By CID Special Agent Gutierrez, IRS LA div.
Here's something most people couldn't have cared less about in 2014. Back when the rest of the world was freaking out about a new Star Wars coming and wondering who around them had Ebola, the IRS first began including an amendment to their forms in regards to "digital assets". Now a decade afterwards, the world has caught up and crypto has become a force with billions at its disposal, to which many would like to believe can hide behind its digital veil of internet memes. WRONG! Guess what crypto-punks. The IRS can read the internet too.
Resources such as CoinTracker and Lukka can help individuals keep track of their coin inflation rates throughout a given year to help with properly reporting accurate assets. For tax purposes, individuals can consider their digital assets similar to stock. You would only need to officially report any income sales that are withdrawn as dollars (USD) any transactions that occur between digital currencies [say you convert your Rabets to Tetra Coin] does NOT have to be reported to the IRS.
The IRS understands that crypto can be confusing especially for newcomers, that is why it is highly recommended that you use outside accounting/professional help to refer to your specific situation. Happy Tax Season!
*Editor's note March, 2024 -- What the IRS doesn't much like to specify in these reports is that despite being a decade old amendment, regulation is still a wild west in regards to enforcement. While individuals are expected to report digital asset income, corporations have successfully kept the federal government away from their crypto interests for the time being. Even as of writing, the maximum that corporate entities are expected to report from their crypto holdings is only $10,000. The IRS has been backlogged due to staff shortages for the past decade and as such have had limited resources to enforce any larger scale criminal action or potential fraud in this particular arena, though they claim as of Jan. 29th, 2024 that they are using the "Inflation Reduction Act" to counter such areas ripe with fraud, even hiring a grand total of 2 private consultants to assist in this effort. Rest assured, corporate entities such as BlackBook Entertainment are far too pre-occupied to take advantage of this oversight. No sir, no fraudulent reporting going on, nope. Legally speaking anyways.
For more insight check out these pages!
IRS steps back crypto tax rules, exempting TXs over $10K from obligations (cointelegraph.com)
IRS hires 2 private-sector crypto experts to prep for tax season (cointelegraph.com)
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