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Responding to a Cryptocurrency IRS CP2000 Letter
Thousands of cryptocurrency traders have been receiving CP2000 letters from the IRS over the past few months. CP2000 notices have been in the tax compliance world for a while and are not specific to cryptocurrency. CP2000 notices are often generated when there is a matching issue between what is reported to the IRS by an exchange/broker and a taxpayer.In the cryptocurrency realm, TaxBit has mainly…
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January 13, 2020
TaxBit Hires Former Coinbase Compliance Director
TaxBit is happy to announce the recent hire of former Coinbase Compliance Director Jeff Cartwright. Cartwright was an early employee at Coinbase and helped lead general compliance, internal audits, and regulatory risks. After leading compliance matters at Coinbase, Cartwright worked at Facebook as a Policy and Compliance Manager on its cryptocurrency project, Calibra.Cartwright is an attorney and…
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January 08, 2020
TaxBit Raises Over $5 Million in Additional Funding to Automate Cryptocurrency Taxes
TaxBit, which offers cryptocurrency tax automation software for crypto users, exchanges, and merchants, announced today a $5 million seed round, with a stellar group of investors composed of Fintech leaders TTV Capital and Valar Ventures, crypto moguls Dragonfly Capital Partners, Collaborative Fund and Winklevoss Capital, and generalist investors Global Founders Capital, Table Management, Album…
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January 06, 2020
Proper Cryptocurrency Cost Basis Assignment Methods
On October 9th, 2019, the IRS released long awaited guidance on the taxation of cryptocurrency through Rev. Ruling 2019-24 and an associated FAQ. Specific to this article, the IRS issued additional guidance on proper cost basis assignment methods. This article will discuss: Why cost basis assignment methods matter; andAcceptable and the most optimal IRS cost basis assignment methods for lowering…
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December 13, 2019
Phantom Tax Consequences on Receipt of Digital Assets by Airdrop
On October 9th 2019, the IRS released long awaited guidance on the taxation of cryptocurrency through Rev. Ruling 2019-24 and an associated FAQ, including their guidance on treatment of airdrops. The IRS takes the controversial position that the airdrop equates for taxation purposes to a dividend. As a corollary, an involuntary (and perhaps unknowing) recipient of an airdropped token would have…
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December 09, 2019
IRS Releases New Tax Form Asking Taxpayers About Cryptocurrency Activity
The IRS just released a new Schedule 1 for the 2019 tax season asking every taxpayer about their cryptocurrency activity. Specifically, the form requires taxpayers to respond to the following question: “At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency.”Signalling increased enforcement, the IRS included this question…
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December 06, 2019
Understanding IRS 8949 Cryptocurrency Tax Form
In 2014, the IRS declared that cryptocurrency, such as Bitcoin, is treated as property for tax purposes. In 2019, the IRS released further guidance through Revenue Ruling 2019-24, which brought cryptocurrency in even further alignment with equities and other capital assets for tax purposes. Taxpayers are required to report their capital gains and losses on the same form (IRS Form 8949) as stocks…
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November 18, 2019
Huobi.com Shutting Down for U.S. Users
Cryptocurrency exchange Huobi.com announced that it is shutting down operations to U.S. users. United States Huobi users have until November 13, 2019 to move their assets off of Huobi.com Users should connect their API’s to their TaxBit account or export their transaction history so that they have records of taxable transactions, per IRS requirements.Exchanges shutting down can make it very…
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November 07, 2019
Poloniex Shutting Down for U.S. Users
Large cryptocurrency exchange Poloniex announced that it is shutting down operations to U.S. users. TaxBit is here to shed some insight and share how to prepare from a tax standpoint. U.S. Poloniex users have until December 15, 2019 to connect their API’s to their TaxBit account or to export their transaction history so that they have records of their taxable transactions.On February 26, 201…
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October 22, 2019
IRS Guidance On Cryptocurrency Mining Taxes
In the crypto tax space there is frequent mention relating to taxpayers’ responsibilities to calculate and report capital gains and losses on an IRS 8949 cryptocurrency tax form. What often gets overlooked is the tax implications and potential deductions for mining cryptocurrency such as bitcoin. Mining cryptocurrency has a unique problem of creating multiple tax implications that must be reported…
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October 21, 2019
IRS Issues New Guidance On Taxation of Cryptocurrency
After months of anticipation, the IRS has finally released its new cryptocurrency tax guidance through Rev. Rul. 2019-24 and an FAQ. Specifically, this new revenue ruling clarifies: 1) proper tax calculation methods; 2) the tax treatment of hard and soft forks; 3) proper sources for pricing data; 4) cost basis assignment on gifted crypto; and 5) taxpayers’ responsibilities.1) Proper Tax…
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October 10, 2019
How to Report Crypto Losses
The IRS says I need to report my cryptocurrency taxes…, but I had net taxable losses? TaxBit has frequently heard this sentiment from its users. Although losing money on your crypto trades is a major bummer, TaxBit can help you receive some relief in the form of an increased tax refund. With wild price swings and volatile coins, most crypto traders lived through the unfortunate reality of losing…
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October 09, 2019