If cryptocurrency gains acceptance as a means of exchange, it’s sure to raise the ire of governments hungry for revenue from sales taxes.
Active crypto traders can qualify for trader tax status (TTS) to deduct business and home-office expenses. And there might be an additional benefit.
For cryptocurrency traders, the ability to use like-kind exchange rules to avoid U.S. tax on trades is a bit of a “good news/bad news” story.
Calculating tax exposure is always a data-heavy business process. With regular assets, this process is simple. In cryptocurrency, it's anything but.
There's a lot of information to process, but ignoring it can be hazardous. The IRS is going to come after investors who are not reporting their gains.
The tax treatment of hard forks in the U.S. is uncertain and the IRS should issue guidance addressing such issues, says a legal expert.
The IRS' 2014 tax guidance may encourage cryptocurrency users to use unregulated foreign exchanges and use privacy coins like monero or zcash.