Topic: IRS Tax Inquiry or Audit.... (Read 1831 times)
This thread shows up at the top of the search results for "IRS audit" so I thought I'd give an update and point to something that hasn't been mentioned on the forum, this (alleged) IRS crypto audit letter sent in Feb 2020 (after the 2019 "soft letters", and before Harper v. IRS).
I think one would claim it as misc income on realized gains ...those gains would equal that which was converted to fiat not that which is still held in a wallet (which might still appreciate) , and then only claimed for tax purposes if the income was above what was spent (on mining equip etc). One could also claim a loss if what you spent on mining equip was more than the realized gains.
Or claimed as capital gains...it's really up to interpretation of the law at this point, from what I understand. http://www.bitcointax.info/ has some info on the subject.
They can start at any time and there are different kind of audits for different purposes. The IRS has little info on bitcoin I suspect from tax filings as most gains of a material amount happened last year. Before that it was likely a 'who cares' from a tax perspective.
But there's enough activity at Treasury these days (US) that I have no doubt they are looking into it. I am surprised that no one here has been contacted or had it come up yet....... but no responses like this to date... and this is the second time we have called for some report of IRS activity.......
But there's enough activity at Treasury these days (US) that I have no doubt they are looking into it. I am surprised that no one here has been contacted or had it come up yet....... but no responses like this to date... and this is the second time we have called for some report of IRS activity.......
I think one would claim it as misc income on realized gains ...those gains would equal that which was converted to fiat not that which is still held in a wallet (which might still appreciate) , and then only claimed for tax purposes if the income was above what was spent (on mining equip etc). One could also claim a loss if what you spent on mining equip was more than the realized gains.
If anyone has had even an inquiry about how their bitcoin was treated for US Tax purposes by the IRS or a State Tax authority - might you be willing to share in this form to help others? If so please add to this thread your experience.
When does the IRS start audits?
What a CPA with many years of personal income tax experience told me is that the IRS will look at any taxes paid on bitcoin gains as money falling from heaven. They do not have any 1099 evidence of the gains, so it is like a windfall that they did not expect. Under these circumstances the IRS is very happy to get the unexpected tax revenue from bitcoin and is highly unlikely to scrutinize the return.
Adding to that that no bitcoin-specific regulations yet exist, they really are unlikely to question how the tax on profits from bitcoin were calculated. Take a reasonable approach and you will be safe from prosecution.
Adding to that that no bitcoin-specific regulations yet exist, they really are unlikely to question how the tax on profits from bitcoin were calculated. Take a reasonable approach and you will be safe from prosecution.
If anyone has had even an inquiry about how their bitcoin was treated for US Tax purposes by the IRS or a State Tax authority - might you be willing to share in this form to help others? If so please add to this thread your experience.
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