Many people use Coinbase or the Gemini exchange to transfer fiat into BTC or ETH. If you have sold BTC back into fiat/US Dollars, that transaction is recorded for your tax records. The IRS asked Coinbase for their transaction records from a few years ago which Coinbase denied. The case went to court and in the end, Coinbase handed over the transactions.
The IRS is also using a company named Chainalysis to track BTC wallet transactions, so they are not only looking at transactions on Coinbase.
There are sites like localbitcoins.com where you meet someone in public to buy/sell BTC which is one way to sell off of a centralized exchange.
Another way is to trade your BTC for precious metals, Apmex is now accepting BTC and BCH.
Here is their FAQ section regarding the transaction of BTC/BCH for precious metals
The exchange rate and wallet to use for the transfer
There is a link to the Bitpay site that shows you the wallets that can be used to pay for precious metals
Do they accept other cryptos? No Plus the payment method and the maximum amount that you can purchase.
Once you have your precious metals sent to you (Gold Eagles), you can then sell them at the local coin shop. Or sell them on a precious metals exchange / ebay or ???
This is only eliminating the sell step to fiat/US Dollars at a centralized exchange like Coinbase or Gemini. It is one transaction that the IRS will not be receiving when Coinbase hands over the transactions for the 20XX year. They would still be able to track a transaction to the Apmex site and potentially track it back to when it was purchased. (This is where a mixer is handy...)
I have NOT read the IRS tax code for 2018 regarding cryptocurrencies, but I speculate that when you purchase an item, it is a taxable event IF you have capital gains on the BTC. (Great huh?)
I am not a registered investment advisor or broker and do not advocate the purchasing or selling of any asset. I do not recommend or advocate avoiding tax payments on capital gains on any investments.
Need a crypto hardware wallet? Affiliate link to the Ledger Nano S
We are guaranteed 2 thing in life death and taxes...even if we give up US citizens ship IRS will follow you to the ends of the earth to try to collect on ones' tax debt.
I like the steps you explained above though.
you forgot the 3rd one. that is" bullshit" it always happens
Another informative article from glennolua, thanks man, love your contributions and fresh insights. Meeting up locally seems to be the best way to go. Its the only way to go if you require or seek complete anonymity.
Coins mentioned in post:
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Don't forget stable assets such as bitUSD on bitshares and DAI on Ethereum