Apart from Bitcoin , STEEM & SBD, there are various other Cryptocurrencies , Skyrocketing in market.
now many organisations are eyeing to implement tax on people trading or profiting from them.
IRS Notice 2014-21 |Source: https://www.irs.gov/pub/irs-drop/n-14-21.pdf |
The IRS addressed the taxation of virtual currency transactions in Notice 2014-21. According to the Notice, virtual currency is treated as property for federal tax purposes. This means that, depending on the taxpayer's circumstances, cryptocurrencies, such as Bitcoin, can be classified as business property, investment property, or personal property. General tax principles applicable to property transactions must be applied to exchanges of cryptocurrencies. Hence, Notice 2014-21 holds that taxpayers recognize gain or loss on the exchange of cryptocurrency for other property. Accordingly, gain or loss is recognized every time that Bitcoin is used to purchase goods or services.
is it a worry for us!!!
well if it happens or is happening already, we should keep somethings in mind
that it is important to track basis, ie the owners should properly track crptocurrency basis. Basis is generally defined as the price the taxpayer paid for the cryptocurrency asset.
Owners should constantly continue to track gains and losses on each transaction.
the values of these virtual currencies are extremely volatile,
and a proper track record should be kept and the wallets should be maintained every now & then.
An individual who, in the course of a virtual trade or business, makes a remittance using cryptocurrency with a
equitable market value of $600 or more is required to report the payment to the IRS and the payee’s virtual currency
payments are subject to backup withholding. This means that persons making reportable remittance with
cryptocurrency must seek a Taxpayer Identification Number (TIN) from the payee.
If a TIN isn't acquired prior to payment, or if a notification is received from the IRS that backup withholding is required,
the payer must backup withhold from the virtual currency payment.
Interesting stuff. I recently came across an article about Arizona allowing annual taxes to be paid with bitcoin.
https://steemit.com/bitcoin/@zumi-relix/pay-taxes-with-btc
I think as crypto users, we should go ahead and cooperate with government on taxes. If we do it on our own, that lowers their incentive to try to regulate it and possibly make it worse for us.