US crypto traders liable to capital gain taxes says IRS
Washington tax authorities are treating crypto-currencies as properties and not money and this means US investors are starting to receive some unexpected and large tax demands
Money laundering. Tick. Ponzi frauds and market manipulation. Tick. Terrorist financing and drug dealing. Tick. Tax evasion? Yes, that too can now get a tick on the checklist of supposed crypto crimes.
As US tax authorities are considering crypto-currencies as properties and not money, any US crypto-related purchases are liable to capital gain taxes, reports The Guardian. As investors are finding out, the taxable amount is based on the value of the crypto when the purchase was made, not the value when the tax bill was issued. With the markets sliding like they have in the last few months, that can lead to a significant difference.
As one investor so eloquently wrote last week on Reddit,
“I just discovered that I owe the IRS $50k that I don’t have, because I traded in cryptos. Am I fuxxed?”
Late last year, a US district court judge ordered crypto exchange Coinbase to release the identities of anyone who had traded more that $20,000 worth of crypto-currency. The order came when the Internal Revenue Service asked to examine 480,000 trading accounts after the US tax authority said only about 800 taxpayers claimed Bitcoin gains between 2013 and 2015.
Not reporting gains, even on crypto-to-crypto trades, could be considered tax evasion say the IRS.
An old fashioned crime for a new industry.