Crypto Taxes: the new IRS "guidance" - a podcast by Naomi Brockwell

Recently the IRS issued its first Cryptocurrency Tax Guidance in 5 years. The crypto community has been hoping that this would help clarify taxes around things like hard forks and airdrops, but it seems that confusion persists:

The IRS document reads:

“If your cryptocurrency went through a hard fork, but you did not receive any new cryptocurrency, whether through an airdrop (a distribution of cryptocurrency to multiple taxpayers’ distributed ledger addresses) or some other kind of transfer, you don’t have taxable income.”

Their language here suggests some confusion about the nature of airdrops and hard forks.

Jerry Brito of Coin Center told CoinDesk last week:

“One unfortunate consequence of this guidance is that third parties can now create tax reporting obligations for you by simply forking a network whose coins you own, or foisting on you an unwanted airdrop.”

Crypto Lawyer Sasha Hodder joins me to talk about the guidance issued: none of this is tax advice btw!

We cover things like the IRS' allowance for "first in, first out", which means that you can either identify specific units sold, or use a first in, first out method depending on which is more suitable for your situation. We will also talk about IRS specifically saying it would not create an exemption for transactions below a certain threshold, making day-to-day purchases in crypto difficult.

Call to action:

Here are the 2 bills that Caitlin Long says viewers should send to their state representatives & senators to ask them to enact:

(1) utility tokens aren't securities https://www.wyoleg.gov/Legislation/2018/HB0070

(2) direct property rights in digital assets https://wyoleg.gov/Legislation/2019/sf0125

https://twitter.com/CaitlinLong_/status/1096821184652443648

IRS guidance:

Virtual currencies:

https://www.irs.gov/businesses/small-businesses-self-employed/virtual-currencies

Notice 2014-21:

https://www.irs.gov/irb/2014-16_IRB#NOT-2014-21

IRS FAQ:

https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions

Marco Santori's helpful twitter thread:

https://twitter.com/msantoriESQ/status/1181975909567475713

Matt Corva's great twitter points:

https://twitter.com/MattCorva/status/1181984597288116225

Recommended Book:

What has the government done to our money - Rothbard
https://amzn.to/2KMzmcu

video: https://youtu.be/ikmsEvsnLh0

Further episodes of NBTV: Your Money, Your Data, Your Life

Further podcasts by Naomi Brockwell

Website of Naomi Brockwell