IRS Finally Issues Cryptocurrency Updates

By: Eric P. Rothenberg, Esq. – [Published Article] For the first time since the IRS issued guidance in 2014 [See IRS Notice 14-21], the IRS has twice spoken on the subject of cryptocurrency despite Congress practically begging for guidance in September 2018 [See letter to the IRS dated September 19, 2018 from the House Ways and Means Committee]. And while the IRS did answer some questions, there are still far too many left out. On October 10, 2019 the IRS released IR-2019-167 which they thought was “additional guidance”. It’s only a one-page release but it does reference new frequently asked questions [FAQ’s]. The FAQ’s on cryptocurrency comprise 43 questions. Nearly all of those FAQ’s are no news at all and merely state the obvious once the IRS declared in 2014 that cryptocurrency was considered by them to be “property” and not currency nor a security [See IRS Notice 14-21]. The

Read More »

Accounting Methods for Cryptocurrency Trades & Sales

By Eric P. Rothenberg, Esq. – (Published Article)   The world of cryptocurrency transactions was changed dramatically at the end of 2017 when the Internal Revenue Code [“IRC”] was modified to remove all types of assets eligible for Tax Free Exchanges under IRC Section 1031 [also known as “1031 Transactions] EXCEPT for real estate. Prior to 2018, you could exchange farm animals, rail cars and office equipment, etc. After 2017, only real estate will qualify. In my previous articles on cryptocurrency tax aspects, I discussed that the IRS has treated, since 2014, all cryptocurrency as “property” and not as either currency or security. The SEC, however, does treat it as a security, and FinCEN, the short name of the Financial Crimes Enforcement Network, a department within the US Treasury, treats it as currency. With three differing views of the same intangible object, confusion abounds. PRIOR LAW Prior to 2018, you

Read More »

Cryptocurrency [Bitcoin] and the IRS

By Eric P. Rothenberg, Esq. – [Download PDF Article] The creation and use of cryptocurrency is very recent. Back in 2010, it just began trading. In 2011, it hit its first “bubble” at $31 per coin when previously they traded for just pennies. Most people by now have already heard it hit nearly $18,000 in December 2017. That’s quite a leap in just 7 years. If you wish to learn all about cryptocurrency and the blockchain technology behind it, which may become an important tool for many businesses in the future, go to the Wikipedia’s History of Bitcoin. This article is not about what bitcoins are, but is about what you need to know about their income tax and reporting aspects. And this article is a very over-simplified view to point out the issues and give you some guidance as a start. For many years, no one even knew what

Read More »