CyberWisdom Safe Harbor Commentary:
What is most likely to be an overlooked story from fool.com evaluates an interesting turn in that Like-kind exchanges changes in cryptocurrency exchanges, investors will have to report the capital gain or loss of the original currency as a federal tax return. No more Loop-hole.
Because of the recently signed Tax and Jobs Act, the tax landscape is undergoing dramatic changes. The new tax law entails how “like-kind exchanges” are dealt with (Section 1031 of the U.S. tax code, in case you’re interested). Like-kind exchanges changes mean that whenever a cryptocurrency investor sells one fictitious coin to buy another fictitious coin, they will have to report the capital gain or loss of the original currency as a federal tax return starting January 1.
This change has become more complicated for crypto-investors
Cryptocurrencies Investors not only receive capital gains from their investment activities but in fact, any transaction involving cryptocurrencies may need to pay capital gains tax. For example, if a person purchases goods or services in bitcoin, the IRS considers this an asset disposal and asks the “investor” to pay the appropriate capital gains tax.
To complicate matters, popular cryptocurrencies do not guarantee investors the cost base and sales price for 1099. This really makes some virtual currency investors blind, so to speak.
Not surprisingly, a recent LendEDU survey found that 36% of Bitcoin investors do not intend to disclose capital gains to IRS in the upcoming tax season. Of course, the upcoming tax season will be the last chance a cryptocurrency investor will have to profit from a similar deal. From here, they have no other choice but to report their own gains and losses or face the risk of financial penalties or criminal charges.
Virtual-currency investors won’t be able to avoid paying capital-gains tax with this trick any longer.Ready or not, folks, here comes tax season!For Engaging post, Read More…
thumbnail courtesy of fool.com.
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