BTC and Taxes

[Lethalius]

I have a question regarding taxes and BTC. In tax year 2022, if I only bought bitcoin on several dates and transferred to an external wallet (not mine), do these purchases and transfers need to be reported on my tax form? If I am understanding a Turbotax and Cryptocurrency Video (youtube) correctly, it says that if you bought crypto, held crypto, transferred crypto from one wallet to another, you don't have to report crypto. (see attached image). In my Cash App account, under the "Documents" folder, then "Bitcoin"- there are no documents available such as a 1099-B.

Anyone that can help me with this, it would be greatly appreciated.

Thanks,
Lethalius

 

[OdinOrder]

That's my understanding as well. You never turned it back into fiat currency. You never made any gains. If you held it for a year, made 100%, then turned to fiat, and sent to your bank, then yes.

 

[UnholyAlliance]

Yo only need to report it if you cashed out any bitcoin for the year so if you just held it then you are good.

 

[Ruhlfreak55]

Unless someone tells you to I wouldn't. How can they even prove you're not still in control of it if it went to an external wallet.

 

[goback2013]

Unless someone tells you to I wouldn't. How can they even prove you're not still in control of it if it went to an external wallet.

If he accessed the external wallet directly from an IP mapped to his name, then they can say the wallet belongs to him.
Remember the block chain also logs IPs that accessed the wallet.
And yes I believe they will go to lengths to pull IP assignments handed out by a peesons ISP
Especially in an audit.
Also when accessing the IRS site, and signing into your account they'll log your IP
Then they can say you logged in from the same IP that also accessed the external wallet.
The blockchain is 10000% auditable.

 

[intensed]

The blockchain doesn't store IP addresses.

 

[UnholyAlliance]

The blockchain doesn't store IP addresses.

The exchange where the wallet was created might log IP's (blockchain.com for example). Not sure which ones do however but obviously if you use a hardware wallet or an offline wallet IPs won't be logged.

 

[Ruhlfreak55]

Who the hell told you the bitcoin blockchain stored IP addresses??? LOL. Even if that were true aren't all of us masking that at all times?

 

[UnholyAlliance]

Who the hell told you the bitcoin blockchain stored IP addresses??? LOL. Even if that were true aren't all of us masking that at all times?

The government would love to have something like that in the blockchain so that it be a lot easier for Big Brother to track you.

 

[goback2013]

The exchange where the wallet was created might log IP's (blockchain.com for example). Not sure which ones do however but obviously if you use a hardware wallet or an offline wallet IPs won't be logged.

Right. But any transaction initiated by that wallet will have an IP associated to that transaction by a BTC entry node.

 

[UnholyAlliance]

Right. But any transaction initiated by that wallet will have an IP associated to that transaction by a BTC entry node.

I don't think the blockchain specs have a field for the IP.

 

[goback2013]

Who the hell told you the bitcoin blockchain stored IP addresses??? LOL. Even if that were true aren't all of us masking that at all times?

The nodes contain IP information. You think nodes are run by benevolent non-ALPHABET actors ? OK.

 

[goback2013]

I don't think the blockchain specs have a field for the IP.

Node server certainly contains logs. Blockchain doesn't need a field to store informational/Metadata. But the server fronting the blockchain certainly can(and does) log ip information

 

[Ruhlfreak55]

The nodes contain IP information. You think nodes are run by benevolent non-ALPHABET actors ? OK.

I always run full nodes on any of this kind of stuff when I'm up. YOU think enough of the full nodes are Alphabet that actually cooperate that any of them could even link 2 of your transactions together? Plus like I said you should also be up on TOR if you're doing any of this. aka the IP leads nowhere.

 

[goback2013]

The exchange where the wallet was created might log IP's (blockchain.com for example). Not sure which ones do however but obviously if you use a hardware wallet or an offline wallet IPs won't be logged.

Yeah. You can send to that wallet all day. That's fine. But once that wallet initiates a txn, that txn will require communication with a BTC node. The node can log the IP initiating the txn.
So at that point one will have to ensure they're using an IP that is not traceable to any credit card, etc.
This is the reason guys send their BTC to XMR.

 

[goback2013]

I always run full nodes on any of this kind of stuff when I'm up. YOU think enough of the full nodes are Alphabet that actually cooperate that any of them could even link 2 of your transactions together? Plus like I said you should also be up on TOR if you're doing any of this. aka the IP leads nowhere.

Ha! Guys still have problems filling out western union forms. You really think most know how to properly use TOR, a VPN, booting a live-OS.. ?
You're an outlier.. the average user is still wondering why they haven't received a $10k check from their new pen pal.. who just so happens to be a Nigerian prince

 

[goback2013]

tldr
.. park your BTC in an external wallet
Don't send from that wallet for a while

Only problem is I see with this is... do they then start watching the external wallet since it suddenly received a large sum from your wallet.. but now sits idle.

If you use the external wallet for purchases then that will certainly link you to the external wallet.

Upwards of 100k new agents means they are serious..

 

[goback2013]

I always run full nodes on any of this kind of stuff when I'm up. YOU think enough of the full nodes are Alphabet that actually cooperate that any of them could even link 2 of your transactions together? Plus like I said you should also be up on TOR if you're doing any of this. aka the IP leads nowhere.

ISPs could also be logging IP/txn information. Since BTC communications are all done unencrypted.
Remember ALPHAs log Metadata. Not too much effort to scrub BTC packets for txn data.

 

[Biggerp73]

I transferred and received enough money through bitcoin and cash app this past year to buy a small house in some states. Didn't pay a dime in taxes. Just filed my regular W2, that's it. Already got both my federal and state returns back a week or two ago.

 

[Zarati]

Simple answer, NO!