Quote from: oldbushie on March 26, 2014, 03:55:03 PM

That doesn't tell me anything. At best it just means "for this year" not "for all previous years". My tax guy said this:

"Yeah since there's no reporting coming into them from any outside source yet, there's really no way for them to even know anything about mining or bitcoins being bought and sold prior to this year."

The new guidance is that cryptocurrencies always were property, not just starting this year - but since their origination. Therefore, if you didn't report them as property in 2008, you were committing tax evasion in 2008. However, they will graciously allow you to voluntarily report those previous earnings and they won't penalize you.

Your tax advisor is correct. Without 1099s, there is nearly no way (or at least it is massively cost prohibitive) for the IRS to track down every bitcoin user prior to this year. It doesn't change the fact that you were supposed to do it since 2008.

In my opinion, this is a band-aid until the IRS figures out real rules. They need something so the new bitcoin millionaires can get taxed, but it isn't ideal for the IRS nor users.

LRM could be fine, they just need to collect SSNs and addresses of everyone and issue 1099MISCs for everyone that earned a total of $600 in a given year (valued at the time dividends were sent). If LR stored bitcoin, he'd need to pay tax on his earnings. I'm assuming he set up his LLC as a pasthrough, so he'll pay individual rates on distributions he makes to himself. This is an additional complication, and something I pointed out 50 or so pages ago - but was told that LR doesn't keep anything in BTC so this wouldn't be an issue. strikethrough, it can be complicated depending on the wording of the new "contracts" so I don't really know how this effects LRM.