SO my question is has anyone here actually been audited in the USA and had to explain where there HYIP money had come from.

I want to know if you can really make it through an audit and what kind of questions the tax man asks.

I mean I have these thoughts about sitting at a table and explainng why I claimed money in the gambling section of my tax form or in the online marketing business section when he askes to see my records and all he sees are these enteres in my egold account from programs that are hyips and autosurfs.


thanks for any responses


Steve

Can the IRS even see someone's e-gold account?

I dont think the IRS really cares "how" you earn your money as long as you report it as income and pay your fair share of taxes.

Its outside their scope of their duties to decide what is a legal source of income or not. They might pass your information onto your state AG or some other law enforcement body who may or may not have the resources to investigate your online activities.

I think the scamers and program owners have more to worry about then us poor members who keep getting hurt by this high risk programs.

Quite so uncle jesse, if ever any action would be taken the 'organisers' of these financial constructions will get the blame for it, not the 'unknowing' users

It's true that the IRS doesn't care how you get the money. They even have ways for drug dealers to report their income

I believe your chances of going threw an IRS audit greatly increase when your self employed. I have been audited before. A special agent came to my house and believe me it was not any fun. He checked every room in my house all my equipment etc etc. In fact he came to my house twice. Pay your Taxes.

Audit? I think that word should be eliminated from the english language and every single IRS rulebook

Do you really tell the IRS??????
Do you deduct you loses at least?

Yes, report your losses, they are write offs.

I got some postage for you! lol these are copy and paste from a TalkGold.com forum

DriveDan:
"isclaimer: I am not a CPA, tax advisor, or attorney. Consult one before filing any taxes. I won't be held responsible for anyone following anything I say since it is provided as information only.

Since no one seems to know how US taxes work I figured I'd do some research.

First, EVERYONE in the US should read this: IRS Publication 550, Investment Income and Expenses It explains the differences between investment income sources. It's really easy to follow and very informative.

After reading that, I think I've figured out that most HYIP income is treated as interest payments. Any HYIP that pays a percentage rate of your deposit is paying you interest on investment property. Some HYIPs that use shares instead of payments are probably treated as capital gains (only when sold).

Interest is taxable as normal income. Interest that has been reinvested is still taxed. Interest that includes principal repayment would only be taxed on gains. Capital gains are taxed differently, depending upon your income and amount of gains.

Expenses can be deducted, up to a maximum of 2% of your investment return. Expenses include fees such as egold transfer fees, withdrawal fees, etc.

Losses can be deducted. This can be tricky to figure depending upon the investment type. Losses are typically limited to being deducted from the same type of income.

An interesting item to note is if you take a loan to make an investment the interest on the loan is deductable. Even if the loan is sitting in a non-interest bearing account the interest is deductable. Any loans that are used to pay for personal items can not have the interest deducted.

I will be consulting with an attorney and lawyer this week reguarding taxes and business structuring. I'll post my findings. Any feedback would be appreciated.
__________________
Disclaimer: I am not a CFA, CPA, lawyer or licensed in any way. Everything written here is my opinion and should be treated as such. I do not offer individual investment advise since that would be illegal."

"

Quote:
Originally Posted by hype
I heard that the IRS doesn't recognize ecurrencies as any real currency.

Don't believe most of what you hear. That is completely false. When you exchange money into an ecurrency backed by something (such as gold) you are purchasing that medium as investment property. When you exchange money out you are selling that investment property. The price difference is reported as a gain or a loss.

Here's an example combining this and my above post about taxes. Remember, this is for information only.

On June 1st you purchased $1000 worth of eGold with an exchange rate of ~$416/oz. The exchanger charges you a fee of 2%. You receive $980 worth of gold (~2.3558 oz) and incur an eGold transaction fee of approx $0.67 (0.001608 oz). That leaves you with $979.33 worth of gold.

On June 17th you decided to sell your gold. The price rose to ~$437/oz, leaving you with $1028.77. You somehow manage to withdraw it without any fees. You are left with a profit of $28.77. You had paid a fee of $20 (2%) up front. 2% is the maximum you can deduct in fees, leaving you with a net profit of $8.77.

I hope that helps!

Anyone can feel free to correct me if I'm wrong."

"
Let me state again that I am not a CPA or lawyer and have no formal training in accounting or tax prep.

After putting some more thought into it I think it may be a very complex situation. The reality is everytime you invest into a program using egold you are doing an out exchange. Any profit or loss would have to be recorded. Then, every payment counts as some form of income (depending upon they type of investment).

The reality is that the chances of the IRS getting your egold records are small unless you're a terrorist. You can probably just report out exchanges as capital gains and be fine with that. However, if you want to do it the right way I feel this is it. Again, consult with a CPA for the real answer.

Here's an example. Keep in mind that this is for only one program. Think of how complex it would be for 10 or 20.

You do an inexchange for $1000 worth of egold. 5 days later you decide to invest it all into a program that will pay you 1% daily ($10) on trading days (5% weekly, $50). The price of gold has gone up 1% in the time. You deposit your $1010 worth of gold in the program. You now have a recorded capital gain of $10. Everyday you get paid $10 worth of gold at that day's exchange rate.

After 2 weeks (10 trading days) you decide to sell the egold you have received for cash. We'll say you were paying an average of $0.50 fee per incoming transfer ($5 total). The price of gold has fluctuated daily but the trend has been rising. Instead of your gold being worth $95 it is worth $97. That is another $2 capital gain that has been realized because you made an out exchange.

At this point you have received $12 in capital gains, $100 in interest income, and $5 in fees (assuming you paid no in or out exchange fees).

You can see how complex this gets. The bookkeeping would need to be updated daily. If you are dealing with a small amount of money (say under $5000) I wouldn't worry about reporting it like this. I'd report it as capital gains on all sold gold. However, if you're dealing with large amounts I'd suggest opening an offshore business in a jurisdiction (such as Panama or Nevis) that doesn't charge taxes on income generated outside the country. Pay yourself a salary for being manager and pay all taxes on the salary. This is a whole other topic in itself that I won't cover here.
"
I'm looking for it but I read in there, that any spending/recieving of $$ amounting to more then 5000 dollars within your bank, like you make a payment of 5k into Bank of America, they report it. Not as in a bad thing, its their job. You go to buy a car and you put 7k+ as a down payment, they report. However if one is to try to avoid that large spending by making many small payments like 5k = 10 payments of $500, the bank WILL notice it and report. Again not as in a bad thing, but its their job.

I tell them I'm a pimp and my hoes are writeoffs