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Are Crypto Loans Taxed as Loans?

Transactions involving the borrowing and lending of units of virtual currency (or crypto loans) are increasing in number and type. Lacking Treasury or IRS guidance with respect to crypto loans, potential tax issues that arise from these transactions must be analyzed and understood in accordance with broad, general tax principles established by case law and based on government guidance developed in other tax areas. Access the full article here.

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Finally the IRS Clarifies Its Position on Cryptocurrency

It took five years, but the Internal Revenue Service (IRS) has finally released some guidance on the taxation of cryptocurrencies! On October 9, 2019, the IRS released Revenue Ruling 2019-24 and several “frequently asked questions” (and answers) which deal with some (but not all) of the federal income tax issues involved with cryptocurrencies. Over the years, we have reported on the issues involved with cryptocurrencies, including the potential controversies that have ensued because of a lack of guidance. Call for Compliance: Cryptocurrency May Be Subject to US Tax Cryptocurrencies & State Tax: Transactions with Virtual Currency Digital Token Offerings and Sales under Regulation S Watch Your Mailbox: IRS Letters Warning of Cryptocurrency Non-Compliance on Their Way Governments Are Pulling Back the Crypto-Currency Curtain The IRS May Be Coming for Your Bitcoins IRS Criminal Investigation Division Expects Official “Stand up” of National Coordinated...

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Watch Your Mailbox: IRS Letters Warning of Cryptocurrency Non-Compliance on Their Way

On July 26, 2019, the Internal Revenue Service (IRS) issued a press release informing the public that it is sending more than 10,000 letters to taxpayers with potentially unreported (or misreported) virtual currency transactions. The letters will inform them of the possible reporting requirements that may apply to these transactions and advise them of the need to correct past errors. As IRS Commissioner Chuck Rettig notes in the release, “Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties. . . .The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations.” As we have previously reported, the IRS has stepped up its enforcement efforts regarding the reporting of cryptocurrency holdings and transactions in...

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Cryptocurrency May Be Subject to US Tax: Come Into Compliance Now

Lately, we have been frequently asked the question: “I file US tax returns and pay taxes here. Are my cryptocurrency transactions taxable or reportable in the US?” The answer for US persons and US taxpayers most likely is “yes.” US persons are generally taxable on income earned worldwide, regardless of the manner in which that income is paid (e.g. currency (foreign or domestic) or property (tangible, intangible or virtual)). Thus, if you have bought, sold or exchanged cryptocurrency, those transactions could be subject to federal tax. If your cryptocurrency is held offshore, a number of offshore reporting obligations could also apply to these holdings. Now is the right time to come forward and resolve any US compliance issues related to your cryptocurrency holdings. As we have seen in recent cases like the Coinbase summons enforcement proceeding (which we reported upon in several previous posts), the Internal Revenue Service (IRS) has stepped up its...

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Weekly IRS Roundup October 21 – 25, 2019

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 21 – 25, 2019. October 21, 2019: The IRS issued a news release in which it announced the launch of its second annual International Charity Fraud Awareness Week. The IRS joined an international coalition to raise awareness and share practices to help charities and other not-for-profit organizations avoid fraud and stop financial crime. The campaign features an online hub where counter-fraud experts can share webinars, help sheets and case studies. October 22, 2019: The IRS provided procedures to Chief Counsel attorneys for working and coordinating cases with issues involving virtual currency, including digital assets, digital currency, crypto-assets, and cryptocurrency. Issues that involve virtual currency that are not addressed by Notice 2014-21 or other public guidance, and that involve novel issues or issues likely to...

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Weekly IRS Roundup October 7 – October 11, 2019

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 7 – October 11, 2019. October 7, 2019: The IRS announced that taxpayers who requested the six-month filing extension should complete their tax returns and file on or before the October 15 deadline. October 8, 2019: The Treasury and the IRS released the 2019–2020 Priority Guidance Plan that sets forth guidance priorities. This plan prioritizes implementation of the Tax Cuts and Jobs Act, Pub. L. 115-97, 131 Stat. 2054 and of the Taxpayer First Act, Pub. L. 116-25, 133 Stat. 981, enacted on July 1, 2019. In addition, the 2019–2020 Priority Guidance Plan reflects the deregulatory policies and reforms described in Section 1 of Executive Order 13789 (April 21, 2017; 82 FR 19317) and Executive Order 13777 (February 24, 2017; 82 FR 12285). October 9, 2019: The Treasury and the IRS published a correction to a notice of proposed...

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International News II 2018 | International Tax

McDermott Will & Emery recently published Issue 2, 2018 of International News, which covers a range of legal developments of interest to those operating internationally. This issue focuses on the new rules for noncorporate US shareholders in relation to GILTI, the nuances of cryptocurrencies and the tax treatment of such, and highlights the most recent news regarding health care private equity investments in India. Read full issue.

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The IRS May Be Coming for Your Bitcoins

If you have traded Bitcoin or other crypto-currencies, you probably know that their taxation may be as uncertain as your potential for reward or loss. Since 2014, the Internal Revenue Service (IRS) has publicized how it believes these investments should be treated for US federal income tax purposes. If you have failed to report your virtual currency transaction, the result in Coinbase, a recent IRS “John Doe” summons enforcement case, should convince you that it is time to ensure you are compliant with tax laws. The IRS may be coming for your Bitcoins! IRS Guidance – Bitcoins Are Property In IRS Notice 2014-21, 2014-16 IRB 938, the IRS explained that so-called “virtual currencies” that can be exchanged for traditional currency are “property” for federal income tax purposes. As such, a taxpayer must report gain or loss on its sale or exchange, measured against the taxpayer’s cost to purchase the virtual currency. In the notice, the IRS also made clear that...

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