Have fun in jail!
It doesn't matter if you own a pizza palor, mine bitcoins, or sell drugs.
You always owe taxes!
Why don't you move to a country where there are no capital gains tax and no income tax.
As long as you live in the US or are an US citizen you will be breaking the law and the IRS will catch up with you.
Plenty of cash only businesses under-report their earnings. Some get caught, many don't. If you know the tools that the IRS uses to catch these types of tax evaders (I do) it would be easy to keep your BTC-to-cash transactions under the radar and get away with this indefinitely. Even with a random audit. However, if the IRS for some reason or other opens a criminal investigation on you then it is a different story ...
Yes, but I doubt the OP is running a cash-only business with which he can use to launder his money.
The second he sells $5k worth of coins on Coinbase, wires in $5k from a sale on Bitstamp, deposits a check for $5k from CampBX, or $5k in cash from sales he made on localbitcoins, his bank is likely secretly filling out forms and reporting him. They won't tell him and in fact, they are not allowed to. Try to break up the deposits into smaller amounts and you'll be charged with structuring, which is a much more serious crime. I suppose you could use localbitcoins and keep it all in cash and spend it slowly. Try doing that with $100k+ though without attracting any suspicions. You become very limited with what you can do with your money. Fancy dinners are probably ok. Jewelry and sports cars are not.
So, yes, once that money hits your bank account, you run the risk of getting audited. And if you are audited, you'll have to explain it to the IRS. Yes, you can launder it, it happens all the time, and lots of people get away with it. But lots get caught too.
If you made <$5k from your bitcoins then really who gives a sh*t anyways. The IRS isn't going to care about that amount of chump change and frankly, as an honest taxpayer, I don't really care about that amount either.