Trading cryptocurrency and having a virtual asset has become more and more common these days. But since announcing the first tax guidance for cryptocurrency in 2014, the U.S. IRS has only updated the guidance now.
The Internal Revenue Service has launched additional guidance on tax treatment. The additional guidance contains answers to the previously many asked questions. Including the tax liabilities created by cryptocurrency forks; the acceptable methods for valuing cryptocurrency received as income; and how to calculate taxable gains when selling cryptocurrencies.
One of the biggest question left by the 2014 guidance is forks. Therefore, the new guidance focuses mainly on forks.
According to it, tax liabilities will apply for new cryptocurrency formed by forks of existing blockchain. Citing from the document:
“If your cryptocurrency went through a hard fork, but you did not receive any new cryptocurrency, whether through an airdrop (a distribution of cryptocurrency to multiple taxpayers’ distributed ledger addresses) or some other kind of transfer, you don’t have taxable income.”
Apart form it, IRS finally also give details on how to count the cost basis of cryptocurrency and virtual asset. According to the guidance, cost basis can be calculated by summing up “fees, commissions and other acquisition costs in U.S. dollars” when acquiring a cryptocurrency.
Now, the IRS will ask if you own any cryptocurrency in your tax form
Following the new cryptocurrency tax guidance, the IRS will ask individual taxpayers about cryptocurrencies. In the new Form 1040 draft launched by IRS on Friday, it includes the question:
“At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”
The form is the most widely used tax form in the U.S. And the IRS is still waiting for the feedback from its software partners before finalizing the form.
The U.S. is not the only one launching a cryptocurrency related guidance. Previvously, Hong Kong SFC launched the first cryptocurrency guidance in its country.
On the other hand, U.S. SEC has just halts Telegram token issuance, accusing it as “unlawful“.
