IRS Demands Identities of All US Coinbase Traders Over Three Year Period (vice.com) 124
An anonymous reader quotes a report from Motherboard: In bitcoin-related investigations, authorities will often follow the digital trail of an illegal transaction or suspicious user back to a specific account at a bitcoin trading company. From here, investigators will likely subpoena the company for records about that particular user, so they can then properly identify the person suspected of a crime. The Internal Revenue Service, however, has taken a different approach. Instead of asking for data relating to specific individuals suspected of a crime, it has demanded bitcoin trading site Coinbase to provide the identities of all of the firm's U.S. customers who made transactions over a three year period, because there is a chance they are avoiding paying taxes on their bitcoin reserves. Coinbase has a total of millions of customers. According to court filings, which were first flagged by financial blogger Zerohedge on Twitter, the IRS has launched an investigation to determine the correct amount of tax that those who use virtual currencies such as bitcoin are obligated to pay. But according to the documents, the IRS is asking for the identities of any U.S. Coinbase customer who transferred crypto-currency with the service between 2013 and 2015. "The John Does whose identities are sought by the summons are United States persons who, at any time during the period January 1, 2013, through December 31, 2015, conducted transactions in a convertible virtual currency," reads a memorandum written by Department of Justice attorneys and filed on Thursday, November 17.
I realize it's nit-picking (Score:4, Funny)
"Coinbase has a total of millions of customers."
This sentence really set off my annoyance sub-processor.
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That's easily fixed. Throw away the sub-processor and replace it with a co-processor. That way you can be annoyed more constantly without having to give things special consideration.
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It's a win-win!
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I'm pretty sure that's not an accurate value. It's probably "Coinbase has a total of millions of customers, plus or minus a couple of millions."
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Sounds like bullshit, but if it wasn't: Were you reporting your tips when you filed your taxes?
I reported the profitable sale of Bitcoin (that I had mined) in 2012 or 2013 or something. I reported it as "Sale of Bitcoin", I believe. I didn't try to deduct hardware or power costs used in mining.
A couple of years later I bought some more but ended up cashing everything out at a small net loss. I didn't report it as it was a net loss (I didn't try to deduct the loss either.)
I'm pretty "fuck the government"
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> Sounds like bullshit
Many people are having to subside on side hustles and tips if you're lucky. Sounds like you have no idea what being in the working class is like.
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So you believe the bit about pulling people to a offsite location and telling them the IRS is going to go back on THEIR tax records 5 years to garnish some imagined top wages that may or may not have already been reported, and somehow quitting would solve it?
I wouldn't put it past a shitty manager to say that kind of shit, even off the record, but no one with a brain would believe it.
Re:Not the first time they've done this (Score:4, Insightful)
So, you systematically evaded taxes for 5 years, and that makes you angry at the government?
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No. No it isn't. If you don't think so, keep off the roads, and keep your kids out of the schools the rest of us have paid for. Starve alone in the dark, you rugged individualist, you*.
*Unless, of course, you inherited enough money to not pay any taxes, like our Fuhrer-elect.
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LOL. Not real smart, are you, uneducated milinial scum, you just ELECTED a populist, didn't you? Hope ya' choke on it.
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Don't have kids, and the roads where I am from are paid for out of my vehicle registration. I pay income tax, sales tax, government fees on my utilities that I pay for up front out of the money I already paid withholding taxes on, sounds like some serious double and triple taxation or outright theft.
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> Except you never consented to the contract. You were born. That is all.
That's false.
The contract IS the Socialist Slave Number, or Slave Identification Number.
In the US there is NO law that requires a person to have one. [macquirelatory.com]
-- Response from SSA to Mr. Scott McDonald, March 18, 1998 from Charles Mullen, Associate
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How is it theft? Taxation is defined by law. If you think laws don't affect you, then the laws about property also don't exist, so you don't own whatever they are taking from you.
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Taxation is defined by law.
So was slavery at one time, so were the horrors perpetrated in WW2 Germany, so were separate drinking fountains for whites and blacks. All legal, compulsory even, in many circumstances. Holding women as chattel is also legal in places in the ME, as is killing homosexuals.
I guess being legal makes anything OK then, right?
Or is it only as long as the laws comport with *your* views and biases?
Strat
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Whether something is "OK" and whether it is "illegal" are 2 different topics - the one at hand is whether Taxation is Theft, i.e. whether it is illegal - it isn't.
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Whether something is "OK" and whether it is "illegal" are 2 different topics - the one at hand is whether Taxation is Theft, i.e. whether it is illegal - it isn't.
Wrong.
Theft can be legal or illegal, it's still theft. In WW2 Germany the jews had their wealth, property, and businesses stolen. It was theft. It was technically legal under the existing laws, but it was still theft.
The same as the genocide in WW2 Germany. It was legal, but it was still genocide.
Legal status does not make something right or wrong or change what it is. It simply allows or forbids it under the legal system.
Taxation IS theft, it simply happens to currently (and temporarily) be legal in the US
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The definition of theft is "an unlawful taking (as by embezzlement or burglary) of property". So no, just because you think taxation is wrong does not make it theft. If there is a law allowing it, then it is not unlawful. Therefore it is not theft.
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Whatever you want to call it, it's obviously taking someone else's rightfully owned property without their permission. They (or someone who gave it to them willingly) have produced something of value and earned that wealth. To take it is wrong-- lawful or not.
The great German sociologist Franz Oppenheimer pointed out that there are two mutually exclusive ways of acquiring wealth; one, the above way of production and exchange, he called the "economic means." The other way is simpler in that it does not require productivity; it is the way of seizure of another's goods or services by the use of force and violence. This is the method of one-sided confiscation, of theft of the property of others. This is the method which Oppenheimer termed "the political means" to wealth. It should be clear that the peaceful use of reason and energy in production is the "natural" path for man: the means for his survival and prosperity on this earth. It should be equally clear that the coercive, exploitative means is contrary to natural law; it is parasitic, for instead of adding to production, it subtracts from it. The "political means" siphons production off to a parasitic and destructive individual or group; and this siphoning not only subtracts from the number producing, but also lowers the producer's incentive to produce beyond his own subsistence. In the long run, the robber destroys his own subsistence by dwindling or eliminating the source of his own supply. But not only that; even in the short-run, the predator is acting contrary to his own true nature as a man.
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And an additional benefit is that they don't need to go after their rich friends, who gave them their positions.
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Fishing Expedition (Score:5, Insightful)
Coinbase should be able to get this quashed.
If the IRS had evidence of a crime, they're allowed to get information to further identify the person who committed it.
If Coinbase had committed a crime, they're allowed to get information as to who else was involved in it.
However, to subpoena a list of all clients in a certain geographical area over a three year period is to presume them guilty and then look for the innocent. That's a classic fishing expedition, and the courts should disallow it.
I am not a lawyer. Consult lawyers for legal advice. This is simple common sense.
E
P.S. I know the IRS is powerful... but not ALL powerful.
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Exactly. If Coinbase refused to provide the data, THEN they would very likely be charged with assisting money laundering. Anyone who worked in any financial institute would know this.
i.e. IRS don't need Coinbase to commit a crime to ask for this data, but Coinbase would have committed a crime by refusing.
Re:Fishing Expedition (Score:5, Informative)
It is not that simple. The IRS request is not a subpoena, it is an an administrative demand for information. They are not (yet) investigating a crime, but ensuring tax compliance. Your rights during a tax audit are not the same as your rights in criminal court. I hope Coinbase can stop this disclosure, but I am not optimistic. If the IRS prevails, then we should expect most bitcoin transactions to move offshore.
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In the even of a search warrant they will not be issuing it against the individuals whose records are being stored but against the records of the company storing those coins and records. When banks get audited those audits include the records of all of their customers because that is what is being audited the interactions between the bank and it's customers. So for those cheating, take you imaginary money and run because make no mistake the IRS is coming for you and you will be no happy to see them. You cou
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Really? Perhaps there are actions against offshore tax havens now, but I don't expect much investigatory action during the next 4 years.
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You could of course always deny that imaginary money is yours and simply walk away from it, claiming the imaginary coin company service made in all up but you have to give up all your imaginary money.
Not true.
You can keep the coins in your wallet and keep your wallet.
However, if the coin company has documented proof of your transaction requests, it will be very difficult to deny that the coin purchased with the money from your cheque and with the proper bitcoin address isn't yours.
You may get away with not showing or opening your wallet with that coin, but I doubt you can escape the IRS' claim for unpaid taxes.
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it is an an administrative demand for information. They are not (yet) investigating a crime, but ensuring tax compliance.
The police kicked in my door. The assured me that they were not executing a search warrant, but conducting an administrative audit to ensure compliance with the law.
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Tax Audits are not governed by the same laws as police and search warrants.
US Constitution, Fourth Amendment.
You can't just change the terminology to step around the rule of law.
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US Constitution, Fourth Amendment.
Keep reading. Let us know when you get to #16.
You can't just change the terminology to step around the rule of law.
No, but you can amend the Constitution.
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US Constitution, Fourth Amendment.
Keep reading. Let us know when you get to #16.
So, let's see what it says.
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
So they can levy an income tax. And they don't have to give any of it to the states. And they don't have to worry about any head counts. But there's nothing in there about exemptions from 4th amendment protections.
So let's take a look at that 4th amendment:
"The right of the people to be
Re:Fishing Expedition (Score:5, Informative)
The police kicked in my door. The assured me that they were not executing a search warrant, but conducting an administrative audit
The IRS are not "the police". The police must respect the rights of citizens under the 4th Amendment. The IRS has greater powers because of the 16th Amendment. "The right of the people to be secure in their persons, houses, papers, and effects" does not include records that document financial transactions.
I am not saying this is the way it "should be", I am just pointing out that this is the way it "is". There is no fair and efficient way to enforce an income tax without the government prying into every nook and cranny of our lives.
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16th Amendment
Nothing in there about an exemption from the 4th Amendment. The 16th Amendment simply allows the gov't to levy taxes based on something other than a flat fee per person (the original power defined in the Constitution).
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Nothing in there about an exemption from the 4th Amendment.
If the IRS can only request documentation and audit people when they have probable cause that a crime has been committed (as the 4th Amendment requires), then compliance will fall to near zero. Employers will no longer be required to submit W2s or 1099s, and citizens will no longer file returns.
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then compliance will fall to near zero
So the income tax system we have is unsustainable unless everyone's rights are violated. Time to shut it down and come up with something else.
Hint: Forming a corporation is conditional upon filing an application with the appropriate governing entity. That entity can place any legal preconditions on approval of that application. Including a requirement to submit financial records to taxing authorities. So tax corporations. Either gross revenue or profits or whatever combination works best. No rights are los
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Hint: Forming a corporation is ... blah blah blah
Most businesses are not corporations. If an individual citizen employs other individual citizens they are required to file the same forms as a corporation. Tax compliance has nothing to do with "incorporation".
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The government needs money in order to carry out its duties. We can argue about what those duties are, and how much money it needs, and we should, but we can't pretend it doesn't cost money.
If the government is going to acquire money to pay for the government, it can do so using a few different models (assuming the collection will be under the color of law, and based on some rational rules, not just tax collectors riding door-to-door taking whatever they want): a) take a percentage of money as it comes in
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Because some bureaucrat says "records" are not "papers or effects?" Or because there's "no expectation of privacy," even though there are explicit written privacy contracts between the parties? If a court goes along with such bullshit, the King has no clothes. The end does not justify the means, and it's better than one person gets away with something than that
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Because some bureaucrat says "records" are not "papers or effects?"
If by "some bureaucrat" you 75% of the state legislatures and the Supreme Court of the United States, then yes.
The end does not justify the means, and it's better than one person gets away with something than that millions have their rights violated.
Just tell that to the IRS on April 15th when they demand your tax return. Good luck.
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The IRS has greater powers because of the 16th Amendment
- actually not because of any amendment, the IRS has its powers because the government decided it wants your money, not due to any amendments. [youtube.com]
And something I think many people don't know (Score:2)
Is the IRS regularly does look at lots of financial records. Lots of entities report things about you to the IRS by law. Your W-2s? The IRS already has those, your employer sent it to them. Same with 1098s, 1099s, etc. You'll notice that they say something like "This is important tax information and is being furnished to the Internal Revenue Service." That means they are sending it to the IRS, as well as you. The IRS gets told about things like the interest you earn, and interest you pay, money you make, ta
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Sounds like how NH operates for property tax purposes. You can refuse them entrance, but then they'll value your shack at a million dollars. For whatever reason NH didn't do that to me. They simply sent me a letter saying they were going to show up, but then never did. They valued my house around what it very recently had sold for. I had wanted to refuse them entry, but never got the chance. I probably was going to fold though this time. Mainly because I didn't feel like fighting such a big battle given tha
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It is not that simple. The IRS request is not a subpoena, it is an an administrative demand for information. They are not (yet) investigating a crime, but ensuring tax compliance. Your rights during a tax audit are not the same as your rights in criminal court. I hope Coinbase can stop this disclosure, but I am not optimistic. If the IRS prevails, then we should expect most bitcoin transactions to move offshore.
Perhaps, but the IRS has pretty long arms. Over the past few years they have been enforcing pretty heavy reporting requirements on financial instutions all over the world who deal with "USA Persons". They have been able to force foreign institutions to follow their rules by exterting pressure on the USA business dealings that those institutions might have. This can be a pretty powerful incentive. Many institutions deal with this by refusing to do business with any "USA Person", which can make it a royal pai
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You were modded Funny because you imply that the IRS needs to comply with laws or the Constitution.
Are you new here? A refugee from Syria perhaps, or someplace similar with a functioning rule of law?
IRS merely trying to do its job (Score:3)
Bitcoin and other electronic currencies are "property" (see e.g. https://www.irs.gov/uac/newsro... [irs.gov] )
Now the IRS doesn't automatically monitor all bank accounts: see e.g. here: http://peopleof.oureverydaylif... [oureverydaylife.com] for
The IRS can however, force banks, foreign exchanges, and now electronic currency exchange houses, to disclose the identity of those engaged in transactions. It can do this to any individual or corporation if they decide to audit them: see here: http://www.libr [libra.tech]
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Abortion rights
Where are those enumerated? They aren't.
What you have is protection from the state digging around for evidence that you had an abortion because the state's interest in protecting a fetus doesn't let it violate the constitution.
The media and fools like you like to frame it as "abortion rights" because abortion is a divisive issue. By letting them chip away at "abortion right", about half of the country will support you (and more than half if you do it gradually enough). The real effect is that it chips aw
because there is a chance they are avoiding payin (Score:2)
because there is a chance they are avoiding paying taxes on their bitcoin reserves
What exactly is the federal tax on "bitcoin reserves"???? If you have cash money that you keep in reserve, there is no tax on it (assuming that you paid income tax on the original income). If there is actually no tax on "bitcoin reserves" as I believe, then this is an invasive fishing scam that improperly puts these bitcoin users in the position of being investigated just because they used Coinbase.
Not taxing reserves, looking for gains or income (Score:3)
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But the specific excuse for doing this mentioned reserves. They might as well just admit that they are on a fishing expedition.
The slashdot summary phrases things as "reserves". The actually court document introduction focuses on tax avoidance. ... In order to identify taxpayers who have may have underpaid taxes associated with transactions in virtual currency, the United States brings this ex parte proc
"The IRS is responsible for monitoring ways in which United States taxpayers evade their United States tax obligations by concealing or otherwise failing to report their proper amount of taxable income and thus underpay their taxes
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Actually, the court document focuses on tax evasion. The difference is huge - avoidance is legal. Evasion is getting paid in cash and never reporting it. Avoidance is getting paid by your employer, and maxing your 401k
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According to Intuit, profit from selling BTC is taxed like income, holding BTC which is increasing in value is taxed as capital gains, and "earning" BTC through mining is taxed as revenue which can be offset by mining costs: https://turbotax.intuit.com/ta... [intuit.com]
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holding BTC which is increasing in value is taxed as capital gains ...and like any other investment subject to taxation as capital gains, the tax isn't owed until the asset is sold and the gain is realized.
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Yes. The IRS likes their money now. See taxation of zero coupon bonds as one example.
Morality (Score:5, Insightful)
The right wants to lower taxes because they think it will increase tax revenue.
When the hell did it become moral for a government to maximize tax revenue?
Its down right evil.
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When the people want more services than tax revenues can provide in any given year and have ran a substantial budget deficit for well over a decade?
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Re: Morality (Score:1)
Then invent a time machine and go live before 1789.
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Well... it's happened, and if you want it to stop, then a constitutional amendment will be required.
I would suggest....
Congress shall pass no law disbursing government-controlled money, assets, or collected taxes in the form of money, goods, or services to any person or entity, except in the form of a refund or rebate available to all citizens as a proportion to the amount of taxes collected from that person, or as necessary to support common good services beneficial to a majority of citizens and offer
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No, what is evil is running the federal government on a $10 trillion dollar deficit over the last 7 years that future generations will have to pay for in order to buy votes with social programs like health care, welfare and food stamps.
And to be clear, the right wants smaller, less intrusive government with minimal safety nets for those who truly have to have it. This means less taxes because the government is smaller. If that boost of 2-3% extra into the economy also increases the total economic growth r
Wait, I thought they didn't think it was money? (Score:1)
Oh, right, its property now, right IRS?
https://www.irs.gov/uac/newsro... [irs.gov]
Because they have a mandate to manage property that is not theirs, obtained with currency.. I mean, "property" that was not created or backed by the federal reserve bank, and no matter what nation if extraction the individuals involved in the exchange of property are from, they need to perform excise on it, right?
So, I need to declare when I give property to another person on my W2. Such as when I give a Christmas present, or give blan
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So, I need to declare when I give property to another person on my W2.
Well, yes, but not on the W2.
Who pays the gift tax?
The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead. Please visit with your tax professional if you are considering this type of arrangement.
What is considered a gift?
Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return.
What can be excluded from gifts?
The general rule is th
Remember when people said Bitcoin was anonymous? (Score:2)
And that that was one of the main benefits of using it? I was always confused how on earth that was supposed to work. Comforting to see that the answer is apparently "it doesn't".
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Bitcoin is as anonymous as you want it to be.
Exchanging it for fiat currency isn't.
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And it's assholes like you who refuse to pay your taxes that have me actually rooting for the IRS in this regard.
But, if you think that's bad, just wait until the IRS decides to charge tax on every bitcoin transfer. After all, they're public.
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Given that these joker outfits that call themselves exchanges keep getting hacked ever other week
Well, say they get hacked every other week. I think this is quite the learning experience for those who pay attention.
Saw that coming ... (Score:2)
When bitcoin hit the scene years ago, I said that it was currency.
Got a lot of flack for that.
Then I said that as soon as it could be converted to real cash, it would be regulated.
I was wrong on the timing, but bitcoin is going to be another Paypal.
No Problem (Score:2)
Just hack into the IRS and erase their database and wipe out all records. Seeing how easily the OPM was hacked, this should not be that hard for a talented group.
If the IRS wants to operate outside the US Constitution and Rule of Law, then they abrogate the right to any protections provided under the law and are fair game.
Strat
LifeProTip: Don't identify as American. (Score:2)
At least as far as bitcoin is concerned.
Shit (Score:2)
I bought a few thousand Dogecoins in the last five years.
How many dog treats do you think I owe the IRS?
And the New Administration Says ...? (Score:2)
I'm very curious as to how the incoming Republican Administration and Congress will respond to this demand for information.
How are they basing the taxing of holdings (Score:2)
I think this is more about the IRS looking for people who have used the exchange of bitcoin (really, the sell) of either mined cones (in which case they would likely be responsible for income tax) or profit earned on the buy/sell similar to that of stock purchases, in which case they would likely be responsible for capital gains tax.
While I hope Coinbase is able to fight this, it's really not that much different than say Fidelity reporting your exchange activity. What is different, at least IMO, Coinbase (
1099? (Score:1)