recommended reading

Why Bitcoin 'Millionaires' Could Accidentally Become Tax Felons

Garry L./

If you’re an American who bought bitcoins at around $80 less than a month ago and sold them today for around $237, congratulations! You may be on your way to accidentally committing tax fraud. That’s because you’ll run afoul of authorities if you don’t report what you made on bitcoin as capital gains, the same way you report gains made on most assets sold at a profit, argues Karl Denninger, who is sometimes credited as one of the founders of the Tea Party movement.

Since there isn’t a field in TurboTax for “bitcoin earnings,” many fans of the cryptocurrency are likely ignorant of this wrinkle in the tax code of the United States and many other countries. Meanwhile, newly minted bitcoin millionaires are revealing themselves—or at least their Reddit handles—left and right.

Even those who are staying quiet about their newfound riches are liable, basically forever, for whatever capital gains they fail to declare and pay taxes on come tax season. That’s because bitcoin, far from being an “untraceable” currency, relies for its very existence on a global record of every transaction ever conducted with a bitcoin. Using the right forensic tools, tax authorities could plausibly figure out exactly where every one of your bitcoins came from and where it went. And, as Denninger notes, because there’s no statute of limitations on tax avoidance, people who are cashing out now could be prosecuted for not paying capital gains taxes at any point in the future.

Read more at Quartz.

(Image via Garry L./

Threatwatch Alert

Thousands of cyber attacks occur each day

See the latest threats


Close [ x ] More from Nextgov

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Modernizing IT for Mission Success

    Surveying Federal and Defense Leaders on Priorities and Challenges at the Tactical Edge

  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

  • Effective Ransomware Response

    This whitepaper provides an overview and understanding of ransomware and how to successfully combat it.

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.


When you download a report, your information may be shared with the underwriters of that document.