More IRS crypto reporting, more danger

More IRS crypto reporting, more danger

imageCryptocurrency31 minutes ago (Jun 11, 2021 01:00PM ET)

More IRS crypto reporting, more danger

The United States Internal Revenue Service classifies crypto as property, meaning you can trigger taxes every time you use crypto to buy something. You might be using it to pay for a Tesla (NASDAQ:TSLA) electric vehicle — oh, sorry, that’s not possible anymore — a cup of coffee or even a castle in Europe. You might be paying someone for services, either as an independent contractor or as an employee. But no matter what the transaction, you may have a gain or a loss, something quite apart from the income tax impact on the person you are paying.

The tax impact might even be made more difficult by the wild fluctuations in value that tend to characterize crypto investments. Think about paying for services too: Say you pay someone as an independent contractor; to report the payment, you’ll need to issue them an IRS Form 1099. Whatever the type or amount of crypto you use, the IRS will say you paid them the current market value of the crypto on that day.

Robert W. Wood is a tax lawyer representing clients worldwide from the office of Wood LLP in San Francisco, where he is a managing partner. He is the author of numerous tax books and frequently writes about taxes for Forbes, Tax Notes and other publications.

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More IRS crypto reporting, more danger

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