New IRS Crypto Tax Guidelines Only Add More Problems for Bitcoin Taxpayers, ‘Don’t Make Sense In Current Form’

New IRS Crypto Tax Guidelines Only Add More Problems for Bitcoin Taxpayers, ‘Don’t Make Sense In Current Form’

 

The Internal Revenue Service (IRS) has published a new statement intended to clear up the issue of taxing cryptocurrencies — specifically regarding airdrops and hard forks. However, what the tax authorities shared only leads to more questions and confusion.

According to a new document from the IRS , the independent agency seems to understand that cryptocurrencies are decentralized digital assets and how the underlying blockchain technology works, claiming that they are independent networks that can “record, share, and synchronize transactions, the details of which are recorded in multiple places at the same time with no central data store or administration functionality.”

However, any knowledge past that is strained at best, despite their desire to regulate such an industry. Gross Income Confusion

Essentially, the IRS proposes two issues regarding gross income and cryptocurrencies: (1) Does a taxpayer have gross income under § 61 of the Internal Revenue Code (Code) as a result of a hard fork of a cryptocurrency the taxpayer owns if the taxpayer does not receive units of a new cryptocurrency?
(2) Does a taxpayer have gross income under § 61 as a result of an airdrop of a new cryptocurrency following a hard fork if the taxpayer receives units of new cryptocurrency? The first is asking if, say, one trader holds the fictional asset CryptoCoin. If CryptoCoin were to hard fork, and the trader doesn’t receive any airdropped assets from that fork, did they experience any gross income? Well, considering they didn’t gather any assets, one could assume that […]