The Internal Revenue Service (IRS) is moving on crypto holders who fail to report their crypto gains on their taxes. If you are a US taxpayer who holds crypto, here are some facts you should know.
- Despite the cryptocurrency market’s bearishness, many bitcoin holders reportedly hold the cryptocurrency at a profit. Consequently, the IRS requires US taxpayers who sold bitcoin or any cryptocurrency at a profit to file it in their tax reports.
- Many crypto holders are failing to do so. The IRS is using every means available to enforce compliance on US taxpayers who hold crypto. A significant reason for strict compliance is that the IRS considers crypto property for tax purposes. Once a US taxpayer sells his cryptocurrency, the US tax code requires they report their gains or losses on their income statement. The “property” gains or losses are additional or decreased income.
- No IRS code section exempts like-kind exchanges for cryptocurrencies. Like-kind payments allow tax deferment, and IRS section 1031 does not include crypto in like-kind exchanges. So, suppose a US taxpayer is trading Bitcoin for Ethereum. In that case, the transaction does not defer tax obligations on capital gains.
- Taxpayers who trade cryptocurrencies in the United States must report their gains or losses in their tax reports. This is necessary to avoid facing severe actions from the US Government or the IRS resulting in the seizure of crypto assets.
See Related: D.C. Attorney General Seeks To Collect $100M In Unpaid Taxes From Michael Saylor
