Coinbase is currently Sending 13,000 Client Records Over to the IRS
Coinbase investors knew this day came. The top US cryptocurrency exchange for bitcoin, Bitcoin Cash, Ethereum and Litecoin on Feb. 23 informed the 13,000 affected investors by email, telling them the other shoe had dropped. Coinbase will comply with a judge's ruling in a California federal court to share client data of 13,000 of its customers with the Internal Revenue Service's (IRS). The IRS was most concerned with accounts with at least $20,000 «in any one transaction type,» as per the court ruling.
While the number of clients affected may sound high, it's less than the initial amount that the tax agency requested in December 2016 for 500,000 client records. Coinbase deems it apartial win, reminding investors it advocated on their behalf after taking the issue to the US courts.
Among the details that the IRS asked for were «citizen ID, title, birth date, address, and historical transaction records for specific higher-transacting customers during the 2013-2015 period,» according to a notification on Coinbase's site.
Although these Coinbase investors have been reporting their gains and losses with the tax agency already, others may not be as ready. Recent reports suggest that only a small proportion of Americans have been reporting their cryptocurrency transactions to the IRS, based on CreditKarma data so far.
Year-to-date, their taxes via CreditKarma have filed. Of that amount, fewer than 100 have revealed activity. More than half of taxpayers that participated in a CreditKarma poll said gains were experienced by them. Taxpayers have to file.
Additionally, the same cohort has yet to report any cryptocurrency gains to Uncle Sam ever, regardless of the fact that many investors appeared to understand that they owe taxes on the profits.
It's unclear, however, the percentage of these users that are based in the United States.
Meanwhile, the crypto exchange's user base surpassed the number of accounts at traditional stock broker Charles Schwab, whose number of users stood at 10.6 million as of Q4 2017. Coinbase in the autumn added hundreds of thousands of accounts as little as a week's time. Meanwhile, the crypto market's members have ballooned from less than 5 million in 2016.
Cryptocurrencies are taxed as land in the United States. While reductions can be reported to offset gains, because of this, crypto profits must be reported as capital gains.