The internet is abuzz with rags to riches stories of people who invested in Bitcoins early to reap huge margin gains. But the question is did these people pay taxes on these gains? Probably not. Bitcoin is a decentralized cryptocurrency and it is impossible to track down its owners. Hence, a major chunk of people have relied on it to evade taxes and of course, get some good margins off the digital money dough.
In the state of Virginia in US, Bitcoin is taxable and according to the Internal Revenue Service (IRS), only 800 people in total have paid taxes on profits of Bitcoins. In Virginia, the taxation on Bitcoin started back in 2014, when the IRS announced that Bitcoin will be treated as a property and any gains or losses will be treated as property gain or loss.
Although Bitcoin users are hard to track, it is not completely impossible to crack the blockchain transactions to identify the owners. IRS is working closely with different organizations to identify accounts doing hefty tradings on cryptocurrency trading platforms.
Coinbase is a popular platform for buying and selling cryptocurrencies, IRS is also demanding Coinbase to share information of netizens who have traded more than $20,000 of Bitcoins between 2013 to 2015.
The concerns of IRS are very true as over the years cryptocurrency has emerged an easy way to convert the black money into white without raising eyebrows. The debate, throughout the world, is still on-going, on how and when should the cryptocurrencies be taxed.
In other news, CEO of JP Morgan Chase & Co, Jamie Dimon called Bitcoin a fraud. He made loud claims at a conference saying, “The currency isn’t going to work. You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart.”
This week has been difficult for Bitcoin so far and if we look at the Bitcoin value it has plunged below $4000 for the first time in weeks.
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