Many taxpayers are using Bitcoin, Ethereum, Ripple and other virtual currencies/cryptocurrencies to buy goods and services, and other taxpayers are using virtual currency as part of their overall investment and portfolio strategies.
With the growing popularity of virtual currency transactions and the need to ensure accurate tax reporting, the IRS has made the topic one of their compliance priorities. The Form 1040, U.S. Individual Income Tax Return, includes a question on virtual currency on the top of page one, giving a clear indication that crypto asset reporting is top of mind for the IRS.
While the IRS is clear that virtual currency is treated as property for federal income tax purposes, other questions remain for more nuanced situations. As this area continues to evolve and more taxpayers are impacted, the AICPA is working to obtain more guidance and clarity on various tax matters.
Below is a consolidation of AICPA resources, CPE and comment letters and IRS guidance to help you advise clients on cryptocurrency complexities.
AICPA articles, tools and resources
Blockchain Universal Glossary: Learn about terms such as airdrop, Bitcoin, forks and cryptographic key in this handy summary chart of common digital asset terms.
CPA.com and Lukka crypto asset solutions: Access webinars, cryptocurrency resources and videos to sharpen your virtual currency tax skill set.
Crypto Asset Tax Preparer Checklist: Use this checklist to help comply with virtual currency reporting obligations.
Navigating the world of crypto asset tax reporting: In this paper, we illuminate the new crypto landscape in which clients and firms alike are operating, highlight the role that accountants play in this environment, and illustrate ways in which tax compliance software can address the unique challenges introduced by managing all of this new data.
Podcast: Cryptocurrency: Discover three ways to add value for your clients: Ryan Firth, CPA/PFS, shares how you can support clients interested in cryptocurrency.
Podcast: Dissecting the latest in the world of crypto assets and taxes: Get an overview of cryptocurrency and guidance on tax implications as well as practical tax compliance tips with Shehan Chandrasekera, CPA.
The Tax Adviser (pre-filtered search): Access articles written by industry experts and learn more about the taxation of virtual currency as well as important tax strategies.
AICPA advocacy in virtual currency
AICPA comments on IRS virtual currency guidance, Feb. 28, 2020
AICPA comments on Notice 2014-21: Virtual currency guidance, June 10, 2016
Blockchain and virtual currency implications for tax (self-study): Learn about blockchain technology and how to master current tax issues, anticipate new challenges and create value for yourself and your clients with this new technology.
IRS guidance on taxation for virtual currency (self-study): This course covers the new guidance on the taxation of virtual currency, frequently asked questions (FAQs) and what you need to know as a tax practitioner or personal financial planner.
Rev. Rul. 2019-24: Tax treatment of transactions involving cryptocurrency: This ruling expands on existing guidance related to the tax treatment of virtual currency transactions.
Notice 2014-21, 2014-16 I.R.B. 938: This notice describes how existing general tax principles apply to transactions using virtual currency; it provides guidance in the form of FAQs.
FAQs on virtual currency transactions: The IRS answers questions about when and how to recognize gain or loss when selling virtual currency, how virtual currency received by an independent contractor should be treated for self-employment income and much more.
Bookmark and follow the AICPA’s blockchain & digital assets library for more guidance and tools on virtual currency and blockchain.
This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you’re not already, consider joining this prestigious community of your tax peers. You’ll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a subscription to The Tax Adviser.