As Bitcoin has risen more than 120 percent since the beginning of 2019, the US Internal Revenue Service (IRS) is announcing that it is preparing an updated set of cryptocurrency taxation policy.
IRS policies for creating additional crypto taxes.
In a letter to a bipartisan group of US Congressmen, IRS Commissioner Charles Rettig said clear Bitcoin tax guidelines would be a top priority for the Agency. The letter was a response to a letter from the 21
An excerpt from Commissioner Rettig's response reads as follows:
I share your conviction that taxpayers deserve to be clear about basic issues surrounding the taxation of virtual currency transactions and have made it a priority for the IRS to issue guidance , In particular, your letter mentions (1) acceptable methods for calculating the cost base. (2) acceptable cost base allocation methods; and (3) tax treatment of forks. We have thought about these issues and intend to publish guidelines on these and other issues in the near future.
The timing of the IRS Statement is authoritative for Bitcoin, having more than doubled since January 2019.
How timely … BTC Spikes and the IRS Commissioner decide to comment;)
– Crypto Tax Girl (@CryptoTaxGirl) May 21, 2019
As previously reported by Bitcoinist repeatedly demanded that Bitcoin taxation be more definitively structured in the USA Several institutes and interest groups have rejected the ambiguity of the IRS framework for the crypto tax, which is currently being developed in 2014.
Both the American Institute of CPA and the Treasury Department have previously asked the IRS to provide clear guidelines for the Bitcoin tax process. Many critics of the current framework say that taxpayers are overburdened with taking preventive measures to avoid getting into the difficulties of cryptocurrency tax evasion fees.
Bitcoin is Both Currency and Property
Already 2014 The IRS decided not to recognize Bitcoin and other cryptographies as currencies and to mark them as property. Therefore, their exchange falls under the capital gains tax.
Fast forward to 2018 and according to the IRS, cryptos is a digital representation of the value that is similar to the traditional Fiat currency. This statement opens the door to income tax considerations for transactions in virtual currencies.
The purchase of crypto is not a taxable event.
The sale of Krypto for Fiat (eg USD) is a taxable event.
Trading a coin for another event is taxable.
The use of crypto to buy goods or services is taxable.
– Crypto Tax Girl (@CryptoTaxGirl) July 11, 2018
Then there are also the effects of using Bitcoin and other cryptocurrencies to make purchases. Already in March 2019, Bitcoinist reported that the proposed Bitcoin for Starbucks coffee could provide additional BTC tax relief under the Bakkt-Starbucks agreement.
I trade the "magical Internet money" for infrastructure It does not belong to a sovereign state, it is an unproductive asset that depends on state goods to avoid state theft or taxes.
The payment of capital gains tax for such activity is such a joke. LMFAO
Dovey Wan 🗝 🗝 (@ DoveyWan) May 20, 2019
However, there are industry players who believe that crypto currency should not fall under state tax. Dovey Wan of Primitive said on tweets Monday that the payment of capital gains tax on cryptocurrency transactions was "a joke".
Do you consider taxes on cryptocurrencies lawful? Let us know in the comments below.