IRS Releases First Cryptocurrency Tax Guidance Since 2014

IRS released guidance advising virtual currency holders how to pay taxes on investments.

The agency Oct. 9 released a ruling (Rev. Rul. 2019-24) and a question-and-answer document that tell cryptocurrency owners and their tax advisers when taxes are due, an area that has been a source of confusion for years.

• The guidance, the first in this area since 2014, addresses how to report gains and losses and what do if someone is paid in virtual currency, such as bitcoin, as wages
• The guidance also tells users how to treat hard forks, which occur when changes to software create two or more separate versions of a cryptocurrency—for example, bitcoin versus bitcoin cash.
• The new guidance comes after members of the bipartisan Congressional Blockchain Caucus urged IRS in an April letter to issue more rules on the tax consequences of cryptocurrency transactions and basic reporting requirements for use.
• “The IRS is aware that some taxpayers with virtual currency transactions may have failed to report income and pay the resulting tax or did not report their transactions properly,” the agency said in a statement.

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