Thats all pretty disgusting. I am in Canada, and i use it in a similar way, but the way BTC is defined in the law is pretty vague and only a capital gain should have to be declared so its pretty easy to do whatever as long as you declare your real BTC profits as a other source of income.
I really wish it does not become like that in Canada in the future.
I can understand them having to report transactions "according to government regulations" since they do business like a bank and with banks that are also under the same regulations. It's a way for the government to police [via the tax man] those who might commit fraud or evade taxes.
I do everything by the book. I mark off all things that are allowed to be written off for tax purposes. I invest what remains after expenses back into more mining rigs. The ONLY payroll I have had is from the training part of my business when training telephone technicians. There has been no payroll from bitcoin mining because I use ALL of it's profits to invest into more rigs or related hardware to grow my hash.
My only concern at this point in time is WHAT EXACTLY is Coinbase going to report on their 1099-K as transactions? I more than likely will have to have several communications back and forth with them to PROVE that some transactions were simply transfers from cold storage address to coinbase or visa versa or from coinbase to another exchange after coinbase exchange went down to have the opportunity to sell my coin at another exchange in the event of a flash crash. That occurred here recently when Coinbase Exchange went down. This is what concerns me.
We will see how cooperative Coinbase is with me in future correspondence to clear up any discrepancies they may have on form 1099-K.