IRS says, only 802 people paid taxes on Bitcoin profits

Nowadays, it’s been everyday buzz about investing in Bitcoin and the news of people becoming ‘bitcoinnaires’. However, IRS began issuing guidance on taxation of Bitcoin Profits

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Bitcoin is taxable

In March 2014, IRS began issuing guidance on taxation of Bitcoin profits. Meanwhile, the agency announced that Bitcoin would treat as property with loss or gains treated as capital loss or capital gains for tax purposes.

Probably, readers are familiar with many ups and downs stories about Bitcoin investors becoming millionaires overnight. Therefore, such stories from Idaho teenager who turned $1000 into $1.1mln. The Norwegian engineer who made $800,000 in profit off a $24 investment.

However, none of these stories have mention the taxes of these individuals paid or didn’t pay.

Catch me if you can

Amazingly, few take the idea of taxation lightly. As their belief that Bitcoin is pseudo-anonymous, there’s no way the IRS will find out about their taxable gains. But still they may be wrong.

Bitcoin isn’t as anonymous, as evidenced by the number of people in federal prison who paid in Bitcoin for child pornography or illegal drugs. As many companies that scour the Blockchain, seeking to link Bitcoin accounts to their actual owners.

Earlier, the IRS was found to have been partnering with a company called Chainalysis. It is to double down on its efforts to monitor Bitcoin traders who occupy in high frequency and volume trading.

Recently, IRS demanding that the exchange divulge the identity of anybody who traded more than $20000 in Bitcoin per year between 2013 and 2015.  The IRS is perhaps correct in their belief that many Bitcoin owners are evasion taxes. According to studies, in 2015, only 802 Americans told the IRS about their Bitcoin-related capital gains or losses.

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How can Chainalysis help IRS?

Chainalysis, 2014, is an anti-money laundering software for Bitcoin. Through its formal partnerships with Europol and other international law enforcement agencies. Its investigative tools have been “used globally to successfully track, capture, and convict money cyber-criminals and launderers”.

Also Read: Microsoft announces Coco Framework for Blockchain-based Businesses

Significantly, to remember that Bitcoin’s Blockchain is completely transparent. Each transaction that has occurs in listed in that decentralized ledger. The transactions can be follows through the Blockchain using erudite software. The only thing that gives Bitcoin any appearance of privacy is the fact that it uses arbitrary addresses which are not certainly associates with a user’s real-world identity.

Its important to know that people leak information about themselves every time. Many people tend to post their Bitcoin address on Internet forums. If they were to turn around and use this same address for illegal activity then their identity could be unveiled.

On a note that 2017 has been a banner year for cryptocurrencies. It wouldn’t be a astonishing to see Bitcoin and other digital currencies high on IRS’ list of priorities.

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Qadir AK

Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.

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