Virtual Currency

 

Did you transact in virtual currency this year?

Do you need to report it?

IRS has begun sending letters to virtual currency owners advising them to pay back taxes, file amended returns; part of agency's larger efforts

In 2014, the IRS issued Notice 2014-21, 2014-16 I.R.B. 938 explaining that virtual currency is treated as property for Federal income tax purposes and providing examples of how longstanding tax principles applicable to transactions involving property apply to virtual currency.  The frequently asked questions (“FAQs”) expanded upon the examples provided in Notice 2014-21 and apply those same longstanding tax principles to additional situations.

Note: Except as otherwise noted, these FAQs apply only to taxpayers who hold virtual currency as a capital asset.  For more information on the definition of a capital asset, examples of what is and is not a capital asset, and the tax treatment of property transactions generally, see Publication 544, Sales and Other Dispositions of Assets.

Please contact us for your specific Questions.