Category Archives: Cryptocurrencies

Coinbase To Comply With IRS Summons

Posted on February 24, 2018 by Russ

Two of my clients received an email from Coinbase: Dear Mr. Smith, In December 2016, the Internal Revenue Service issued a summons demanding that Coinbase produce a wide range of records relating to approximately 500,000 Coinbase customers. Coinbase fought this … Continue reading →

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Online Gambling and Offshore Cryptocurrency Exchange Addresses for 2018

Posted on January 24, 2018 by Russ

This list has been superseded by the 2019 list. With the United States v. Hom decision, we must again file an FBAR for foreign online gambling sites. An FBAR (Form 114) is required if your aggregate balance exceeds $10,000 at … Continue reading →

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Are Cryptocurrency (Bitcoin) Transactions Always Short-Term?

Posted on December 9, 2017 by Russ

One of my clients sent me a link to a tweet (on Twitter) from Peter Brandt: Nope. Wrong. The IRS will not consider BTC for long term gains. Short-term no matter how long held. — Peter Brandt (@PeterLBrandt) December 8, … Continue reading →

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IRS Mostly Wins Coinbase Summons Fight

Posted on November 29, 2017 by Russ

The IRS has been battling Coinbase, the United States’ largest cryptocurrency exchange, in a fight to obtain information about individuals who sold Bitcoins during 2013, 2014, and 2015. The IRS issued a summons to Coinbase–basically, an administrative demand for information. … Continue reading →

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Can You Use a §1031 Exchange to Defer Gain with Cryptocurrency?

Posted on September 5, 2017 by Russ

I recently wrote an article noting that if you exchange one cryptocurrency for another you have a capital gain (or loss). I was recently asked if you could defer such a gain by using a §1031 Exchange. What Is a … Continue reading →

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The IRS Is Coming! The IRS is Coming!

Posted on August 24, 2017 by Russ

As first reported by Bob McKenzie this morning, the IRS has purchased software to help them identify Bitcoin transactions. The IRS is reportedly using a product from Chainalysis, Inc., a New York-based supplier of products used to analyze Bitcoin activity. … Continue reading →

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Taxes When a Cryptocurrency Splits Into Two

Posted on August 21, 2017 by Russ

The IRS ruled that cryptocurrencies are treated as property (like stocks and bonds). What happens when a cryptocurrency splits into two separate cryptocurrencies? Let’s start with the analogous situation with a stock. Suppose Acme Industries, Inc. spins off its subsidiary, … Continue reading →

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On Tulips and Bitcoins

Posted on August 20, 2017 by Russ

When I was in junior high school, I remember being taught about the 17th century tulip mania. Tulips in 1637 cost more than a house! That was a bubble (though some economists think there may have been rational explanations, let’s … Continue reading →

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Did I Prepare 5% of the Tax Returns with Bitcoin in 2015?

Posted on August 13, 2017 by Russ

The IRS is attempting to force Coinbase to disgorge a list of its customers who have traded Bitcoins. Back in March, an IRS agent, as part of attempting to enforce its summons against Coinbase, stated that there were only 802 … Continue reading →

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Exchanging One Cryptocurrency for Another Is a Taxable Event

Posted on May 27, 2017 by Russ

Let’s assume I own some Bitcoins and you own some Ethereum; these are two cryptocurrencies. We think they’re each worth $5,000 and we agree to swap them. Do we have a taxable event? The IRS consideres cryptocurrencies to be akin … Continue reading →

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