There have been a few developments since we last looked at cryptocurrency in April, 2017 (Are Bitcoin Users Cheating on Taxes? (Or Are They Just Confounded by the Rules?)). The IRS has increased tax compliance enforcement but unfortunately, guidance from the Internal Revenue Service has not kept up with the advances in the cryptocurrency world continuing tax reporting challenges.
In 2014 the IRS released their position regarding the taxation of cryptocurrency transactions in Notice 2014-21 (https://www.irs.gov/pub/irs-drop/n-14-21.pdf). The IRS notified taxpayers that: (more…)
By Erika Diebert, CPA, Tax Manager
ASL Technology Group
In November 2017 the IRS was successful in federal court in its quest to gain access to bitcoin transactions. They now have the records for any transaction worth more than $20,000, including exchanging bitcoins for dollars, and sending or receiving bitcoins to/from another user. The time frame of available information covers transactions between 2013 and 2015. The IRS is expecting a large number of bitcoin users to pay taxes owed on unreported transactions. We would be surprised if this was the end of the quest for information by the IRS. With 2016 and 2017 being big years for bitcoin activity, and other successful cryptocurrencies being left out of the November 2017 court order, a lot of possible unreported transactions are not covered by this subpoena. (more…)
Based on an IRS investigation, taxpayers numbering only in the 800’s in each of the years 2013 through 2015 reported a transaction description likely related to Bitcoin on the form used to report capital gains or losses from property transactions. In 2013, the IRS issued guidance to say that virtual currency transactions were property transactions, rather than currency transactions, and followed that up with practical guidance in April 2014 in their Virtual Currency Guidance, Notice 2014-21. (more…)
For better or worse, the public face of blockchain technology has been Bitcoin, the polarizing crypto-currency. While Bitcoin’s detractors point to high-profile criminal activities and price volatility to question its ultimate long-term viability, a broader base of people knowledgeable in the foundational blockchain technology see potential applications beyond the creation and trading of currency not controlled by any centralized authority. (more…)