Coinbase Pushes Tax Calculator on US Users, Kowtowing to Incessant Government Pressure

Coinbase has launched a gain/loss calculator to assist in their efforts to help US-based users stay in compliance with applicable tax laws. The truth of the matter is that they're trying to stick to the letter of the law in every possible manner with the IRS. They're actually bending over backwards to placate the IRS, even providing them with blockchain data so that the IRS can possibly sniff out tax cheats. Apparently they were mandated to do so by a judge, to be fair, but still.

While the calculator may be helpful for those who just bought bitcoin or altcoins for investment purposes, many will find it to be useless as they use other wallets, make use of bitcoin, or liquidate through other means, making it very difficult to calculate gains and losses.

The IRS has determined that bitcoins are property and that they are going to be taxed as such. While Coinbase desires to allay the government's consternation over their inability to completely track blockchain data, they must also protect the privacy of the tens of thousands of users who expect as much. While they purport that "We take user privacy very seriously and will work to protect the privacy of our users in broad information requests," they are very much at the mercy of the US government. Coinbase insiders see that they have a good thing going and they don't want a federal crackdown getting in the way of their continued success.

As a very active user of Coinbase, I feel for them. They're between a rock and a hard place. That being said, I'll think twice when deciding where to transact a bitcoin cash-out for fear that the IRS will flip out, thinking that they're missing out on more than their fair share. I'm all for paying your taxes but I'm very hesitant of big brother getting the wrong idea about me when I cash out a few hundred through Coinbase, thinking that behind the scenes I may have holding like the Winklevoss twins.