What are the tax implications for cryptocurrency transactions that the IRS is seeking to understand?

1 answers

• Lhanz JalosFeb 25, 2021 · 5 years ago
  The IRS is seeking to understand the tax implications of cryptocurrency transactions because they want to ensure that individuals are accurately reporting their income and paying the appropriate taxes. Currently, the IRS treats cryptocurrency as property, which means that any gains or losses from cryptocurrency transactions are subject to capital gains tax. This means that if you sell your cryptocurrency for a profit, you will need to report that profit as taxable income. On the other hand, if you sell your cryptocurrency at a loss, you may be able to deduct that loss from your overall taxable income. It's important to keep detailed records of your cryptocurrency transactions, including the date of purchase, the amount spent, and the date of sale, as this information will be necessary when calculating your tax liability. Additionally, if you receive cryptocurrency as payment for goods or services, that income is also subject to taxation. It's always a good idea to consult with a tax professional who is knowledgeable about cryptocurrency to ensure that you are meeting your tax obligations.
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