2017 was marked by a high growth in cryptocurrency rates. Traders earned huge profits due to this growth. Authorities around the world are worried about collecting taxes on such super high revenues. One of the methods of collecting taxes is to oblige cryptocurrency exchanges to submit information on the availability of traders' accounts and movements on these accounts.
So many exchanges began to submit information about the income of traders to the tax authorities.
One student from the United States invested $ 5,000 in cryptocurrency in 2017. By the end of the year, he already had $ 880,000 in his account. Coinbase has filed 1099-K in tax form. As a result, the tax accrued to the student a tax of $ 400,000. But the problem is that the student did not cash out their funds and did not take profits. He did not sell cryptocurrency at the peak of its popularity.
As a result, his portfolio of $ 880,000 was "blown away" to $ 125,000. But taxes of $ 400,000 will have to pay the state or sue for a long time, proving their innocence, spending a lot of money on lawyers.