These might be some stupid questions, but I’m gonna ask them anyway as I don’t want to make enemies with the IRS if I do something wrong.
Lets say I buy 1k worth of bitcoin on coinbase, and send it all immediately to Bovada, and play some poker throughout the year. Lets assume I make a profit of 1k, so my Bovada balance is now at 2k obviously. Then I withdraw my entire bankroll back to coinbase, but sell / convert to 2k from BTC to USD, so no gains / losses on the BTC itself. My understanding is that coinbase(pro) automatically sends a 1099 form to both you and the IRS, so they would know if you didn’t file the 1k profit and trouble would ensue. However, the profit I made didn’t come from holding / trading BTC, but instead from playing poker, so the IRS isn’t isn’t expecting me to file the 1k profit from trading, correct? This profit would instead need to be filed under gambling profits I would imagine?
Let me know if I need to clarify anything or add details, I’m also in the USA if it helps. Also the money amounts here are hypotheticals, so if I need to disclose the accurate amounts I can do so if it changes anything. As you can see from this post I’m pretty naïve when it comes to how taxes work, so if possible overexplaining would be much appreciated if possible!
Thanks in advance!