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Virtual Currency › Cryptocurrency › Tax Liability

Virtual Currency (aka Digital Currency or Digital Money) is a type of currency or medium of exchange that is not issued by any government nor guaranteed by a government currency. Despite lacking legal tender... more +
Virtual Currency (aka Digital Currency or Digital Money) is a type of currency or medium of exchange that is not issued by any government nor guaranteed by a government currency. Despite lacking legal tender status, Virtual Currency is still traded and exchanged in some environments, typically online environments or communities. Bitcoin is the most well-known form of Virtual Currency.    less -
Cadwalader, Wickersham & Taft LLP

First Stand-Alone Crypto Tax Fraud Case Leads to Guilty Plea

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On September 12, 2024, the U.S. Department of Justice (“DOJ”) announced that Frank Richard Ahlgren III pleaded guilty to filing a false tax return underreporting gains from selling $3.7 million in Bitcoin. As we discussed...more

Freeman Law

IRS Issues First Draft of Cryptocurrency Reporting Form

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The IRS appears to be on the verge of changing the way digital asset (i.e., cryptocurrency) transactions are reported for federal tax purposes. On April 19, 2024, the IRS issued its first draft of Form 1099-DA, the intended...more

Cadwalader, Wickersham & Taft LLP

Crypto: Give Unto Caesar What Is Caesar’s

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Earlier this year the U.S. Department of Justice (“DOJ”) brought USA v. Ahlgren, its first crypto case with tax evasion allegations unrelated to another crime, demonstrating the DOJ’s willingness to pursue stand-alone crypto...more

McGlinchey Stafford

Legislation: Cryptocurrency Staking Rewards Taxed at Time of Sale

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Proposed federal legislation would move the time of taxation for rewards received from staking cryptocurrency and other digital assets to the time of sale. IRS guidance currently provides that staking rewards are taxed at the...more

Morgan Lewis

New IRS Guidance Provides a Spot of Certainty Amid Digital Asset Limbo

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Per recent transitional guidance, the IRS will not require taxpayers to report transactions involving receipt of digital assets under Section 6050I....more

Cadwalader, Wickersham & Taft LLP

IRS Holds That Crypto Staking Rewards are Taxable Income

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The Internal Revenue Service (“IRS”) recently issued guidance in Revenue Ruling 2023-14, holding that taxpayers who stake their cryptocurrency and receive additional units of cryptocurrency as rewards when validation occurs...more

Lowenstein Sandler LLP

IRS Rules That Cryptocurrency Staking Rewards are Taxable

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The Internal Revenue Service (IRS) has ruled that a cash-method taxpayer that stakes cryptocurrency native to a proof-of-stake blockchain is subject to tax on additional cryptocurrency it receives as rewards when validation...more

Wilson Sonsini Goodrich & Rosati

IRS Confirms That Staking Rewards Are Part of Gross Income

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On July 31, 2023, the Internal Revenue Service (IRS) released Revenue Ruling 2023-14, which provides that cryptocurrency stakers should include the value of the rewards they earn from staking in their gross income....more

Cadwalader, Wickersham & Taft LLP

Congress Getting in on Barbenheimer Action, Goes for Crypto Tax Double Feature

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Recent legislative action suggests that Congress is eager to resolve many unanswered crypto tax issues.  On July 11, 2023, Senators Ron Wyden and Mike Crapo released an open letter to the “members of the digital asset...more

Cadwalader, Wickersham & Taft LLP

Playing the Waiting Game on Crypto Tax Reporting

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As previously discussed here, the IRS published guidance in December 2022 effectively postponing the January 1, 2023 effective date for certain digital asset broker reporting rules until final regulations are promulgated. To...more

Cadwalader, Wickersham & Taft LLP

IRS Says Crypto Protocol Changes Are Not Taxable

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On April 21, 2023, the IRS released Chief Counsel Advice Memorandum 202316008 (the “CCA”), which provides that cryptocurrency protocol changes are not treated as realization events and do not give rise to gross income for...more

Cadwalader, Wickersham & Taft LLP

Cryptocurrency Is Property Not Currency Even if Legal Tender, Per IRS

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In Notice 2014-21, the IRS announced its position that cryptocurrencies constitute property for tax purposes, rather than foreign currency, and observed that while cryptocurrency may operate like “real” currency in some...more

Cadwalader, Wickersham & Taft LLP

IRS Gets Serious About Digital Asset Reporting by Individuals

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Since 2019, Form 1040 has included a general question regarding the taxpayer’s cryptocurrency activity. Over the years, the IRS has modified the scope of its cryptocurrency inquiry. On the 2021 Form 1040, this question read:...more

McGuireWoods LLP

Old Wells: A New Frontier for Crypto-Mining and Complaints

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Cryptocurrency mining is an emerging industry that must overcome the watchful eyes of communities and regulators. This unique process uses computers to solve complex math problems on a blockchain, which rewards miners with...more

ASKramer Law

Tax Return Reporting of Cryptocurrency

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You need to consider how you’ll report digital asset transactions on your 2022 tax returns. Tax reporting requirements for digital assets have changed yearly since 2019, when the IRS first added a question about crypto to IRS...more

BakerHostetler

The Tax Man Is Back: IRS Issues First John Doe Summons in 2022 to Major Crypto Platform, Seeking Treasure Trove of Information on...

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Key Takeaways: ..The IRS issued its fourth John Doe summons against digital asset platform sFOX, seeking information regarding user identity and transaction activity over $20,000. ..The use of John Doe summonses...more

Cadwalader, Wickersham & Taft LLP

Mini-Me Crypto Tax Legislation

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Bipartisan crypto legislation was introduced by Senators Pat Toomey (R-PA) and Kyrsten Sinema (D-AZ) on July 26, 2022. If enacted, the Virtual Currency Tax Fairness Act would exclude from gross income gain on certain de...more

Cadwalader, Wickersham & Taft LLP

States Turning Eyes to Taxation of Cryptocurrency and Non-Fungible Tokens (NFTs)

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As the IRS ponders its approach to taxing cryptocurrency and NFTs, states are increasingly imposing taxes on some digital asset transactions, including the use of cryptocurrencies...more

Akin Gump Strauss Hauer & Feld LLP

The Responsible Financial Innovation Act – A Bullet Point Summary

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Key Points - On June 7, 2022, Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) released long-awaited legislation addressing the regulatory and tax treatment of digital assets. Their Responsible Financial...more

Cadwalader, Wickersham & Taft LLP

Crypto Trading Safe Harbor – We’re On Our Own

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The District of Columbia Bar Tax Legislative and Regulatory Update Conference, a two-day conference on tax legislative and regulatory developments, included a one-and-a-half hour panel on taxation of cryptocurrencies and...more

Oberheiden P.C.

Tokenization Lawyer – 5 Reasons Why You Might Need One

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What is Tokenization? Tokenization is the process of converting an asset into a token on the blockchain. It operates by dividing—or fractionalizing—the ownership of an asset (whether the asset is a piece of real estate or...more

Cadwalader, Wickersham & Taft LLP

NYSBA Tax Section’s Crypto Recommendations

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On April 18, 2022, the New York State Bar Association (“NYSBA”) Tax Section published its second report on cryptocurrency and digital assets (“the Report”). The Report recommends...more

Miller Nash LLP

Today In Tax: Uncertainties Surrounding Cryptocurrencies, Mining, NFTs, and More

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While the number of cryptocurrencies and other blockchain-based assets continue to grow, the IRS’s published guidance is inadequate in addressing how to tax these new digital assets and transactions involving them....more

Sheppard Mullin Richter & Hampton LLP

When Does Cryptocurrency Mining Create a Taxable Event? IRS Does Not Clarify

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A couple rejected a refund settlement offer from the IRS over its tax treatment of tokens they earned from mining. Instead, the couple has sought formal adjudication on the issue from the federal courts. The government has...more

Proskauer - Blockchain and the Law

Congress and the IRS Make Moves to Improve Taxpayer Compliance for Cryptocurrency Transactions

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IRS Commissioner Charles Rettig, testifying before Congress in April 2021, estimated the gap between taxes owed and taxes collected in the United States to be close to $1 trillion....more

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