Based on yesterday’s article from NASDAQ.
The US government uses a service (IRS) that maps and already in 2014 issued its first instructions on how to tax cryptocurrencies.
However, crypto-taxation is still a nightmare for most traders, and some regulations are criticized.
The latest IRS guidelines consider digital assets, currencies as “property for US federal tax purposes.”
This applies to all cryptocurrencies that the current digital money market offers.
Taxable
“Crypto-to-crypto and crypto-to-fiat trades, spending cryptocurrencies on goods and services, and earning crypto as income (including mining rewards). Each of these scenarios entails calculating the fair market USD value of the cryptocurrency at the time of the trade.” said Nasdaq
Non-taxable
“Scenarios such as gifting cryptocurrency or merely transferring it between exchanges or digital wallets. However, it’s essential to note that buying cryptocurrency with fiat is not, in itself, a taxable event. Tax liabilities only arise once a cryptocurrency is traded, sold, or used to purchase goods and services.” said Nasdaq
The biggest criticism is the obligation to monitor each trade and the current market price at the time of trade.
For daily traders, this is difficult because of the high volatility, and the frequency of trades, means a lot of work in the preparation and correctness of the tax return.
The most important decision was the introduction of – 1 tax forms, which greatly simplified tracking and clearly defines the legal obligation for every citizen working with cryptocurrencies.
Along with the introduction of taxation guidelines, is an increased interest from legitimate companies to obtain an official license for their activities.
The USA is also preparing the adoption of the “Virtual Currency Tax Fairness Act of 2020”, which sets out additional conditions that will affect the direction of the industry.
At the end of article, one statement from Protocol Labs General Council member Marvin Ammori that we heard during a congressional meeting on March 4, “doing taxes for crypto is a nightmare, thanks to the over-complicated regime.”