Pay Your Bitcoin Taxes, Don’t Whine About It

I see Coinbase had to release the account information of over 13,000 accounts to the IRS.  A lot of the folks that own those accounts are livid.   The IRS wants the taxpayer ID, name, birth date, address and historical transaction records of users that completed transactions of more than $20,000 in a single year between 2013 and 2015.

If you made money trading, pay the tax.  Be happy to pay the tax.  You could have had a loss.  Or worse.

In 2008, I was short commodites from August to December and held the position.  I owed tax.  It went against me the first week of January.  I went from a gain to a very small gain.  I held on and the market broke but it wasn’t fun knowing I owed the IRS a bunch of money on paper gains.

Suppose the IRS treated Bitcoin exactly like it treats commodity transactions.  Then Bitcoin traders would be really mad.  In Commodities, you pay a blended rate.  It’s 60% the highest tax rate combined with 40% of the capital gains rate. It works out to roughly 24%.

Here is the rub.

Every position you have is marked to market on December 31 and you owe the tax on the gain even if you haven’t exited the position.  This means that no matter if you exited, or were a #HODL, you owed tax.  It looks like only people that exited are going to owe tax and if they held it less than a year it will be at the top rate.

Bitcoin Close Price data by YCharts

In cross country driving news, we made it all the way to North Platte, NE. Ate dinner at Ole’s Big Game Steakhouse last night in Paxton, NE. I am glad we left when we did. They aren’t getting inches of snow in the mountains behind us. They are getting feet of snow. Saw some antelope in Wyoming yesterday. I swear, Wyoming and Western Nebraska remind me of the Serengetti plain in Africa. Wide open spaces. North Platte is actually a historic place for WW2 buffs. Flags in Nebraska are at half-mast for Rev. Billy Graham tomorrow. Thanks Pete!