The US Internal revenue system published its new guidelines regarding crypto taxation in five years. The new guidelines address tax liabilities and cryptocurrency forks. According to IRS, new cryptocurrencies created from a fork of an existing blockchain should be treated as taxable income when received. It adds that airdrops must be taxed completely in the same year.
CTO of CasaHodl, Jameson Loop tweeted that new IRS’s guidelines are a hot mess. IRS Commissioner Chuck Rettig said that new guidelines would help taxpayers better understand how longstanding tax principles apply in this rapidly changing environment. He added that the IRS wants to help taxpayers understand the reporting requirements and ensure fair enforcement of tax laws for those who don’t follow the rules.
Today's IRS guidance is a hot mess.
1. What if you have keys but no software from which to spend the asset?
2. What if you never sell or transfer the asset and it drops 90% in value?
3. What's the value if the asset isn't even trading at the time of fork?https://t.co/jJ5SdXU72i pic.twitter.com/SpTOIOKqg0
— Jameson Lopp (@lopp) October 9, 2019
The documents state that “Under $ 61, all gains or undeniable accessions to wealth, clearly realized, over which taxpayer has complete dominion, are included in gross income.” Many from the crypto community responded that the guidelines are quite unclear. Investors are also required to keep records of their investments, and the profit and loss account for a given year.
In honor of the IRS fork guidance I’m announcing BBV — Bitcoin Bruce’s Vision.
It’s a Bitcoin fork that gives me an extra 1 million coins. I’ll sell one sat to you for $300.
Also: I’m sending a 12 word seed phrase poem to each member of Congress right before the fork.
— Bruce Fenton (@brucefenton) October 9, 2019
This was my read as well. IRS needs to fix this, clarify guidance. Doesn't make sense in current form. https://t.co/39N2eV2VKM
— Palley (@stephendpalley) October 9, 2019