by Marvin Dumont
It’s tax season for U.S. crypto users, and here are some tips for filing with the Internal Revenue Service (I.R.S.). April 15 is the tax filing deadline unless you request an extension.
Crypto investors should have records of purchases, sales, trades, exchanges, as well as, “fork” income and airdrops that occurred prior year. You should know purchase and sale price of coins, quantity of each coin, and dates. This info helps to calculate capital gains (or losses).
It’d be extremely helpful if you meticulously track all your portfolio’s activities on sites like CryptoCompare and Live Coin Watch.
The tax code treats fork coins and airdrops as taxable. Moreover, the cost basis is the price of token when you purchased. Transaction fees can be deducted.
Here’s a helpful crypto-tax webinar that identifies taxable and non-taxable events:
- Sale of crypto to fiat
- Sale of crypto for another crypto
- Exchange of crypto for an item or service (capital gains)
- Mining (ordinary income and capital gains)
- Fork income and airdrops
- Crypto-denominated compensation
Cryptos are treated as intangible property (IRS Notice 2014–21) which means they’re considered more like stock than currency. Coins are also subject to wash-sale rules which govern treatment of losses.
A good place to start is I.R.S. Form 8949 which covers sale of capital assets.
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