Virtual Currency Taxation

Taxation of crypto currency

There has historically been quite a bit of confusion on how virtual currencies would be taxed. Some believe that they qualify for like-kind treatment, some believe that all must be reported as capital gains, and some are just confused as to what to do with their 1099-K form from coinbase.

We can first say that much of the information you will find on forums, non-CPA blog posts, and twitter is either slightly incorrect or completely incorrect. This has lead many to mis-report their cryptocurrency transactions.

Some important points are:

• You may possibly qualify for the qualified trader election
• You may be able to net gains/losses from your crypto toward other items on your return, such as ordinary income, other equity transactions, etc.
• Income from mining, NFT minting, DeFi, employment, etc. that is paid in crypto is reported differently than income from trading
• If you exchange one coin for another, yes, that is a reportable transaction. However, do not be overwhelmed with the thought of reconciling records of many trades across many exchanges – we have a simple process to aggregate this information.
• Crypto to crypto generally does not qualify for “like kind exchange” 

Contact us below to either complete or amend your crypto returns.