Virtual Currency Transactions
U.S. taxpayers are required to pay tax on their global income. On July 26, 2019, the IRS published Information Release 2019-132 announcing that it has started sending letters to owners of virtual currencies, such as Bitcoin, Ethereum, and others advising them to pay back taxes on any unreported transactions. The IRS confirms that they have sent out more than 10,000 letters to be received by taxpayers by the end of August. Notice 2014-21 provides that virtual currency is treated as property for U.S. federal tax purposes which means that general tax principles applying to property transactions will also apply to virtual currency transactions. A taxpayer who receives virtual currency as payment for goods or services must, in computing gross income, include the fair market value in U.S. dollars of the virtual currency as of the date that it was received.
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