Advisory Committee internal revenue Service United States (IRS) believes that the Agency should provide clearer guidance as to how to tax crypto-currency transactions.
In a new report, published on October 24, the Advisory Committee on program information reporting (IRPAC) underlined the growing popularity of cryptocurrencies, noting that “also increased the number of questions regarding the applicable tax consequences.”
In 2014, the IRS released a notice stating that from the tax point of view, cryptocurrencies are considered as a form of ownership.
However, the report noted that “many industry and tax practitioners still have questions about the additional tax consequences of cryptocurrency transactions”:
Can cryptocurrencies be treated as specifically specified foreign financial asset? How to determine the basis for calculating tax for selling cryptocurrency? Should there be brokerage statements for cryptocurrency transactions? Therefore, IRPAC recommends that the IRS has provided additional guidance on the tax consequences of cryptocurrency transactions.
The report further explains that, according to Fundstrat Global Advisors, at the moment of potential tax liabilities for cryptocurrency in the United States may be about $25 billion. However, these data account for $92 billion of taxable profits American captainvalor.
The document also States that, according to Fundstrat, up to 50% “cryptocurrency” tax liabilities may remain unregistered:
Regardless of the accuracy of such estimates, they clearly emphasize the need for more information about the operations of these protocols to ensure effective collection of taxes which may be applicable to them.
The document’s authors acknowledge that some investors may use stock exchange located outside the United States, or to invest in an anonymous cryptocurrency that allows you to avoid paying taxes. The report encourages cooperation with foreign governments, as well as to adhere to existing guidelines, including rules for the representation of information reporting.
Finally, it is noted that there remain “important issues” that require analysis and appropriate consultation for the definition of “transaction”:
Taxpayers will be able to inform [the IRS] reliable information if they correctly identify the impacts associated with cryptocurrencies.