Can a Virtual Currency Position Be Treated as a Commodity for Tax Purposes?

Some virtual currency units and positions are treated as commodities by Commodity Futures Trading Commission (CFTC) and US courts. The IRS has told taxpayers that it views convertible virtual currency as property, not foreign currency, for federal tax purposes. Lacking clear guidance from either the Internal Revenue Service (IRS) or the Department of the Treasury, this article addresses issues that may help determine whether Internal Revenue Code provisions that apply to commodities might also apply to transactions involving virtual currencies and positions. Access the full article here.

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Virtual Currency Losses Disallowed on Infrequent Activities

If a taxpayer’s virtual currency activities are too infrequent to rise to the level of investment activities or do not qualify as trader or dealer activities, losses associated with virtual currency transactions are not deductible. This article explores tax-law issues that arise in the context of "personal use virtual currency" and reminds taxpayers to be aware of both their intent when acquiring or holding virtual currency and the potential tax implications arising from such activities. Access the full article here.

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Weekly IRS Roundup July 27 – July 31, 2020

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of July 27, 2020 – July 31, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here. July 28, 2020: The IRS issued final regulations providing guidance about the limitation on the deduction for business interest expense after amendment of the Internal Revenue Code (Code) by the Tax Cuts and Jobs Act and the Coronavirus Aid, Relief and Economic Security Act (CARES Act). The regulations provide guidance to taxpayers on how to calculate the limitation, what constitutes interest for purposes of the limitation, which taxpayers and trades or businesses are subject to the limitation and how the limitation applies in consolidated group, partnership, international and other contexts. July 28, 2020: The IRS published a notice of proposed rulemaking concerning rules that provide additional...

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Specific Identification of Virtual Currency Positions

The Internal Revenue Service (IRS) views convertible virtual currency as property, not foreign currency. As such, taxpayers must record and track the tax basis of each unit of virtual currency held in order to properly report taxable gain or loss when disposing of a unit or units of virtual currency. This article reviews the IRS’s position with respect to the identification and tax basis of such units. Access the full article here.

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The Legal Effect of IRS Pronouncements on Virtual Currency

Given limited guidance by US tax authorities regarding taxation of virtual currency activities, taxpayers with such holdings may find themselves in uncharted territory as to whether to take positions that are contrary to IRS pronouncements. This article explores relevant notices, rulings and FAQs, and reviews the types of deference that courts tend to put on different types of IRS interpretations and guidance. Access the full article here.

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Weekly IRS Roundup July 20 – July 24, 2020

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of July 20, 2020 – July 24, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here. July 20, 2020: The IRS published a news release on after-tax-day tips for taxpayers who missed the July 15, 2020, tax deadline and did not request an extension. The tips include advice on obtaining a refund and on reducing penalties and interest. July 20, 2020: The IRS released public comments on the 2020-21 Priority Guidance Plan in response to Notice 2020-47, which invited the public to submit recommendations for items to be included on the 2020-2021 Priority Guidance Plan. The US Department of the Treasury and the IRS use the Priority Guidance Plan each year to identify and prioritize the tax issues that should be addressed through regulations, revenue rulings, revenue procedures, notices and other...

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Weekly IRS Roundup July 13 – July 17, 2020

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of July 13, 2020 – July 17, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here. July 14, 2020: The IRS issued a news release on a proposed redesigned partnership form for tax year 2021 (filing season 2022). The proposed form is designed to provide greater clarity for partners on how to compute their US income tax liability with respect to items of international tax relevance, including claiming deductions and credits. Comments are due by September 14, 2020. July 16, 2020: The IRS issued a notice requesting comments concerning consent to extend the time to assess tax with respect to gain recognition agreements covered by section 367 of the Internal Revenue Code (Code). Form 8838 is used to extend the statute of limitations for US persons who transfer stock or securities to a...

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Skip Jail and Clean Up Your Tax Problems

If you have knowingly failed to report income or claimed deductions you know you are not entitled to, or just decided not to file your tax returns and pay the tax owed, you may be liable for civil penalties and even jail time for criminal tax evasion. Taxpayers with civil and criminal tax exposure may want to fix their past mistakes but are afraid of what will happen if they “come clean.” So, the majority of offenders keep offending year after year. But did you know there is an Internal Revenue Service (IRS) program that can help taxpayers get out of that “evasion” cycle, and clean up past tax issues, usually without criminal liability? The IRS has a longstanding program through which taxpayers can make voluntary disclosures of tax underreporting and tax criminal evasion. Such disclosures may help taxpayers limit their criminal exposure, although disclosure does not automatically guarantee immunity from criminal prosecution. The latest iteration of the...

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Weekly IRS Roundup July 6 – July 10, 2020

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of July 6, 2020 – July 10, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here. July 6, 2020: The IRS added new frequently asked questions on the treatment of grants or loans to businesses through the Coronavirus Relief Fund established by the Coronavirus Aid, Relief and Economic Security (CARES) Act. The IRS stated that a government grant is taxable because the grant generally is not excluded from the business’s gross income except in narrow circumstances. A government loan, however, generally is not included in gross income except to the extent it is forgiven. If a government forgives all or a portion of the loan, then the amount forgiven is included in gross income and taxable unless an exclusion applies. If an exclusion applies, the IRS indicated the taxpayer may lose an...

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Weekly IRS Roundup June 29 – July 3, 2020

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of June 29, 2020 – July 3, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here. June 29, 2020: The IRS issued a news release announcing that the tax filing and payment deadline of July 15 will not be postponed. However, individual taxpayers may request an automatic extension of time to file until October 15. Individual taxpayers that file Form 1040 series returns must file Form 4868 by July 15 to obtain the automatic extension. June 29, 2020: The IRS issued corrections to proposed regulations regarding the credit for carbon oxide sequestration under section 45Q. Among other changes, the IRS clarified that the applicable recapture period ends upon five years, and not three years, after the last taxable year in which the taxpayer claimed a tax code section 45Q credit. June 29, 2020:...

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