For the second time in the last month, the IRS has alluded to forthcoming guidance related to cryptocurrency and digital asset transactions. IRS Commissioner Charles Rettig said in late May that clarification on crypto tax regulations might arrive by the end of June and gave further hints as to what might be included in the guidance.
Rettig made his comment on May 30 at the Federal Bar Association Insurance Seminar Event in Washington, saying guidance would come “within the next 30 days,” or possibly sooner. Rettig also specified that the coming communication from the IRS would take the form of a revenue ruling, an official interpretation by the IRS, as well as a revenue procedure, which should provide filing and other instructions concerning crypto taxation.
Guidance on taxable and nontaxable crypto transactions
“I think it’s going to be helpful for people who might be guessing at ways that digital assets might be nontaxable,” Rettig added, suggesting that guidance could include details about crypto transactions that taxpayers might currently be treating as nontaxable but that the IRS views as taxable.
In a previous response to members of Congress, Rettig also suggested that clarification would include at least three other elements: “(1) acceptable methods for calculating cost basis; (2) acceptable methods of cost basis assignment; and (3) tax treatment of forks.”
Crypto tax information reporting confusion
With the last Notice on virtual currency transactions from the IRS dating to 2014, confusion remains regarding how crypto exchange platforms and other intermediaries should report transactions to both investors and the IRS alike. At the same time, the IRS is trying to contend with a staggering tax gap in an environment in which many investors are reticent to report crypto transactions on their tax returns.
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