Internal Revenue Service (IRS) announced new guidelines for the taxpayers and investors in cryptocurrency like Bitcoin.
Charles Rettig, the commissioner at IRS, said that the agency was working day and night for the new guidance. In 2014, the guidance by the agency had left some questions unanswered, and the market of crypto has become complicated year by year. The tax guidance is essential because cryptocurrency use among new generation and current guidelines will help these generations to invest their money correctly.
The cryptocurrencies from the existing blockchain should be treated as an ordinary income. It is same as the market value of new cryptocurrency. It means that whenever new cryptocurrencies are recorded on the blockchain, the tax liabilities will apply to it.
In the past five years, IRS didn’t issue any guidance, but in recent months, it started focusing on cryptocurrency. IRS warned 10,000 cryptocurrency holders and imposed penalties for paying taxes in virtual currencies.
Many accountants like Jason Tyra are focusing on cryptocurrency cases. According to him, people are looking for tax help on their investments in digital currency. He thinks that clients are very much worried about this matter, but people like him are still advising them properly. Now, the IRS is enforcing rules for the cryptocurrency.
The new IRS guidance document provides a way to help the taxpayers in determining the cost, the fair value of coins in the market, sale of goods and services, etc. The price can be determined by adding all the money to attain the crypto, which includes fees, commission, and other costs in US dollars.
In 2014, the original IRS guidance issued taxes for purchasing goods and services. The virtual currency was treated more like property than the money for paying the fee. But, now many things have changed in the new IRS guidance document.
