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The Cryptocurrency Tax Fairness Act Was Offered As Amendment To The House Tax Reform Bill Last Night In Congress. | Coin Center

The Cryptocurrency Tax Fairness Act Was Offered As Amendment To The House Tax Reform Bill Last Night In Congress. | Coin Center

The Cryptocurrency Tax Fairness Act was offered as amendment to the House tax reform bill last night in Congress. Video of the Rules Committee meeting is below and you can watch Rep. Jared Polis speak about the bill that he co-sponsored with Rep. David Schweikert. The amendment would have created a de minimis capital gains tax exemption for personal cryptocurrency transactions, and helped clarify how exchanges could offer third-party tax reporting. While the amendment was not adopted, we applaud the bipartisan leadership shown by Reps. Polis and Schweikert. That they recognized this issue, introduced a bill, and got it this far means a lot and it shows the IRS that many in Congress believe that the existing tax treatment of cryptocurrencies needs to be updated. The bills language didnt make it into the larger tax reform bill, but that doesnt mean the bill itself is dead; its alive and well and we will continue to advocate for its passage by Congress, and well continue to work to try to have the IRS adopt as much of it as it might be able to through rulemaking. For an ecosystem that is barely a decade old to get this far in Congress is remarkable, and were only just starting. Watch: @RepJaredPolis offers The Cryptocurrency Tax Fairness Act as an amendment to the House tax reform bill last night pic.twitter.com/rMuDw6OWBE Coin Center submitted comments to Her Majestys Treasury defending UK citizens right to develop and publish open-source software. As outlined in its consultation paper, Transposition of the Fifth Money Laundering Directive , HM Treasury is currently considering broadening the scope of the UKs anti-money laundering/countering the financing of terrorism (AML/CFT) regulations to impose data collection and reporting requirements on not only cryptocurrency de Continue reading >>

The Taxation Of Cryptocurrency

The Taxation Of Cryptocurrency

Home / CPA Journal Content /The Taxation of Cryptocurrency Virtual Transactions Bring Real-Life Tax Implications Bitcoin and several rival forms of cryptocurrency experienced record-breaking growth in recent years, leaving many investors and their CPAs grappling with uncertainty and surprise during tax season. Many returns were put on extension, awaiting further guidance from the IRS, while other taxpayers found themselves faced with an unexpectedly large tax bill as a result of misconceptions surrounding how these transactions are taxed. Cryptocurrency is digital currency that uses encryption techniques, rather than a central bank, to generate, exchange, and transfer units of currency. Unlike cash transactions, no bank or government authority verifies the transfer of funds. Instead, these virtual transactions are recorded in a digitized public ledger called a blockchain. Individual units of the currency are called coins. Introduced in 2009, Bitcoin was the first cryptocurrency and remains the most widely used. Other forms have grown tremendously in popularity since then, including Litecoin, Ethereum, and Ripple. While cryptocurrency exchanges have experienced booms and busts in the market, experts predict the use of cryptocurrency will continue to increase, making it imperative that CPAs are prepared to understand and educate their clients on the tax implications of these virtual transactions. The IRS addressed the taxation of cryptocurrency transactions in Notice 2014-21, which provides that cryptocurrency is treated as property for federal tax purposes. Therefore, general tax principles that apply to property transactions must be applied to exchanges of cryptocurrencies as well. Notice 2014-21 holds that taxpayers must recognize gain or loss on the exchange of crypt Continue reading >>

Irs Goes After Cryptocurrency Owners For Unpaid Taxes

Irs Goes After Cryptocurrency Owners For Unpaid Taxes

IRS goes after cryptocurrency owners for unpaid taxes The IRS is sending out 10,000 form letters to Americans who had cryptocurrency trades and may not have paid taxes. The government has said that virtual currencies are taxed like property, but has not given more detailed guidance, to the frustration of many. While the letters are essentially a generic reminder of tax obligations, they are a warning that a crackdown could be coming, tax attorneys said. The IRS is going after taxpayers who owe money from cryptocurrency trades. The agency began sending letters last week telling people they "potentially failed to report income" from selling virtual currencies like Bitcoin, Litecoin or Ethereum, and will send 10,000 of these letters by the end of August, according to a press release. Tax attorneys suggested that this campaign is an outgrowth of a court order last year for currency platform Coinbase to turn over information on about 13,000 accounts to the IRS. When most people in the U.S. buy cryptocurrencies, they use regulated exchanges like Coinbase, said Katya Fisher, practice group leader of the blockchain, digital assets and technology transactions practice at law firm Greenspoon Marder. The IRS letters, which appear to be generic, are "basically a nice reminder," Fisher saidnot an indication that an audit is imminent. But they do mean taxpayers need to make sure they've paid taxes on any cryptocurrency they may have sold in the last few years. Virtual currency is taxed like property , according to IRS guidance issued in 2014. This means that if someone sold a cryptocurrency after it grew in value, they would have to pay a capital gains tax of between 10% and 37% on the profits, depending on how long they held the asset. Conversely, if someone lost money in the crypt Continue reading >>

Tax Tips For Bitcoin And Virtual Currency

Tax Tips For Bitcoin And Virtual Currency

Tax Tips for Bitcoin and Virtual Currency Tax Tips for Bitcoin and Virtual Currency Virtual currency like Bitcoin has shifted into the public eye in recent years. Some employees are paid with Bitcoin, more than a few retailers accept Bitcoin as payment, and others hold the e-currency as a capital asset. Recently, the Internal Revenue Service (IRS) clarified the tax treatment of Bitcoin and Bitcoin transactions. Convertible virtual currency is subject to tax by the IRS Bitcoin is the most widely circulated digital currency or e-currency as of 2017. It's called a convertible virtual currency because it has an equivalent value in real currency. The sale or exchange of a convertible virtual currencyincluding its use to pay for goods or serviceshas tax implications. The IRS answered some common questions about the tax treatment of Bitcoin transactions in its recent Notice 2014-21 . Tax treatment depends on how Bitcoins are held and used. Bitcoin used to pay for goods and services taxed as income If you are an employer paying with Bitcoin, you must report employee earnings to the IRS on W-2 forms . You must convert the Bitcoin value to U.S. dollars as of the date each payment is made and keep careful records. Wages paid in virtual currency are subject to withholding to the same extent as dollar wages. Employees must report their total W-2 wages in dollars, even if earned as Bitcoin. Self-employed individuals with Bitcoin gains or losses from sales transactions also must convert the virtual currency to dollars as of the day earned, and report the figures on their tax returns. Bitcoins held as capital assets are taxed as property If you hold Bitcoins as a capital asset, you must treat them as property for tax purposes . General tax principles applicable to property transaction Continue reading >>

How To File Taxes On Your Cryptocurrency Trades In A Bear Year

How To File Taxes On Your Cryptocurrency Trades In A Bear Year

Chandan Lodha is co-founder at CoinTracker , a Y Combinator and Initialized Capital-backed startup that offers a secure cryptocurrency tax calculator. He was previously the Product Manager on Project Loon at Google[x]. Fred traded bitcoin, ether and a handful of other cryptocurrencies on Gemini, Binance and Coinbase last year. Unfortunately, due to the crypto downturn, his trading yielded a capital loss of more than $35,000. Hes not alone the stories have been coming out right and left about people who are not already rich, who have lost serious money lately . While it was a rough loss, filing taxes could add another headache in a few weeks if not done correctly. Given that bitcoin is down 55 percent year-over-year in 2018, compared to 686 percent up the year before, chances are that filing taxes on crypto trades may look quite different this year for crypto holders like Fred. The main difference is that users will want to claim capital losses in a bear year to reduce their tax bill. That means ensuring that you are maximizing your capital loss claims to the greatest potential by: Offsetting capital gains in other asset classes in the same tax year Using the remainder of losses to offset up to $3,000 of other income ($1,500 if youre married and filing separately) Rolling over any remaining capital losses to future years To get an understanding of how powerful this is, lets take an example. Imagine Maya earned $5,000 in the stock market in 2018, but lost $9,000 in cryptocurrency trading in the same year. Without filing cryptocurrency taxes, Maya would be on the hook for capital gains taxes on $5,000 from the stock market. At the 24 percent short-term tax rate, that would be $1,200 ($5,000 * 24 percent) to pay in taxes! Now, taking into account the $9,000 crypto capital Continue reading >>

How To Report Cryptocurrency On Taxes

How To Report Cryptocurrency On Taxes

The dramatic highs and lows of Bitcoin and the outright explosion of cryptocurrencies over the past year has a lot of traders and enthusiasts wondering how to report cryptocurrency on taxes. This question gets quite sticky as there has been a lot of debate on the topic with no clear-cut, this is how you should do things type of guidance yet. This article dives into the specifics behind reporting your crypto transactions on your taxes. If you are not generally familiar with how the IRS currently treats cryptocurrency, you should read our detailed crypto-tax guide before continuing. So if you are reading this, you are probably a crypto-trader or enthusiast concerned with the process of paying taxes on your trading activity. Maybe you have an automated trading strategy that conducts thousands upon thousands of trades every single month, and now youre realizing that you have no way of calculating what your true capital gains tax liability isdont worry we were in the same boat. But no matter your situation, youve probably made some trades and hopefully some decent money, and now you want to make sure that you report everything legally on your taxes. How do you do it? For every trade that you make, even if it is just a coin-to-coin trade, you need to know a few things. You need to know your cost basis (ie the original value of the crypto), and you need to know the Fair Market Value of the crypto at the time of the trade. If you are not familiar with these terms or how they apply to crypto please read our guide for a refresher on capital gains, taxable events, and everything crypto-tax related before continuing. Finished it? Okay great, lets move on. Once you know both of these things, calculating your capital gain is simple. Simply subtract the Cost Basis from the Fair Marke Continue reading >>

Cryptocurrency And Taxes: 4 Things To Know About Reporting Your Investments

Cryptocurrency And Taxes: 4 Things To Know About Reporting Your Investments

4 things to know about your cryptocurrency at tax time by Anna Bahney @annabahney March 26, 2018: 12:37 PM ET Although cryptocurrencies are nothing new, 2017 saw more mainstream investors buying in and cashing out. Now they could be staring down some major tax liabilities. But how tax laws apply to virtual currencies like bitcoin and ethereum is still a gray area that confuses people. "I think a lot of people who got in to cryptocurrency maybe didn't even think about the tax implications," says Janna Herron, a tax researcher and writer at Value Penguin. The Internal Revenue Service says virtual currency transactions are taxable by law. The agency issued its first and only guidance on how tax principles apply to transactions using cryptocurrency in 2014. "The one notice is considered tax authority," says Sarah-Jane Morin, an attorney in the tax practice group at Morgan Lewis. "It isn't as binding as regulations, but it is all we have to go on." The guidance says that for tax purposes, cryptocurrencies should be treated as property, not currency. And cryptocurrencies, in this guidance, include anything that is considered a "convertible virtual currency," which means it has an equivalent value in real currency or acts as a substitute for real currency. Not all cryptocurrencies act this way, but most of the major ones, like bitcoin, do. "Some people with bitcoin may think of it as dollars or cash," says Morin. "But for IRS purposes it should be treated as a house, stocks, bonds. You have to look at the general tax principles that apply to property and how it impacts your gains or losses." Basically, if you bought bitcoin and haven't sold, you haven't realized any gain. You probably don't have any reporting obligations. But if you sold bitcoin or any other cryptocurrency in Continue reading >>

Cryptocurrency And Taxes: The Impact Of Mining, Spending And Trading

Cryptocurrency And Taxes: The Impact Of Mining, Spending And Trading

Cryptocurrency and Taxes: The Impact of Mining, Spending and Trading When it comes to cryptocurrency and taxes, ambiguity reigns. Bitcoin and Ethereum are still in the early stages of development, and their values are extremely volatile. As of early December 2017, one bitcoin was fluctuating between $15,000- $18,000 , and its value has changed dramatically over the past year alone. Cryptocurrencies are designed to be a more efficient and reliable form of decentralized currency that anyone can buy and sell through online exchanges. They can be digitally traded for or exchanged into U.S. dollars, euros or any other form of currency (real or virtual). With the right computers, they can also be mined using complex computerized algorithms to uncover new cryptocurrency value, much like mining gold. But as cryptocurrencies grow in popularity and value, what are the tax implications for mining, trading and spending? Whenever cryptocurrencies are mined, bought, sold, spent or traded, there are tax implications. Taxpayers who receive crypto as payment for goods or services must determine the fair market value in U.S. dollars when received. Taxpayers who mine coins are subject to tax on the fair market value on the day mined. Depending on the business structure of the miner, the income could also be subject to self-employment tax. Accounting for cryptocurrency is just as important as accounting for buying and selling stocks and bonds. In 2014, the IRS declared cryptocurrencies should be treated as property for U.S. federal tax purposes and follow the general tax principles applicable to property transactions. This means theyre subject to capital gains tax, similar to stocks and bonds or real estate. In some cases, you may be considered a trader and the net income from your tradin Continue reading >>

Congress Launching Bills To Update Crypto Currency Tax Guidelines

Congress Launching Bills To Update Crypto Currency Tax Guidelines

Congress Launching Bills To Update Crypto Currency Tax Guidelines Congress Launching Bills To Update Crypto Currency Tax Guidelines With the rise in popularity of crypto currency and the uncertainty of the tax law governing the reporting of crypto currency, legislation is being introduced in Congress to provide updated guidelines on how taxpayers should report profits associated with investing in crypto currency. Congressman Tom Emmer Spearheads Legislation To Support Blockchain Technology And Digital Currencies. Congressman Tom Emmer (R-MN), currently co-chairing the Congressional Blockchain Caucus, says the United States should create an environment that enables the American private sector to lead on innovation and growth. Mr. Emmer plans to propose the following: A Resolution Supporting Digital Currencies and Blockchain Technology which expresses support for the industry and its development in the United States. Mr. Emmer states that like the internet, the federal government should provide a light touch, consistent, and simple legal environment. Read more here . The Blockchain Regulatory Certainty Act affirming that certain blockchain related entities that never take control of consumer funds do not need to register as a money transmitter. Examples of these entities include miners that validate network integrity and multisignature providers that provide enhanced asset security to users. Read more here . The Safe Harbor For Taxpayers With Forked Assets Act recognizing that taxpayers can only comply with the law when the law is clear. This bill will provide a safe harbor for taxpayers with forked digital assets. Further it will restrict fines against individuals that attempt to report these assets until the IRS provides any type of guidance regarding the appropriate m Continue reading >>

Regulation Of Cryptocurrency Around The World

Regulation Of Cryptocurrency Around The World

Regulation of Cryptocurrency Around the World Back to Index of Regulation of Cryptocurrency This report surveys the legal and policy landscape surrounding cryptocurrencies around the world. This report covers 130 countries as well as some regional organizations that have issued laws or policies on the subject. The past four years have seen cryptocurrencies become ubiquitous, prompting more national and regional authorities to grapple with their regulation. The expansive growth of cryptocurrencies makes it possible to identify emerging patterns. This report surveys the legal and policy landscape surrounding cryptocurrencies around the world. While not dissimilar in form to the 2014 Law Library of Congress report on the same subject, which covered forty foreign jurisdictions and the European Union, this report is significantly more comprehensive, covering 130 countries as well as some regional organizations that have issued laws or policies on the subject. This expansive growth is primarily attributable to the fact that over the past four years cryptocurrencies have become ubiquitous, prompting more national and regional authorities to grapple with their regulation. The resulting availability of a broader set of information regarding how various jurisdictions are handling the fast-growing cryptocurrency market makes it possible to identify emerging patterns, some of which are described below. The country surveys are also organized regionally to allow for region-specificcomparisons. One interesting aspect of the fast-growing cryptocurrency market is the fluidity of the terms used to describe the different products that fall within its ambit. While the various forms of what are broadly known as cryptocurrencies are similar in that they are primarily based on the same type Continue reading >>

10k Cryptocurrency Owners To Get Irs Tax Payment Letters

10k Cryptocurrency Owners To Get Irs Tax Payment Letters

Bitcoin and other virtual currencies fascinate me, but that's as far as it goes. I don't own and have never had any interest in cryptocurrencies. I'm basically a say it with cash kind of gal. Part of my crypto trepidation is that I've yet to grasp how Bitcoin is mined, despite the hubby's patient, and repeated, explanations. And like many Senators during a recent hearing on Facebook's proposed Libra digital money , I'm skeptical of the concept (as well as suspicious of the online social media platform proposing it, but that's another blog post). My disavowal of cryptocurrency, however, has been a good move for me as far as taxes are concerned. It's one less thing to worry about at filing time since the Internal Revenue Service years ago declared that digital currency transactions are taxable. Basically, Uncle Sam considers cryptocurrency an asset like stocks or other property you own. The sale of those assets that results in a profit triggers, in most cases, taxable capital gains . And now the federal tax collector has launched a concerted effort to get the taxes it says are due from Bitcoin et al owners. Three letters to 10K taxpayers: The IRS is sending letters to taxpayers with virtual currency transactions that potentially failed to report income and pay the resulting tax from virtual currency transactions or did not report their transactions properly. By the end of August, the IRS says more than 10,000 taxpayers will receive the letters. Recipient taxpayer names, notes the tax agency, were obtained through various ongoing IRS compliance efforts. If you're among the taxpayers the IRS is encouraging to pay up, you'll get one of three cryptocurrency tax letter variations: Letter 6173 , Letter 6174 or Letter 6174-A (click the names to see PDF versions). All three vers Continue reading >>

What To Expect When The Irs Alters Its Bitcoin Tax Policy

What To Expect When The Irs Alters Its Bitcoin Tax Policy

What to Expect When the IRS Alters Its Bitcoin Tax Policy Coming guidance from the IRS will address longstanding questions about the tax treatment of cryptocurrency. The tax collector has identified several specific issues it will discuss, including whether investors owe taxes on free crypto they get from a fork. The industry is also hoping for clarity on a number of other matters, including the tax implications of airdrops, staking and crypto stored at overseas exchanges. Every tax season, cryptocurrency investors in the U.S. struggle to figure out how much they owe the government. But next April it might be a little bit easier. Last month, the Internal Revenue Service (IRS) said it would soon issue new guidance on the tax treatment of crypto, something it hasnt done since aninitial notice the agency issued in 2014. In its original guidance, the IRS stated that for tax purposes, virtual currency is treated as property and not as currency. But it left a number of key questions unanswered, such as how to value cryptocurrency received as income. The market has become more complicated in the intervening years, with the emergence of phenomena like airdrops and forks that essentially give people free crypto, raising new questions about tax liability. In a letter last month to Rep. Tom Emmer, IRS CommissionerCharles P. Rettig said the forthcoming guidance would address these issues and others. He did not say exactly when it will come out, and neither would the IRS when contacted by CoinDesk. Its hard to predict when the IRS will publish the new guidance, but as the extended due date for individual returns is October 15, and for pass-through businesses it is September 15, they may shoot to have guidance out before those extended deadlines, saidKirk Phillips, a certified publi Continue reading >>

How Taxes On Cryptocurrencies Like Bitcoin Work

How Taxes On Cryptocurrencies Like Bitcoin Work

Home How Taxes On Cryptocurrencies Like Bitcoin Work How Taxes On Cryptocurrencies Like Bitcoin Work As the new tax bill has just come to fruition, many Bitcoin investors are probably wondering what will happen to their Bitcoin gains when it comes to taxes. There are big changes for Bitcoin investors. Reporting of gains will be required but tracking them wont be easy. In this article, well provide you with the details of paying taxes on Bitcoin. The large majority of Bitcoin investors havent paid taxes to the IRS. In fact, the IRS found that only 802 people using Coinbase, a cryptocurrency broker, filed form 8949 for 2015 for activity related to Bitcoin. A popular tactic has been exploitation of 1031 exchanges. A 1031 exchange lets investors exchange one property for another of like kind. For example, you might exchange your Bitcoin for Litecoin, avoiding taxes through the 1031 exchange. Evan Fox, a tax manager at New York accounting firm Berdon, said , Some people think, 'I'm taking my bitcoin, which the IRS has deemed to be property, swapping it for another property and doing it for investment reasons,' so it sounds like it could be a 1031 exchange. I think it's a stretch. As well see, the IRS has caught on this tactic. The new tax bill closes the 1031 loophole. Suzanne Walsh, a partner at the law firm Murtha Cullina, mentioned to Fortune magazine, The tax act in Sec. 13303 amends IRC Section 1031 (a)(1) to delete property and replace it with real property So, you can see that now I can no longer take the position that my Bitcoin to Litecoin exchange was a like kind one under Sec. 1031, and I have to recognize the gain when I do it. The IRS has effectively taken away any chance that cryptocurrencies can be classified as property for tax reporting purposes. Instead, t Continue reading >>

Wood Llp | Cryptocurrency Taxation

Wood Llp | Cryptocurrency Taxation

The IRS has indicated that transactions in cryptocurrencies such as Bitcoin are taxable just like any other. But for the IRS and taxpayers alike, this is a new landscape with a great deal of uncertainty and confusion. Businesses have filing obligations as well, and may be required to file Forms 1099 or Forms W-2 for payments to independent contractors or employees made in digital currencies. In 2014, the IRS issued Notice 2014-21, which clarified that digital currencies are property, not currency, for tax purposes. The notice warned that IRS Forms 1099 and Forms W-2 may be required for these transactions. FinCEN rules say Bitcoin exchanges and Bitcoin miners should register as Money Services Businesses and comply with anti-money laundering regulations. While the cryptocurrency economy is growing, so is the governments scrutiny for taxpayers transacting in this space. The IRS has sought to enforce John Doe summonses for cryptocurrency users account information at Coinbase Inc. and possibly other exchanges. We anticipate that more IRS efforts to crack down on cryptocurrency transactions are to come. We advise clients on their current obligations and planning opportunities with respect to these transactions, as well as the avenues available to address past delinquencies. Prospective clients who are interested in planning ahead to reduce their prospective exposure, and reviewing and reducing their exposure for tax audits should not delay contacting us or another qualified tax lawyer. We treat all queries as confidential and subject to attorney-client privilege. For articles we have written about the IRSs efforts to tax cryptocurrencies, see: Continue reading >>

How The New Tax Law Impacts Cryptocurrencies

How The New Tax Law Impacts Cryptocurrencies

How the New Tax Law Impacts Cryptocurrencies By David Floyd | January 8, 2018 3:25 PM EST The tax bill that Donald Trump signed into law in late December represents the most substantive changes to the federal tax code in 30 years, but Congress passed up its chance to clarify mattersfor cryptocurrency investors, traders, issuers and miners. The community is left with a host of questions and ambiguities;but while the tax bill does not directly address cryptocurrencies such as bitcoin, ether and the tokens issued through ICOs, it doesimpact them indirectly. Especially important are changes to six provisions in the tax code: like-kind exchanges, loss carrybacks, the corporate tax rate, thebusiness interest deduction, miscellaneous personal deductions, and the treatment of pass-through businesses. (See also, Trump's Tax Reform .) Google "bitcoin tax bill" or some variation, and most of the results will focus on section 1031 of the tax code, which allows capital gains taxes to be deferred for certain "like-kind" exchanges of propertyfor other, similar property. The provision was originally envisioned as a break for farmers swapping livestock, but came to be used for trades in commercial real estate, art and airplanes and cryptocurrencies. According to three attorneys contacted by Investopedia, at least some cryptocurrency investors regard a sale of bitcoin for ether , for example, to be a like-kind exchange that is exempt from capital gains taxes. None of the attorneys we spoke to, however, is convinced: taxpayers who treat crypto-for-crypto exchanges as like-kind are"taking the risk that if they got audited, the IRS would disagree," says Jeremy Naylor, a partner at Cooley LLP. Under the new law, he continues, "it's clear now that you can't do that." The exemption thatsectio Continue reading >>

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