Call for a Consultation (602) 200-7399

Blog

The Tax Man Cometh (a.k.a. IRS and Crypto Collection)

Posted by Brandon Keim | Dec 17, 2021 | 0 Comments

While there are still a lot of questions about the new Infrastructure law's tax requirements for cryptocurrency and investing, the buzz over the requirements brings up another question that has been bubbling around: How does the Internal Revenue Service (IRS) collect payments on virtual assets, like Bitcoin?

The short answer is that it's really not that much different than how the IRS would collect any tax due on any other asset.

The IRS thinks of cryptocurrency (like Bitcoin or any other) as just another kind of property you might own—such as a stock or home or car. Therefore, you need to disclose a gain or loss due to crypto in an IRS tax return, and, as of 2020, the IRS specifically asks about crypto holdings. (Although “If your only transactions involving virtual currency during 2020 were purchases of virtual currency with real currency, you are not required to answer yes to the Form 1040 question,” explains the IRS.)

At the same time, the IRS is also notified by others that you've made related crypto transactions through filings of 1099-Ks, which must disclose transactions above $20,000, and now, with the new law's 1099-Bs.

And once you've disclosed gains and losses, just like in any other case, you are expected to pay for the taxes due. And keep in mind that the new laws are intended to tighten up compliance and enforcement: Cryptocurrency-related taxes are expected to add $2.8 billion to federal coffers each year.

On the other hand, the IRS still won't take cryptocurrency as a payment method for those due taxes….

HAVING EXPERIENCED TAX COUNSEL MATTERS

Whether you have just bought your first cryptocoin or you've made a fortune in mining for Ethereum, crypto is a new world of currency, and that will raise a host of new questions about tax compliance. That's why it is important to start talking to qualified tax counsel—to understand your potential liability and get answers to all those other questions. If you need help, call Senior Partner, Tax Controversy Attorney, and former IRS attorney Brandon A. Keim at (602) 200-7399 or contact him online to discuss your options.

About the Author

Brandon Keim

A Certified Tax Law Specialist, CPA, partner at Frazer Ryan Goldberg & Arnold LLP, and former Senior IRS Trial Attorney, Brandon Keim holds an LL.M. in Taxation from Georgetown University Law Center.

Comments

There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment

Sample

logo2.png

Aenean lacinia bibendum nulla sed consectetur. Donec sed odio dui. Maecenas sed diam eget risus varius blandit sit amet non magna. Nulla vitae elit libero, a pharetra augue. Curabitur blandit tempus porttitor. Morbi leo risus, porta ac consectetur ac, vestibulum at eros. Cras justo odio, dapibus ac facilisis in, egestas.

The act of visiting or communicating with Brandon A. Keim via this website or by email does not constitute an attorney-client relationship. Communications from non-clients via this website are not subject to client confidentiality or attorney-client privilege. Further, the articles, discussion, commentary, forms and sample documentation contained in this website are offered as general guidance only and are not to be relied upon as specific legal advice. For legal advice on a specific matter, please consult with an attorney who is knowledgeable and experienced in that area. Attorneys listed in this website practice only in the jurisdictions in which they are admitted. This website is governed by the Arizona Rules of Professional Conduct.

Menu