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Bitcoin Taxes: IRS Issues Its First Guidance Since 2014, but Still Fails to Answer Many Questions

  • Alex Dovbnya
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    The IRS finally answers some questions about concurrency taxation, but breeds even more confusion

Bitcoin Taxes: IRS Issues Its First Guidance Since 2014, but Still Fails to Answer Many Questions
Cover image via news.u.today

The U.S. Internal Revenue Service (IRS) has finally released its guidance for taxing Bitcoin and other cryptocurrencies, Forbes reports. The updated revenue ruling aims to answer many common questions within the nascent industry, including the tax liabilities that pertain to cryptocurrency forks and the calculations of capital gains.  

“The IRS is committed to helping taxpayers understand their tax obligations in this emerging area,” said IRS Commissioner Chuck Rettig.

When a certain coin goes through a hard fork, its owners are supposed to pay taxes only when they receive new crypto (meaning, that it has to be recorded on a Blockchain). Otherwise, they don't have any taxable income. 

"If a hard fork is followed by an airdrop and you receive new cryptocurrency, you will have taxable income in the taxable year you receive that cryptocurrency."

The IRS has also clarified that your cost basis is the amount of USD spent to acquire cryptocurrency (that includes fees and other costs).

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However, Bitcoin Core developer James Lopp still has a lot of questions, calling the new guidance "a hot mess." Particularly, he doesn't understand how to tax the asset if it drops 90 percent in value after selling.    

As reported by U.Today, cryptocurrency investors started receiving letters from the IRS en masse back in August, but some industry insiders complained about a lack of clear answers for those who wanted to fill their taxes.  


     

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About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with an extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets.

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Ex-Congressman Says Fed Should Not Play With Own Cryptocurrency

  •  Denis Sinyavskiy
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    Former US Congressman Ron Paul shares his thoughts on the possible creation of Fed’s own cryptocurrency

Ex-Congressman Says Fed Should Not Play With Own Cryptocurrency
Cover image via www.123rf.com

Former US Congressman Ron Paul spoke on Fox Business and said that the Fed should not think about creating its own cryptocurrency.

Fed’s Crypto: To Be or Not To Be?

Rumors have been circulating for the past few months about the Fed possibly creating own cryptocurrency. It is expected that a digital coin would become a competitor to its counterparts on the market, and may even replace fiat money. President Patrick Harker, President of the Federal Reserve Bank of Philadelphia, commented on such rumors at a recent conference:

“It is inevitable. I think it is better for us to start getting our hands around it.”

However, there has not been no official follow-up by the Fed towards a crypto exchange. While proponents of this idea believe such innovation is necessary, it is expected that the exchange could stop the current delays involving US bank transfers.

What do the opponents think about the Fed's own cryptocurrency?

The idea of ​​creating the Fed's cryptocurrency has its opponents. This includes Ron Paul, who believes that the Fed is in a better position to stay away from digital coins and allow the private blockchain sector and payment platforms to resolve this discussion in real-time. What the Fed plans to do next is unclear, but the central bank may still enter the game.

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About the author

Starting with a simple interest in cryptocurrency, over the past two years, Denis has worked in a cryptocurrency fund and become an author with an analytical bias. His engineering degree helps with the analysis of the technical part of the cryptocurrency market. As a fan of cryptocurrency, Denis believes that the blockchain technology is the future.

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