Crypto Taxes

Penalties For Having Treated A Virtual Currency Transaction In A Manner That Is Inconsistent With This Notice Prior To March 25, 2014?

Will taxpayers be subject to penalties? Taxpayers may be subject to penalties for failure to comply with tax laws. For example, underpayments attributable to virtual currency transactions may be subject to penalties, such as accuracy-related penalties under section 6662. In addition, failure to timely or correctly report virtual currency transactions when required to do so... [Read More]

Are There IRS Information Reporting Requirements For A Person Who Settles Payments Made In Virtual Currency?

Reporting requirements for a person who settles payments made in virtual currency on behalf of merchants that accept virtual currency from their customers Yes, if certain requirements are met. In general, a third party that contracts with a substantial number of unrelated merchants to settle payments between the merchants and their customers is a third... [Read More]

Are Payments Made Using Virtual Currency Subject To Backup Withholding?

Are payments made using virtual currency subject to backup withholding? Payments made using virtual currency are subject to backup withholding to the same extent as other payments made in property. Therefore, payors making reportable payments using virtual currency must solicit a taxpayer identification number (TIN) from the payee. The payor must backup withhold from the... [Read More]

When One Is Required To File An Information Return With The IRS?

Payments of virtual currency Is a person who in the course of a trade or business makes a payment using virtual currency worth $600 or more to an independent contractor for performing services required to file an information return with the IRS? Generally, a person who in the course of a trade or business makes... [Read More]

Is A Payment Made Using Virtual Currency Subject To Information Reporting?

Is a payment made using virtual currency subject to information reporting? A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property. For example, a person who in the course of a trade or business makes a payment of fixed and determinable income using... [Read More]

Does Virtual Currency Paid By An Employer As Remuneration For Services Constitute Wages For Employment Tax Purposes?

Does virtual currency paid by an employer as remuneration for services constitute wages for employment tax purposes? Yes. Generally, the medium in which remuneration for services is paid is immaterial to the determination of whether the remuneration constitutes wages for employment tax purposes. Consequently, the fair market value of virtual currency paid as wages is... [Read More]

Does Virtual Currency Received By An Independent Contractor For Performing Services Constitute Self-Employment Income?

Does virtual currency received by an independent contractor for performing services constitute self-employment income? Yes. Generally, self-employment income includes all gross income derived by an individual from any trade or business carried on by the individual as other than an employee. Consequently, the fair market value of virtual currency received for services performed as an... [Read More]

Is An Individual Who “Mines” Virtual Currency As A Trade Or Business Subject To Self-Employment Tax On The Income Derived From Those Activities?

Is it subject to the self-employment tax? If a taxpayer’s “mining” of virtual currency constitutes a trade or business, and the “mining” activity is not undertaken by the taxpayer as an employee, the net earnings from self-employment (generally, gross income derived from carrying on a trade or business less allowable deductions) resulting from those activities... [Read More]

Does A Taxpayer Who “Mines” Virtual Currency Realize Gross Income Upon Receipt Of The Virtual Currency Resulting From Those Activities?

For example, uses computer resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger Yes, when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income. See Publication 525, Taxable and Nontaxable Income, for more information on taxable... [Read More]

What Type Of Gain Or Loss Does A Taxpayer Realize On The Sale Or Exchange Of Virtual Currency?

What type of gain or loss does a taxpayer realize on the sale or exchange of virtual currency? The character of the gain or loss generally depends on whether the virtual currency is a capital asset in the hands of the taxpayer. A taxpayer generally realizes capital gain or loss on the sale or exchange... [Read More]