My understanding is that Blockchain in crypto stores each transaction in the blockchain as the crypto is transferred in ownership (holdership?). Anyway, if they cracked the encryption it may be possible for the IRS to have associated back to this person transactions occurring in 2014 or earlier.
Also, I do not believe (again going on memory) that crypto like BTC was classified as anything back then from the government / IRS perspective. That being the case, the classification in recent years has been retroactively applied and the law or regulation that didn't exist then is now applied back to that time.
I do believe that would run afoul of any legitimate court system, but the IRS gets to try their cases in a special court and legitimacy and actually following the law isn't really a concern there in my opinion.
Bitcoin was classified as an asset Jan 1 of 2014, the IRS started treating it as commodities under the U.S. Commodity Exchange Act.
I know because I temporarily moved to Ireland in 2014 for business and the IRS sent me a letter saying that they were going to tally up my personal property and make me pay taxes on it like I sold everything. I had to send them proof that I was retaining my citizenship.
They sent me line items of my major property holdings and assets. One of them was a line item for my bitcoin I'd bought on a whim a while before when it cost almost nothing.
They wanted to tax me the value in 2014 for the 250 bitcoin I owned. They valued it at around $80-90k and wanted me to pay 30% on that in tax.
No, but I asked that question very early in the process and they said they could provide that information, but since I didn't give up citizenship I didn't have to go down that route.
That's not how that works. BTC is perfectly traceable and the transactions in question were done at exchanges that already had his ID. This is about him operating his businesses using BTC for years and then when he left the US he sold them for USD and moved it to a foreign bank account. That's what they say he didn't pay tax on because he didn't declare his BTC holdings.
That's not what this is, this is an expatriation tax. In general when you expatriate all your property is deemed sold for its fair market value on the day before your expatriation date, which means any gains you would have realized are considered income and thus you owe taxes on them.
Meaning, you can't open a brokerage account, buy and hold stock in it for 40 years while you work here, then renounce your citizenship and move to Panama and take your $2 million account without paying taxes on the gains.
Ouch.
So let's say you do pay the. IRS expat financial hostage tax, they consider everything you owned as sold and taxable at the moment of expatriation, but in reality you kept you retirement find money in the same account and you kept your real property (home /land). By paying fill taxes on those assets now to IRS are you free and clear on those assets?
So let's say 5-10 years later you finally liquidate those assets and they appreciated in value by some amount. What does the IRS do then?
You only pay on your gains based on what they are valued at the day prior to your expatriation date. What happens to them afterward is not the concern of the IRS (barring any activities you may have undertaken since expatriation that may once again subject you to US tax law, so don't go getting a green card and moving back)
My understanding is that Blockchain in crypto stores each transaction in the blockchain as the crypto is transferred in ownership (holdership?). Anyway, if they cracked the encryption it may be possible for the IRS to have associated back to this person transactions occurring in 2014 or earlier.
Also, I do not believe (again going on memory) that crypto like BTC was classified as anything back then from the government / IRS perspective. That being the case, the classification in recent years has been retroactively applied and the law or regulation that didn't exist then is now applied back to that time.
I do believe that would run afoul of any legitimate court system, but the IRS gets to try their cases in a special court and legitimacy and actually following the law isn't really a concern there in my opinion.
Bitcoin was classified as an asset Jan 1 of 2014, the IRS started treating it as commodities under the U.S. Commodity Exchange Act.
I know because I temporarily moved to Ireland in 2014 for business and the IRS sent me a letter saying that they were going to tally up my personal property and make me pay taxes on it like I sold everything. I had to send them proof that I was retaining my citizenship.
They sent me line items of my major property holdings and assets. One of them was a line item for my bitcoin I'd bought on a whim a while before when it cost almost nothing.
They wanted to tax me the value in 2014 for the 250 bitcoin I owned. They valued it at around $80-90k and wanted me to pay 30% on that in tax.
Understanding that you proved citizenship and didn't have to fight every line item, but did they ever provide backup for their valuation?
No, but I asked that question very early in the process and they said they could provide that information, but since I didn't give up citizenship I didn't have to go down that route.
Thanks for clarifying.
Glad you didn't end up having to pay the taxes on everything they claimed you owed.
That's not how that works. BTC is perfectly traceable and the transactions in question were done at exchanges that already had his ID. This is about him operating his businesses using BTC for years and then when he left the US he sold them for USD and moved it to a foreign bank account. That's what they say he didn't pay tax on because he didn't declare his BTC holdings.
AI be God Hammer for the Thor's
That's not what this is, this is an expatriation tax. In general when you expatriate all your property is deemed sold for its fair market value on the day before your expatriation date, which means any gains you would have realized are considered income and thus you owe taxes on them.
Meaning, you can't open a brokerage account, buy and hold stock in it for 40 years while you work here, then renounce your citizenship and move to Panama and take your $2 million account without paying taxes on the gains.
https://www.irs.gov/individuals/international-taxpayers/expatriation-tax
Ouch. So let's say you do pay the. IRS expat financial hostage tax, they consider everything you owned as sold and taxable at the moment of expatriation, but in reality you kept you retirement find money in the same account and you kept your real property (home /land). By paying fill taxes on those assets now to IRS are you free and clear on those assets?
So let's say 5-10 years later you finally liquidate those assets and they appreciated in value by some amount. What does the IRS do then?
You only pay on your gains based on what they are valued at the day prior to your expatriation date. What happens to them afterward is not the concern of the IRS (barring any activities you may have undertaken since expatriation that may once again subject you to US tax law, so don't go getting a green card and moving back)