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Guidance For Cryptocurrency Tax Compliance

The Internal Revenue Service (IRS) put cryptocurrency investors on notice that their holdings are subject to taxation. But the IRS has also been lagging and contradictory with details, causing confusion about which transactions must be reported and how capital gains on crypto assets will be taxed.

Goldburd McCone LLP provides sophisticated tax counsel to individuals and businesses in all facets of cryptocurrency, including representation for IRS audits, litigation and criminal tax charges. We serve clients nationwide and internationally, with offices in New York, New Jersey, Florida and California.

The IRS Is Coming For Crypto

Bitcoin, Ethereum and other digital currencies have exploded in the past decade, with a market cap in the trillions. Convinced that millions of taxpayers were underreporting their taxable gains, the IRS procured a landmark court ruling (United States v. Coinbase) to begin clawing back those unpaid revenues. The “John Doe summons” gives the government broad powers to identify cryptocurrency owners and evidence of undisclosed transactions.

For anyone trading in crypto, it’s only a matter of when the IRS catches up and what the bill will be. That is where the veteran tax attorneys of Goldburd McCone LLP can help:

Comprehensive Services In Cryptocurrency Tax Law

At Goldburd McCone LLP, our attorneys can knowledgeably address all matters involving digital currency, such as:

  • Responding to a John Doe summons or audit
  • Voluntarily disclosing crypto transactions and capital gains (or losses)
  • Filing amended returns to reflect past cryptocurrency gains
  • Reporting income from cryptocurrency mining or converting your mining hobby into a business for tax advantages
  • Determining the applicable tax rate on capital gains when selling off crypto
  • Gauging capital gains on exchanges of crypto for real property or other tangible assets
  • Determining sales tax or capital gains on non-fungible token (NFT) transactions
  • Reviewing tax implications for businesses conducting transactions with virtual currency or paying wages with virtual currency
  • Representing taxpayers in any voluntary disclosure programs for cryptocurrency
  • Assisting in compliance, formation of structure and determination of tax regime for nonfungible tokens (NFTs).
  • Helping with corporate compliance, formation, agreements and tax compliance for decentralized autonomous organizations (DAOs).

Take Action Today To Avoid IRS Trouble

Your transactions on virtual platforms are not as anonymous as was once thought. The IRS has signaled that it will not offer tax amnesty for those who willfully avoid reporting cryptocurrency gains, as it did for repatriating offshore assets under the Foreign Account Tax Compliance Act (FATCA). That could change, but as it stands, failing to list cryptocurrency transactions on Form 1040 is considered fraud, subject to criminal prosecution, fines of up to $250,000 and other fallout.

The IRS has given conflicting guidance on what must be reported, creating a catch-22 for taxpayers who are reluctant to divulge crypto acquisitions where capital gains are not yet realized. Our tax lawyers can advise on voluntary disclosure and new or amended returns as well as proactive recordkeeping that will help protect you if the IRS does come knocking.

Find Out Where You Stand And How Our Tax Acumen Can Help

Whether you were an early adopter of Bitcoin or you have recently entered the digital currency game, the market and the regulation are constantly evolving. Goldburd McCone LLP offers cutting-edge counsel and representation to protect your interests.

To arrange a consultation, call our main office at 212-235-1817 or any of our office locations, or reach out online.