IRS Puts Brokers On The Hot Seat for Crypto Tax Reporting
Definition of a broker is debated The Biden Administration’s 2021–2022 Priority Guidance Plan (the Plan) supports a push from the IRS and the US Treasury to more closely scrutinize the virtual currency industry. Missing from the Plan? Specifics. Of note among the 193 guidance projects in the Plan is the“Brokers dealing with virtual assets” section. […]
OFAC Puts Virtual Currency Industry on Notice
New Guide Includes Reporting Requirements and Potential Penalties In a new Sanctions Compliance Guide, The Office of Foreign Assets Control (OFAC) of the U.S. Treasury reiterates that obligations apply equally to transactions involving virtual currencies and those involving traditional fiat currencies. With a broad stroke, OFAC defines the Virtual Currency Industry as technology companies, exchanges, […]
Debunking Five Myths About Cryptocurrency
A surge in cryptocurrency prices this year created many crypto paper millionaires and brought millions into the game. But the digital currency market is a rollercoaster ride. As a result, many of those fortunes have already evaporated as crypto prices fell precipitously. Whether or not crypto will transform the nature of money remains to be […]
The IRS Is Cracking Down On Cryptocurrency Tax Reporting
If you’ve engaged in cryptocurrency or other virtual currency transactions worth $20,000 in any one year between 2016 and 2020, the IRS wants to hear from you. The IRS believes thousands of taxpayers are not telling the government about their income and investment gains from cryptocurrency transactions via Cryptocurrency tax reporting. In a soft warning […]
Upcoming Virtual Currency FBAR and FATCA Reporting Enforcement
Under current FinCEN regulations, a foreign account holding virtual currency is not reportable on the FBAR. However, FinCEN in its FinCEN Notice 2020-2, proposes amending reports of foreign financial accounts (FBAR) regulations to include virtual currency accounts as a type of reportable account. FATCA requires foreign financial accounts reporting as well. For individuals, FATCA applies […]
Did you Engage in Virtual Currency Transactions in 2020?
Taxpayers who engaged virtual currency transactions in 2020 must answer a Yes or No Question on page 1 of Form 1040 or Form 1040-SR. The question is: “At any time during 2020, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency? Failing to answer will prevent electronic filing […]
Operation Hidden Treasure is NOT a Treasure for Crypto Holders
On March 6, 2021, Forbes reported that Damon Rowe, Director, Fraud Enforcement Office, Internal Revenue Service, Washington, DC, remarked that the IRS “added some crown jewels,” including a dedicated team of IRS Criminal Investigation professionals who are working on “Operation Hidden Treasure.” The Director’s remarks occurred at the Federal Bar Association presentation of March 5th […]
IRS is Paying Attention to Virtual Currency Third-Party Information Reporting and Title 26
On September 24, 2020, the TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION (TIGTA) issued a final audit report: “The Internal Revenue Service Can Improve Taxpayer Compliance for Virtual Currency Transactions” that evaluates the IRS’s efforts to ensure accurate reporting of virtual currency transactions as required under U.S. Code Title 26 (Internal Revenue Code) and Title 31 […]
So much of Virtual Currency is still subject to Interpretation
On February 12,2020, the U.S. Government Accountability Office (GAO) published a Report on Virtual Currencies which discusses whether Taxpayers who use Virtual Currency (VC) are fully meeting their tax obligations. The purpose of the GAO report is to address IRS’ efforts related to VC tax compliance, guidance, and information reporting (which involves third parties, such […]
Were you Engaged in Virtual Currency transactions in 2019?
In 2019, taxpayers who engaged in virtual currency transactions will need to file Schedule 1, Additional Income and Adjustments to Income. Schedule 1 of the 2019 1040 Form presents the question to Taxpayers: “At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency? This […]
Wondering about the tax treatment of a Cryptocurrency Hard Fork and Airdrop?
On 10/9/19, IRS issued Rev. Rul. 2019-24 addressing the issues of a Taxpayer having gross income under § 61 of the Internal Revenue Code as a result of a hard fork of a cryptocurrency that the Taxpayer owns if the Taxpayer DOES NOT RECEIVE units of a new cryptocurrency….… AND…… of a Taxpayer having gross […]
Taxpayers, have you sold, received, exchanged or acquired Virtual Currency?
During the month of October 2019, IRS issued Revenue Ruling 2019-24, FAQ’s on Virtual Currency Transactions and a DRAFT Form of Schedule 1, which, for the first time presents the question: “At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency”? The Compliance Checkbox […]
