By Brian E. Ravencraft, CPA, CGMA, Partner at Holbrook & Manter, CPAs
Regardless of your opinion about cryptocurrencies like Bitcoin, one thing is for certain — they are here to stay. Since their beginnings a decade ago, much mystery has surrounded cryptocurrencies regarding their origins, value and purposes. As cryptocurrencies have become more established and accepted as payment, it is more important to understand what the treatment and consequences of purchasing, selling, paying with and accepting as payment cryptocurrencies from a tax perspective.
Per IRS Notice 2014-21, cryptocurrencies are not legal tender, but are generally regarded as property comparable to that of a stock, bond or other investments. Treating cryptocurrencies in this manner means whenever a cryptocurrency is purchased as an investment, the basis in the cryptocurrency is the purchase price plus any permitted transaction fees just like other stock that is traded on an exchange. This also means that whenever the cryptocurrency is sold, a capital gain or loss will result from its sale.… Continue readingRead More »