I'll preface by saying I'm not suggesting anything illegal and this is more of a hypothetical, I believe people should follow the law and pay when there is a taxable event.
So the most obvious situation where you'd have to pay is if you have coinbase, robinhood, any of those etc and you sell on their platform, that's a taxable event and they mail your 1099 to the IRS. Have to pay those.
I'm planning on hodling for the rest of my life I mean at minimum most of it for 5 years for sure. I know bitcoin is traceable, but I moved everything I have to an offline wallet. I know there are ways to basically move your crypto around to get your identity off of it.
What if I gave my bitcoin to a friend as a gift, under the annual exclusion amount of $15k, (you can gift 15k a year with no taxation, over that you do pay, this applies to any asset not a crypto thing).
So I gave my crypto to a friend, I don't hold any anymore, and I've got an offline wallet I don't need to convert my btc to cash which would obviously trigger a taxable event, I could use that btc in the future to purchase goods and services and your purchase doesn't get reported to the IRS. So is btc taxation pretty much the honor system? we all know how technologically inept government is and they don't have the resources to track down every single person with btc and trace, it would only happen if you get selected for a full audit and you would be able to say you gifted it away x years ago and gifts don't have to be recorded you wouldn't have to identify who it went to.
The only wrench in the idea is if regulation is passed that says every retailer needs to report btc purchases, but there are plenty of international companies online so that doesn't seem that feasible.
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