Tax Topic

Virtual Currency (Cryptocurrency)

The sale or exchange of virtual currencies, the use of virtual currencies to pay for goods or services, or the holding virtual currency as an investment, generally has tax consequences that could result in a tax liability.

This area of tax law gets very complicated very quickly, and the IRS is watching all things virtual currency closely. The IRS considers virtual currencies to be “property” vs. currency. If you have received, acquired, sold, disposed of, or used any virtual currency; please call us to set up an appointment so that we can discuss with you what is necessary to properly report the transactions.

If your virtual currency is managed through an investment portfolio, please provide the 1099-Consolidated or 1099-B statement for the tax year showing all the transaction details.

If you manage your virtual currency yourself, you will need to provide, for each transaction:

• Currency name
  
  
• Acquisition date and cost
  
  
• Disposition date and sale amount
  
  
• Gain or loss on exchange
  
  

Here is a link to the IRS website for full details on Virtual Currency: https://www.irs.gov/businesses/small-businesses-self-employed/virtual-currencies

The IRS also published frequently asked questions on virtual currency at https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions

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