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…)
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…)
It’s been awhile since I’ve posted anything about Bitcoin. Given that it seems to pop into the headlines fairly often, I thought it was time for a revisit after closing out 2014. How did Bitcoin fare for the remainder of 2014 and start of 2015? Let’s see.
Here is a nice summary of performance other than price (we’ll get to that later) in 2014. Some key statistics are:
At long last, the IRS has finally offered some clarity on the federal tax implications of transacting and investing in bitcoins and other virtual currencies. When Naila first discussed this topic in her post of February 19, 2014, which dealt with the taxability of mining bitcoins and the impact on foreign account reporting when bitcoins are held in a digital wallet, the guidance was not formalized or readily available to taxpayers. Things are different now.
One of the appeals of bitcoin (or any virtual currency) is that it operates outside the boundaries of established monetary authority without control by any political jurisdiction. Many would say this same condition is responsible for the significant mishaps to date with bitcoin exchanges and the volatile trading value. These calamities include exchange bankruptcies; elicit activities transacted in bitcoins, bitcoin thefts and more. Since bitcoin is not a currency backed by any central government, it falls outside most existing regulatory borders. Or does it?