Sunday, October 17, 2021

[US] Please help me understand. Bitcoin tipping / small transactions and taxes

I like to think I understand how Bitcoin works, both in theory and in practice pretty well. But one thing just makes no sense to me whatsoever: Twitter adding Bitcoin tipping, people paying for things back and forth with lightning.. by US law, every single little transaction is a taxable capital gains event!

What are people doing? Are they keeping track of all of this in a giant spreadsheet? Are they ignoring it and hoping the IRS doesn’t notice? Are they going to report each little tip as a zero basis sale to the IRS?

To me it seems like a MASSIVE PROBLEM that is barely mentioned. The previous episode of Speaking of Bitcoin went into Bitcoin tipping and explored all sorts of reasons about why it is not happening much, and mentions “issues with taxes” as a throwaway before spending the entire episode on ther things. I feel like I am missing something or might just be just genuinely stupid. Please help me understand. Thank you.


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