By Brian Ravencraft
You may have noticed that the IRS has been asking taxpayers if they had any transactions related to cryptocurrency, or virtual currency in recent years. On the first page of the 2020 IRS Form 1040, the IRS specifically asks “[a]t anytime during 2020, did you receive, sell, send, exchange, or otherwise acquire financial interest in any virtual currency?” Regardless of how you feel about whether this is an unwarranted intrusion into your private financial matters, the fact is that they want to know. To take it a step further, according to CNBC, they may already know as the IRS has issued summons to cryptocurrency exchange operators like Kraken, Circle and Coinbase to find out who has been engaged in cryptocurrency transactions.
It is important to know how the IRS views cryptocurrency. From their prospective, they view it as property that would be treated like purchasing a security. If you understand that purchasing or selling units of Bitcoin in the IRS’ view is much like purchasing or selling shares of Microsoft, Ford, or JPMorgan Chase, you have a basic understanding of the reporting they expect on your tax returns.… Continue readingRead More »