This article does not contain tax advice, investment advice or recommendations. Every investment and trading move involves risk, you should conduct your own research when making a decision.
The American Institute of Certified Public Accountants, which is the world’s largest association of accounting professionals, recently asked the IRS to issue updated guidance regarding the tax treatment of cryptocurrency transactions. The last guidance was released during March 2014.
The lack of guidance around the taxation of cryptocurrencies pose uncertainties to the taxation of cryptocurrency transactions and investments. Additional guidance is largely overdue. A lack of information from the government leaves many cryptocurrency investors in the dark on tax matters. This is something seen firsthand at Camuso CPA, especially during last tax season during the alt-coin boom.
The AICPA’s submission to the IRS includes questions related to items such as valuation for charitable contribution purposes, holding virtual currency in a retirement account, foreign reporting requirements, acceptable valuation and documentation, among other items which have yet to be outlined by the IRS in their last release.
Today there’s a virtual currency team within the IRS. The agency also hired a cryptocurrency software company called Chainalysis to track and trace the movement of the bitcoin. The IRS has not yet responded to the latest AICPA inquiry.
Since there still is significant uncertainty around United States regulations, many financial institutions and investors have been cautious about moving into this new exciting market. We are eagerly awaiting further guidance from the IRS along with investors nationwide.
Patrick Camuso, CPA is founder and owner of Camuso CPA, a Charlotte, NC based CPA firm consulting to cryptocurrency investors, miners and business nationwide.