The first round of US tax season has come
and gone, and for some there is still a lot of ambiguity related to
cryptocurrencies. This week, congress sent a strongly worded letter to the
Internal Revenue Service stating that there was an urgent need to describe the
current and future policy. The legislators, led Tom Emmer from Minnesota, are
calling for the IRS to update the guidance it published in 2014. There remains
ambiguity on a number of important questions about the federal taxation of cryptocurrencies.
Emmer and his colleagues say there’s need for additional guidance.
How Do You Handle Capital Gains
The number one question is how to handle capital
gains on cryptocurrencies. Many view cryptocurrencies as currencies and not
alternative currencies. If you live in the US and the value of the dollar
rises, you don’t pay a capital gain every time you purchase an item with
dollars. The guidance from the IRS states that you need to treat
cryptocurrencies like property. You do not pay an unrealized capital gain if