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IRS Issues New & Expanded Cryptocurrency Guidelines

Surely the Government Will Make the Issue Less Complicated

2019-10-10 15:23:44 | Jonathan Ganor

 

U.S. regulations on the topic of cryptocurrency has mostly been murky at best. While Bitcoin and cryptocurrencies are legal in the USA, unclear regulations makes it very rough and confusing at times.

The Securities and Exchange Commission (SEC) considers most cryptocurrencies to be securities. The Financial Crimes Enforcement Network (FinCEN) doesn't consider cryptocurrencies to be a form of legal tender (i.e. money) but considers exchanges as money transmitters. The Commodities Futures Trading Commission (CFTC) considers Bitcoin a commodity. Last but not least, the Internal Revenue Service (IRS) sees cryptocurrency as a form of taxable commodity, akin to real estate.

Recently the IRS has released an expanded guideline on Bitcoin & cryptocurrencies. This is the first they've done so in 5 years.

 

The IRS, Bitcoin, & Cryptocurrency Taxation

The IRS published its first guidelines in 2014, when Bitcoin started becoming more well-known in the world. Earlier today, the IRS published new and expanded guidelines on cryptocurrency taxation.  

While most of the guidelines are pretty straight forward, some have raised eyebrows.

For the majority of the guidelines, the IRS emphasizes the necessity of paying taxes on cryptocurrency profits. It also outlines on which scenario taxes are due.

What truly shocked many is Q&A 22-24.


Apparently, taxes are owed on hard forks which includes an airdrop. Seeing that there have been more Bitcoin forks that can be counted and even more flops, this ruling is a strange one. In addition to that, even relatively successful forks such as Bitcoin Cash or Ethereum Classic, have devaluated in comparison to their price on release.

It seems that the IRS needs an expert who truly understands Bitcoin & cryptocurrencies.

 

The Cryptocurrency Community Reacts

As expected, many well known figures in the cryptocurrency community have voiced their distaste of the recent guidelines.


While many have raised a fair point or two, it is doubtful that the IRS will make any changes anytime soon. One should keep in mind that it took the IRS 5 years to expand their guidelines.

 

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