsion to tolerate shortsighted countries.
They can prosecute the operators of those sites, not like it didn't happen in the internet before. Usually some things survive, but at the cost of extra hurdles (e.g. only accessible via tor, but even there, some people got busted through bad opsec).
You mean the operators of web front-ends which provide access to the exchange? I suppose that's possible. But I don't know how long that will even be the main way that people access them.
They would need to regulate every ISP in the country to block the protocols, and then go after every website just using those protocols under the hood (and most of these would not be in the USA).
I can't see that ever happening especially because these protocols would have non currency uses as well.
Regulate people using handcranks to power portable transmitters transmitting information at variable frequencies to be received and picked up by those who know of beamforming and antenna design.
What if there are no owners? AFAIK, there are protocols for atomic cross-chain trading, and there are dapps that are hosted on the blockchain itself (and are part of the chain). I think dapps have ownership, but I won't be particularly surprised to see if bazaar would be able to try something about consensus-updated codebase without explicit ownership. That could go very wrong, but nonetheless that would be interesting experiment to witness (if anyone would dare, heh). I mean, not for tax evasion purposes, but solely as a "ownerless" software development model.
Node software developers could be at risk, though.
If newspaper headlines start talking about how many crypto-holders are engaging in tax evasion, you can guess where those limited resources will be targeted.
The Government also "tracks" large amounts of cash, which are about as anonymous, through audits - both random and based on red flags. Basically, they send round someone with the ability to lock you up if they can prove you've intentionally hidden assets from them, and they're very, very good at seeking out inconsistencies in your books.
So... Bitcoin people complain that it's not taken seriously as a real currency. Then when it is, with all the associated regulatory and tax ramifications, they complain about that, too.
A lot of bad things can be said about bitcoin as a technolgy and its community of participants. A lot of bad things.
None of these things are present in your post. Most bitcoin folks are happy it's not "real currency", it's not clear what you even mean, there are already taxes and whatever "regulation" means, the SEC is starting to single out individuals for punishment.
So, what do I pay in? Does that mean every transaction in monopoly should be taxed? How about coins ERC20 tokens inside ethereum? what if I trade one crypto kittie for another?
I get that buying something for USD and later selling something for USD you've made a gain.
Scenario:
1. I buy 1 ETH for 1 USD when rates are 1 ETH/USD, 2 ETH/BTC.
2. I trade 1 ETH for 1 BTC when rates are 2 ETH/USD, 1 ETH/BTC.
Option 1: I’ve incurred a loss, because the sale is reported as first a sale of ETH for USD, then a purchase of BTC at whatever the cost basis between BTC/USD.
Option 2: I’ve incurred a gain, because I traded directly from ETH to BTC, and the relative value between ETH and BTC has gone up.