In October last year, the IRS released the new guidance on the tax treatment of cryptocurrency transactions applicable to taxpayers that hold cryptocurrencies as capital assets.
Following the new guidance, the IRS also issued a draft Schedule 1 to the individual 2019 Form 1040 tax return that included a new question (at the top of the page no less!): “At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”
According to the draft instructions to the form, the “Yes” box should be checked if the taxpayer “engaged in any transaction involving virtual currency.”
As investors are working through filing their taxes, the issue has become – can they get the information for their 1040s from the crypto exchanges? An interesting article from Michael Cohn, “Most taxpayers lack 1099 forms for reporting crypto transactions” discusses some of the issues arising from the increased IRS scrutiny of cryptocurrency holders.
(Note: Refinitiv Maxit provides the only end to end tax information reporting for cryptocurrencies with cost basis calculations that are fully compliant with IRS Notice 2014-12, instructing cryptocurrency be treated as property for federal purposes. Contact us today to learn more.)