Quote from: bitwitt on January 21, 2016, 02:39:52 AM

Quote from: dmwardjr on January 20, 2016, 11:19:17 PM

What I'm about to share is important to users of the pool who use CoinBase for their wallet and/or to convert bitcoin into USD. If you have more than 200 transactions [Easily done with a payout for every block in a matter of several months] -AND- more than $20,000 in transactions.

I received the following email from coinbase today after they asked if I use my coinbase account primarily for business or personal use. I told them business because my business checking account is linked to Coinbase. I write off expenses related to bitcoin mining.

Here is a copy and paste of the email:

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Coinbase has requested a file from you.

Thank you for using Coinbase for your business activity. Due to your processing volume, your Coinbase transaction activity last year met U.S. tax reporting thresholds. As a result, we kindly ask you to please do the following:

1. Complete the fillable Form W-9 found here: https://www.irs.gov/pub/irs-pdf/fw9.pdf. Please fill out the basic information in boxes 1 through 6 and enter the applicable Taxpayer Identification Number in Part 1. Note: you may enter tax exemption codes, if any apply to your business, in Box 4. (If you believe the Form W-9 does not apply to you, please email us at taxfiles@coinbase.com and we will help you find the proper form.)

2. Sign and date the form on the line in Part II.

3. Upload the completed and signed Form W-9 using the Kiteworks website.

Coinbase will retain your completed form for tax reporting purposes and we will send you a Form 1099k in the next few weeks for your own records. If you have any questions please do not hesitate to reach out to taxfiles@coinbase.com. Please return the completed Form W-9 to us by January 25 so we can meet federal tax filing deadlines.

Upload link expires: Jan 25, 2016
This upload requires authentication.
To upload your file, please activate your account by creating a password.

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If you read the instructions for US Form 1099-K you will see the following in the instructions: https://www.irs.gov/instructions/i1099k/ar02.html#d0e387

Exception for de minimis payments. A TPSO is required to report any information concerning third party network transactions of any participating payee only if for the calendar year:
The gross amount of total reportable payment transactions exceeds $20,000, AND

The total number of such transactions exceeds 200.

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Box 4. Federal Income Tax Withheld

Enter backup withholding. Persons who have not furnished their taxpayer identification number to you in the manner required are subject to backup withholding on payments required to be aggregately reported in box 1a.

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My question is this: How does Coinbase KNOW what transactions are payments and what transactions are simply transfers from their wallet to a hardware wallet for cold storage? What if I then [Later] transfer all or part of funds from cold storage back to my Coinbase wallet and use it later on to purchase rigs or other hardware? Will the transfer from cold storage wallet to coinbase be counted as a "transaction" or thought to be a "payment" to me by Coinbase? How the hell do they KNOW what is a payment and what is not?

Another example: If I transferred $70,000 USD to my Coinbase account THEN purchased $70,000 worth of rigs, is this to be reported as $140,000 worth of transactions on form 1099-K?

Another example: I paid for something with bitcoin via escrow. Let's say it did not work out and I get refunded that same amount. Is that amount to be considered a payment?

How the hell do they know what is payments and what is not?

This will be interesting when I get the form 1099-K from them to see the gross dollar amount they put on the form.

I recommend not using Coinbase in any regard and use another means of conducting your business with bitcoin. I can see this becoming a BIG mess. I now have to make sure I'm DEFINITELY organized. I can see a visit from the tax man very easily this year. If that happens, I will be on a mission to put an end to anyone doing business with Coinbase.

EDIT: Check out this link: http://cointelegraph.com/news/113403/5-reasons-to-drop-coinbase-like-a-hot-potato-op-ed

Do you know......You just violated Coinbase terms and conditions ? You posted a private message. Good luck they will shut your account down. You need to keep your posts and mouth shut.

Told you this guy was a Blow hard! He just lost most of his Bitcoins playing poker. He is one of the WORST poker players I have seen. Plus he left his wife and young son home as he gambles away his wife 401k.