What are the legalities concerning selling your bitcoin to someone peer-to-peer in person for cash in the U.S.? Is that legally allowed as long as I report my cash income or do you have to go through an exchange?

Confused how all that works. I seem to see a lot of grey area in how this works, in regards to not selling via an exchange aka KYC. I hear from one source its completely legal as long as it declared as income (profits) and then on the other hand I read all these random articles about people getting arrested for selling their bitcoin for cash such as this article https://bit.ly/2EgA5BY..... so I'm really confused via /r/Bitcoin https://bit.ly/3hg05fq