Re: Lab Rat Data Processing, LLC (LabRatMining) Official Announcement
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.
This was my fear. Not that I care about giving the data, but would labrat want to shutdown instead of comply with tax and reporting rules? It does also depend how labrat structures things. Some people won't give up this info, so some of the bonds might become "invalid". Lots of crazy scenarios are possible pending the final decision. I hope this was the issue causing the original problem. I'd hate for this to be an additional problem for labrat to deal with.
It already is.
My $.02.
