Uncle Sam is sending out warning letters to known bitcoin or other cryptocurrency holders to remind them about the responsibility to report and pay tax on any profits generated from their positions. The letters should be sent out within the next week.
Want to keep your bitcoin tax calculation simple? We recommend using BitcoinTaxes to help you keep track of your Bitcoin and cryptocurrency tax liabilities.
Despite the “anonymity” of cryptocurrency, the IRS was able to get hold of this list of holders likely from the subpoena they sent to Coinbase. The list Coinbase gave the IRS were likely people that had purchased at least $20,000 in cryptocurrency between 2013 and 2015. So perhaps if you purchased from other exchanges or after 2015, you MAY not receive this letter.
Uncle Sam should be more interested in reaching early adopters since they would be subject more profits. The price of Bitcoin was around $20 in early 2013 and reached about $260 in early 2015.
IRS had clarified that they consider bitcoin and other cryptocurrencies as properties, so any proceeds from crypto trades and sales are subject to capital gains (much like a sale of your house or stocks).
If you are a hodler and have never sold any of your bitcoins, you likely will not be subject to any taxes. We are not tax experts and you should consult a tax professional to confirm.
Check out clip from CNBC below, we’re also including the transcript in case you can’t see the video. All rights belong to CNBC and please refer all credits to CNBC.
the IRS announcing plans to go after some Cryptocurrency.
investors for back taxes. Robert Frank joins us now with more details, I guess Summer. Did you get a long term gains? No, no, I think, because the IRS sending letters to as many as ten thousand Bitcoin holders over the coming weeks warning them of potential tax liabilities Now the letters,
which the IRS calls,
educational, says the agency has information that you have one arm or accounts containing virtual currency and that failure to pay the proper taxes could result in civil and criminal enforcement activity. Now the IRS won’t say how it received the names of the Bitcoin holders, but last year, coin based that’s the currency exchange.
They notified about thirteen thousand customers. It was releasing information to the IRS after a court order. Now, the IRS last year launched what it calls a virtual currency compliance campaign to deal with non payment of taxes. The agency saying that virtual currency is an ongoing focus for I. R s criminal investigation. The IRS did publish rules on Krypton back in twenty fourteen, saying the crypto is not a currency, but it is a property and therefore subject to capital gains tax, but Crypto Holder same agency has failed. Release specific guidance for taxpayers. IRS Chief Charles Reddick saying recently the rules would come in June. But now it’s saying they’re expected on Lee in the near future. So there’s a lot of questions by Bitcoin holders.
about how you.
value the cost basis. If you mind a coin,
how you deal with if you take the coin and,
trade it for another coin that by good, how do?
you value it? So a lot of.
questions. They’re arrest saying you owe the taxes, but we’re not going to tell exactly for what?