The IRS Still Hasn’t Decided if They Want to tax Cryptocurrency Airdrops
The IRS is still uncertain as to how they will treat cryptocurrency airdrops. Additionally, the agency clarified how users can’t defer taxes on transactions occurring before 2018.
It is promising to see the IRS focus on cryptocurrencies in this day and age. Bringing them into the mainstream adds more legitimacy to Bitcoin and altcoins.
The IRS Isn’t Flexible With Cryptocurrency
In a recent statement. an official commented on cryptocurrency transactions prior to 2018. Some users expected they would be able to defer taxes on exchanges before that time period.
Unfortunately for them, that will not be the case after all. Like-kind exchanges for cryptocurrency trades are not acceptable for the agency.
For the IRS, like-kind exchange principles were never – and never will be – applicable to cryptocurrencies. Any profits or losses sustained as a result of those transactions are taxable events.
Another topic sparking some debate is how cryptocurrency airdrops need to be filed.
To this date, there has been a lot of confusion, despite recent guidance being issued by the IRS. Cryptocurrencies remains a very fickle topic, both for the tax agency and the taxpayer.
In the clarification, the agency confirms airdrops are currently not taxable. That situation is still being reviewed, however, and additional changes may be forthcoming in the months and years ahead.
If promotional airdrops are to become taxable, a new IRS guidance should be issued accordingly.
All of these developments indicate the tax agency is very serious about cryptocurrencies in its own way.
Anyone not adhering to their guidelines may find themselves in a troublesome situation.
Image(s): Shutterstock.com
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JP Buntinx, Khareem Sudlow