With cryptocurrencies like Bitcoin, Ethereum and Litecoin gaining in popularity among investors, the IRS is becoming more aware of those who fail to disclose their gains and/or losses. According to an article written by Accounting Today (Click Here to read article), the IRS is going after Coinbase, an online platform where you can buy and sell cryptocurrencies. A court ordered Coinbase to release information about over 14,000 of its customers who may not have reported their cryptocurrency transactions on their tax returns.
Now that the IRS has pointed its spotlight on this issue, we want our clients to know the tax implications that might occur when investing in cryptocurrencies. Notice 2014-21 (Click here to read), which was issued by the IRS, describes how cryptocurrency transactions are taxed.