Digital Currencies like Bitcoin and Ethereum have risen in popularity in recent years. The Internal Revenue Service (IRS) first outlined guidelines for cryptocurrency in 2014 through Notice 2014-21. In 2019, they updated and clarified that guidance in Rev. Rul. 2019-24. 

Digital currency is taxed as property and is subject to capital gains taxes. Over time, the IRS has provided more specific examples of how to apply current laws to digital currency. Crypto exchanges were not required to issue Form 1099 B, which is essentially a brokerage statement. Taxpayers were responsible for tracking their gains, losses, purchases, and sales, and accountants had to analyze and transcribe those transactions in order to prepare their tax returns. 

As part of President Joe Biden’s Infrastructure Bill, all exchanges must provide Form 1099-B to investors, which means the IRS will also receive a copy. It is believed they are targeting digital investors who were not reporting their profits. 

Our firm has hundreds of digital currency & NFT investors. We aim to educate our clients investing in this space on what is taxable, help them plan for sales, and provide a tax plan that is flexible. If you need support in any of these areas or simply have questions about the space, please feel free to contact one of our qualified experts today.

Services provided: 

• Selling digital currency for cash 
• Exchanging digital assets 
• Purchasing with cryptocurrency
• Hard forking 
• Airdropping 
• FBAR filing 
• FATCA filing 
• Cryptocurrency mining