IRS Plans to Issue Guidance on CryptoCurrency Taxation

[PTCSuccessBlog]

Internal Revenue Service (IRS) commissioner Charles Rettig has explained to U.S. representatives that the tax department plans to issue clearer guidance toward cryptocurrency taxation soon. Since 2014, Americans have been asking the tax agency for better clarification in regard to official tax guidelines.

In September 2018, news.Bitcoin.com reported on a group of U.S. bureaucrats who sent a formal letter to the IRS asking for more clarification in regard to the way cryptocurrencies are taxed in America. U.S. representative Kevin Brady, Tom Emmer and a variety of other state officials insisted in the letter that digital asset taxation needs clearer guidelines.

Since the tax agency’s official statement in 2014, the current guidance for taxpayers is to file each and every transaction executed when using a cryptocurrency as each transaction is considered a taxable event. Meanwhile, in the U.S., cryptocurrencies are also taxed under traditional capital gains laws that apply to property investments. The letter from various representatives notes that most officials believe the IRS should have no problem issuing a comprehensive virtual currency strategy for taxes.

https://www.bitcrypt.co/irs-issue-guidance-on-cryptocurrency-taxation/

[Beerwizzard]

Frankly speaking, I have no idea what's new they gonna tell. In every country if you are officially selling some goods or services then you should probably do some accounting stuff and provide some reports to your government. So if you are accepting $5 in crypto then you would have to pay taxes just as you did with fiat payments. So in my opinion this guidance should look like "tax crypto like fiat" and that's it.
Anyone can show any real examples where crypto need special treatment?

[Zainal-baguz]

if in my view both both BTC or USD have advantages and disadvantages when used for investment. if I prefer to choose BTC as my investment place, bro. my reason
BTC has a very fast price movement when compared to USD. so it was very fast for me to look for finance. certainly with experience. especially when it's time to buy and sell

[BQ]

Frankly speaking, I have no idea what's new they gonna tell. In every country if you are officially selling some goods or services then you should probably do some accounting stuff and provide some reports to your government. So if you are accepting $5 in crypto then you would have to pay taxes just as you did with fiat payments. So in my opinion this guidance should look like "tax crypto like fiat" and that's it.
Anyone can show any real examples where crypto need special treatment?

Isn't it a bit different from an investment perspective? you don't pay the same tax if you sell stocks for $100 for example. there's many more guidelines, losses taken into calculation, in USA I think it's also something about how long one has held a crypto without trading it?

[squatter]

Internal Revenue Service (IRS) commissioner Charles Rettig has explained to U.S. representatives that the tax department plans to issue clearer guidance toward cryptocurrency taxation soon. Since 2014, Americans have been asking the tax agency for better clarification in regard to official tax guidelines.

In September 2018, news.Bitcoin.com reported on a group of U.S. bureaucrats who sent a formal letter to the IRS asking for more clarification in regard to the way cryptocurrencies are taxed in America. U.S. representative Kevin Brady, Tom Emmer and a variety of other state officials insisted in the letter that digital asset taxation needs clearer guidelines.

I disagree. The current guidelines are extremely clear.

I'm all for passing new legislation that makes things easier on taxpayers -- like the Soto/Davidson H.R. 7356 bill, which would allow altcoin like-kind exchanges and a $600 annual tax exemption on capital gains realized through spending coins on goods and services. But this has nothing to do with a need for clarity, just a need for better tax treatments.

[dothebeats]

About time, I suppose. We still have a lot of people coming in to this forum asking for legal assistance on how would they go about filing and paying their taxes. The guidelines they have set since 2014 is still commendable and can be a great basis upon starters. Since the cryptocurrency economy has already evolved, perhaps we will be seeing clearer and more up-to-date guidelines that will accompany traders that are also taxpayers into getting their taxes filed right, without the fear of getting hunted by the feds and the IRS should they fail to comply.

[tsaroz]

This would make things easier. Anonymous cryptocurrency has shown us a lesson that humans are not capable of using unregulated value tokens.
So, we need regulation and for that they need to tax. But if they just taxed on our profit but did nothing to save the money of the investors, it would again be another scam.

[MakeMoneyBtc]

I've been waiting for this for quite a while now and hope that Europe will also do the same thing soon because people need this. Everyone is wondering what taxes should they pay to the government for trading and using cryptocurrencies but when you go and ask the authorities no one can give you a straight answer because they don't have one. For now this is still just being planned but at least it's good that someone thought about taking actions twords it.

[Ailmand]

I've been waiting for this for quite a while now and hope that Europe will also do the same thing soon because people need this. Everyone is wondering what taxes should they pay to the government for trading and using cryptocurrencies but when you go and ask the authorities no one can give you a straight answer because they don't have one. For now this is still just being planned but at least it's good that someone thought about taking actions twords it.

Well, it's been long since crypto is taxed in U.S and finally they have made up their mind to create guidelines for crypto taxation. A lot of people are having a hard time complying with their tax law, so I hope this will ease the process of taxoing cryptocurrency.

[Kakmakr]

I think the IRS already indicated that they do not see Crypto currencies as a currency, but rather as a tradable commodity and that is why they use Capital gains as the tax tool to generate tax income for the government. They also do not want some virtual currency competing with the US Dollar as a reserve currency.

So just expect them to elaborate more on that stance and you will not be disappointed when they give the details. The SEC did the same with the ICO's regarding the definition of Securities. 

[pushups44]

Probably what is needed in addition to greater clarity - and by this I mean resolving the uncertainty over how cryptocurrencies are defined and taxed - is for new laws to make it easier for investors to own and spend cryptocurrencies. Making all transactions no matter how small a taxable event necessarily stunts the growth of the industry. We need to back politicians who will take a crypto-friendly approach.

[traderethereum]

I think that will depend on the regulation for each country.
In the USA, maybe there will be a tax for people who are trading cryptocurrency, but in the other country, there will be no tax for people to trading.
But the government will always watch for every citizen did, and I think they need the right time to apply the regulation.
I am not sure about that, and maybe I am wrong.

[Mike Mayor]

"file each and every transaction executed when using a cryptocurrency as each transaction is considered a taxable event. "

What crap.

Who the hell files every transaction they make? Who here files everything they buy? Every single thing? lol. All day everyday people exchange cash in hand and pay no tax on it. People don't do this as things are now so how will anyone expect them to do it with crypto anyway? How much work is there going to be in taxing a transaction?? What the hell. LOL. just LOL

You already pay tax on transactions its called V.A.T so what this article is going on about is a mystery. Why even ask about tax? If you don't know because you were not told then you ok. So stay not knowing!!
I barely even work with dirty fiat anyway.

[gmaxwell]

I disagree. The current guidelines are extremely clear.

I don't agree that they're clear for handling airdrops/spinoffs.  The simplest interpretations result in absurd consequences.

Some people have advocated that a spin-off is income at the time it came into existence at its market prices.

Following that kind of absurd interpretation to its absurd ends means that we could bankrupt Warren Buffet, for example, by creating a bitcoin spinoff that traded at $1/coin and also included an output paying 100 trillion coins to his website's SSL cert key... causing him $100 trillion in taxable income.

Someone you have no relationship with handing you cryptocurrency you never asked for and expecting nothing in return -- potentially entirely without your knowledge or even any reasonable way for you to discover it-- should never create an income tax obligation.  It certainly shouldn't create an income tax obligation based on some absurd highly illiquid scamcoin market last trade price.

I do agree that its clear otherwise, although _significantly_ inconvenient for general usage. Fixing that will likely take an act of congress: IRS is unlikely to wave tax obligations for small cryptocurrency transactions on their own.

Some of the things people are asking for, like being able to use like-kind exchange to cover swapping between bitcoin and ethereum seem flat out absurd to me. IRS might permit something like that but only if they can't resist showing how ignorant they are about cryptocurrency.  The model of treating Bitcoin largely like stock is a generally workable one, and you sure as heck can't do like kind exchanges between unrelated stocks!