IRS Urged to Give Guidance on Bitcoins

June 16, 2016 Taxation in USA

WASHINGTON D.C. – Taxpayers in the USA could more easily meet their obligations if tax authorities issued guidance on the taxation of virtual currencies.

In a letter late last week to the US Internal Revenue Service the American Institute of CPAs (AICPA) called for the tax authority to issue more guidance on the taxation of virtual currencies such as Bitcoin.

Explaining the need for extra guidance, Troy Lewis, the chair of the AICPA, said “Virtual currency transactions, in which taxpayers increasingly engage, add a new layer of complexity to the analysis of a client’s reporting requirements. The issuance of clear guidance in this area will not only reduce the confusion and burden for tax preparers but also allow taxpayers to accurately comply with IRS rules.”

The clarification requested were regarding the valuation of coins for the purposes of taxation; the treatment of the expenses incurred in obtaining or mining the coins; tracking of gains and losses during transaction involving cryptocurrency; whether property transactions rules apply to coins; whether coins held by a merchant are to be considered property or assets; the treatment of coins during donations, whether coins are regarded as commodities; whether coins can be treated as foreign currency during personal transactions; whether retirement savings accounts can hold virtual coins; and the treatment of coins for the purposes of foreign reporting requirements.

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