The IRS has announced that businesses do not have to report the receipt of digital assets as cash to FinCEN until the IRS issues final rules relating to the reporting requirements. The delay is imposed by US federal law, which requires a public comment period prior to implementing new regulations. Under Code Sec. 6050I(a), any…
Anyone who sticks with cryptocurrency investing long enough will eventually find themselves holding worthless or nearly worthless coins. Altcoins of limited utility will simply fail to catch on, or developers will disappear, or the market will fail to show favor to an obviously useless meme coin. In almost all cases, worthlessness will coincide with the…
Here are a couple of federal tax updates relating to cryptocurrency, courtesy of our colleagues at the AICPA Journal of Accountancy. Form 1040 virtual currency query revised for 2021 A draft version released in July of Form 1040, U.S. Individual Income Tax Return, for the 2021 tax year on page 1 retains the question from…
Internal Revenue Code Section 6050I generally imposes reporting requirements upon any person who is engaged in a trade or business and, in the course of such trade or business, receives more than $10,000 in cash in one transaction or two or more related transactions. These transactions are reported on IRS Form 8300, which collects identifying…
H.R. 3684, known as the Infrastructure Investment and Jobs Act, passed the Senate on August 18th by a vote of 69–30 and now goes to the House of Representatives for consideration. To become law, the House must pass a companion bill and then the differences between the two must be worked out in committee prior…
One of the major ambiguities in virtual currency reporting in recent years has been the question of whether non-US exchanges should be considered “foreign financial accounts” for the purpose of reporting on FinCEN Form 114 (commonly known as the FBAR). Generally, a U.S. person who has a financial interest in, or signature or other authority…
The Treasury Inspector General for Tax Administration (TIGTA) found in a recent audit that it is difficult for the IRS to identify taxpayers with virtual currency activity due to a lack of third-party information reporting that specifically identifies virtual currency transactions. TIGTA recommended that the IRS continue efforts to close the virtual currency information gap…
UPDATE: Congress adjourned for 2017 without further action on this bill. It was not part of the tax reform legislation passed in December. On September 7, 2017, Representatives Jared Polis (Democrat) and David Schweikert (Republican), who co-lead the Congressional Blockchain Caucus, announced the Cryptocurrency Tax Fairness Act. The Act, if passed, would amend the Internal…
As a leading public accounting firm in the virtual currency space, we regularly field inquiries from clients and potential clients relating to taxation of virtual currencies in the United States. Here is a list of the most common misconceptions held by virtual currency users that we encounter in our work, and the answers that we…
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