I am actually looking at if from the angle that IF the government starts to take notice - that is a good thing.
If the IRS were to actually add bitcoin transactions into a formal document - then it legitimizes bitcoin(to the population at large) - at which point bitcoin will see a very rapid rise in use.
I see a window of time where this transition starts taking place to capitalize. People will run to hard currency in the end- and they will easily trade "fake" online money for "real" dollars at quite a discount(silly people dont realize its all fake).
I do everything above board - I would even claim the income - who cares - pay the taxes on capital gains and everything - then they can't harass you.
Thanks for the insight.