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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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Treasury and IRS Throw Out 298 Regulations and Amend 79 Others

Following up on our prior posts here and here, the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) have proposed to remove 298 regulations and amend 79 regulations. The Treasury’s and the IRS’s action is in response to Executive Order 13789 (April 21, 2017), which called on the Treasury and the IRS to identify and reduce tax regulatory burdens that impose undue financial burdens on US taxpayers or otherwise add undue complexity to federal tax laws. The 298 regulations are proposed to be removed because they have no current or future applicability and, therefore, no longer provide useful guidance. However, the proposed removal is not intended to alter any non-regulatory guidance that cites or relies on these regulations. The regulations proposed to be removed fall into one of three categories: Regulations interpreting provisions of the Internal Revenue Code (Code) that have been repealed; Regulations interpreting Code provision...

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Prepare for Examination Season

The tax bar is abuzz with the talk of tax reform. Clients are in modeling purgatory, trying to calculate its effects and plan for the future. Public accounting firms are suggesting how to accelerate deductions in 2017 to take advantage of the massive tax rate decline in 2018. Now more than ever, there are substantial economic incentives to accelerate deductions in 2017 and defer income until 2018. Yes, it’s beginning to look a lot like Christmas and the end to what bodes to be a historic year for federal tax! Not to be a Grinch, but consider the following as you prepare for year end. If you attempt to accelerate any deductions, make sure to have a complete, “audit-ready” file if the Internal Revenue Service (IRS) decides to test your position. Consider how you will protect against the assertion of any penalties; typically, your ticket to get of out penalty “prison” is to maintain proper substantiation and to establish a reasonable cause defense. An opinion of...

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A 360-Degree View: November and December 2017

Wrapping Up November – and Looking Forward to December Please view all of the topics we discussed over the last month, and take a look at the upcoming tax controversy events where our lawyers will be speaking in December. Upcoming Tax Controversy Activities in December: December 14, 2017: Catherine Battin, Britt Haxton, Kristen Hazel, Mary Kay Martire, Jane May, Sandra McGill and Judith Wethall will be hosting the Tax in the City® - A Year in Review event, which will focus on the state and local impact, as well as the federal and international aspects of tax reform. December 14, 2017: Thomas Jones will be presenting the webinar, “Understand how the new Tax Reform bill will affect the status of captive insurers and hear the latest 2017 tax developments” for the Vermont Captive Insurance Association.

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