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09 October 2019

BREAKING TAX NEWS | IRS answers questions on tax treatment of cryptocurrency

The IRS has issued guidance on the tax treatment of cryptocurrency transactions. In frequently asked questions, the IRS expands on its 2014 cryptocurrency guidance (Notice 2014-21) by providing more examples of (i) when taxpayers recognize gain or loss on an exchange of cryptocurrency, (ii) how to calculate basis in cryptocurrency, and (iii) when taxpayers recognize income on other cryptocurrency-related transactions. In Revenue Ruling 2019-24, the IRS rules that a "hard fork" (e.g., when one cryptocurrency becomes two) will not cause taxpayers to recognize income under IRC Section 61. Taxpayers will recognize income, however, if they receive new units of cryptocurrency (i.e., an "airdrop") following the hard fork.

A Tax Alert on this guidance is forthcoming.

Document ID: 2019-9021

 

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