Internal Revenue Service is All Set to Release Crypto Tax Guidelines
The Internal Revenue Service recently announced that it would be fixing the new guidelines for tax on crypto. Because the IRS identifies crypto as property and not currency, it is because it is taxable to purchase and sell crypto.
Consequently, tax rules which apply for property transactions, such as the sale of collectable coins or vintage vehicles, but not real estate tax rules, are also applicable to Bitcoins and other cryptocurrencies. The fair market value of transactions measured in US dollars must be reported. So if you bought a Bitcoin pizza, you would have the Bitcoin available in dollars equivalent to pizza costs (fair market value).
IRS Commissioner Charles Rettig said in his new address to Emmer that the agency “had it as a priority” to issue the appropriate guidance. The directive specifically addresses issues like acceptable methods for cost basis calculation, cost-based allocation, and fork tax treatment.
Transactions shall be reported in US dollars at their fair market value.
Recent Twitter survey shows that the vast majority of crypto investors refuse to report taxes and are prepared to risk tough sanctions if they find out the unreported earnings from the Internal Revenue Service.
Investing Crypto is already risky because it is an emerging market and technology which is not fully utilized at the moment, but it is absolutely flammable to avoid paying taxes. Exchanges work with IRS actively to provide customer information that can be used to compare reported profits or losses. Those who do not report correctly are at or worse risk of being audited.