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Recently the IRS issued its first Cryptocurrency Tax Guidance in 5 years. The crypto community has been hoping that this would help clarify taxes around things like hard forks and airdrops, but it seems that confusion persists:
The IRS document reads:
“If your cryptocurrency went through a hard fork, but you did not receive any new cryptocurrency, whether through an airdrop (a distribution of cryptocurrency to multiple taxpayers’ distributed ledger addresses) or some other kind of transfer, you don’t have taxable income.” Their language here suggests some confusion about the nature of airdrops and hard forks. Jerry Brito of Coin Center told CoinDesk last week:
“One unfortunate consequence of this guidance is that third parties can now create tax reporting obligations for you by simply forking a network whose coins you own, or foisting on you an unwanted airdrop.” Crypto Lawyer Sasha Hodder joins me to talk about the guidance issued: none of this is tax advice btw! We cover things like the IRS' allowance for "first in, first out", which means that you can either identify specific units sold, or use a first in, first out method depending on which is more suitable for your situation. We will also talk about IRS specifically saying it would not create an exemption for transactions below a certain threshold, making day-to-day purchases in crypto difficult. Call to action:
Here are the 2 bills that Caitlin Long says viewers should send to their state representatives & senators to ask them to enact: (1) utility tokens aren't securities https://www.wyoleg.gov/Legislation/2018/HB0070
(2) direct property rights in digital assets https://wyoleg.gov/Legislation/2019/sf0125
https://twitter.com/CaitlinLong_/status/1096821184652443648 IRS guidance:
Virtual currencies:
https://www.irs.gov/businesses/small-businesses-self-employed/virtual-currencies
Notice 2014-21:
https://www.irs.gov/irb/2014-16_IRB#NOT-2014-21
IRS FAQ:
https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions Marco Santori's helpful twitter thread:
https://twitter.com/msantoriESQ/status/1181975909567475713 Matt Corva's great twitter points:
https://twitter.com/MattCorva/status/1181984597288116225 Recommended Books: Permanent Record – Edward Snowden
https://amzn.to/305negc What has the government done to our money – Rothbard https://amzn.to/2KMzmcu Naomi's Privacy Bag: some of my favorite products to help protect your privacy! Use the Brave browser! https://brave.com/nao076 USB-C to ethernet adapter:
https://amzn.to/2lOVBoy Lightening to ethernet adapter:
https://amzn.to/2nWyNns Faraday bag wallet (signal stopping, to protect your fob, credit card, and phone)
https://amzn.to/2SUkPhu Data Blocker (if you're charging your phone in an unknown port, use this so that no data is transferred)
https://amzn.to/2SVh0J2 Computer privacy screen (use your computer in public? Keep your information safe!)
https://amzn.to/2SXYHmf Phone privacy screen (don't let people in public see your private data)
https://amzn.to/2YyJMnH Camera cover (for computers and phones, so no one can access your camera without you knowing)
https://amzn.to/2Mt7Hic Privacy Tip: Don't use wifi, and if you must, append the tag ‘_nomap’ or ‘_optout’ to your SSID to stop other websites tracking your location. My Amazon Wish List
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Crypto Taxes: the new IRS “guidance”