Rajarshi Mitra
Independent Analyst
- More than 20 U.S. lawmakers have issued a letter to IRS commissioner, Charles Rettig, to provide clarity on cryptocurrencies.
- The letter states are unsure as to how much they owe the agency due to unanswered questions.
More than 20 U.S. lawmakers have sent a request to the Internal Revenue Service (IRS) to provide clarity on cryptocurrencies. Mainly, there is massive confusion as to how much taxpayers may owe in taxes. In a letter addressed to IRS Commissioner Charles Rettig, the following questions were asked:
Acceptable methods for calculating the cost basis of virtual currencies. Which specific methods does the IRS consider to constitute “a reasonable manner that is consistently applied,” as required by Notice 2014-21?
Acceptable methods of cost basis assignment and lot relief for virtual currencies. Do taxpayers need to use specific identification whenever they spend or exchange virtual currency, or are other methods, such as first-in-first-out or average cost basis, acceptable as well?
The tax treatment of forks for taxpayers that use virtual currencies, such as the 2017 hard fork of the Bitcoin blockchain.
The letter was signed by Reps. Tom Emmer, Darren Soto, David Schweikert, Warren Davidson, and Ted Budd, among other lawmakers. More than six months back, the IRS ignored a similar letter. The IRS issued formal guidance back in 2014 regarding cryptocurrencies, but many consider it to be outdated since it doesn’t acknowledge forks and other advances in the space since.
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