New IRS Scrutiny on Cryptocurrency Reporting: Filing Requirements and Exchange Treatment

Recording of a 90-minute premium CLE/CPE webcast with Q&A

Conducted on Thursday, October 18, 2018

Recorded event now available

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Course Materials

This CLE/CPE course will provide tax counsel, accountants and other advisers with a critical first look at new IRS initiatives on taxpayer compliance and reporting obligations for crypto currency (e.g. Bitcoin, Coinbase) transactions. The panel will discuss the IRS position on crypto currency as property rather than cash, analyze IRS monitoring to increase compliance, consider criminal investigations and prosecutions for failing to properly report crypto-currency transactions and define proper reporting and tax treatment for “mining” and exchanging crypto currency.


In August 2017, after a detailed report by the Treasury Inspector General for Tax Administration (TIGTA) on compliance issues and guidance to taxpayers investing in crypto currency, the IRS announced concern over “massive” under-reporting of such income. Tax counsel, accountants and advisers for clients using crypto currency must understand the reporting requirements for exchange transactions and the IRS scrutiny clients who engage in crypto currency transactions are likely to face in the future.

Crypto currency is digital currency using encryption techniques, rather than a central bank, to generate, exchange and transfer units of currency. Uniquely, no bank or government authority verifies the transfer of funds. Investors may use “mining operations,” purchase, receive payment, or transfer crypto units to and from another user.

Initial IRS guidance on crypto currency (IR 2014-36), treated all virtual currency as property, rather than currency, for U.S. tax purposes. Treasury left several questions unanswered, including whether crypto currency is business property eligible for tax-free exchange under §1031 and whether crypto currency is required to be reported on Foreign Bank Account Report (“FBARs”) or other foreign asset disclosure forms such as Forms 8938. The Tax Cuts and Job Act of 2017 impacts the analysis with its limitation on like-kind exchanges for non-real property transactions.

The IRS issued a “John Doe” summons to Coinbase, perhaps the largest crypto currency exchange, seeking transactions from 2013 to 2015, suggesting the Service will pursue an aggressive enforcement position on crypto currency exchanges. On November 28, 2017, the Federal District Court for the Northern District of California entered an order requiring Coinbase to provide the IRS with data on many of its clients who engaged in transactions exceeding $20,000.

Listen as our experts provide practical guidance on advising clients of U.S. tax reporting and payment obligations arising from crypto currency transactions.



  1. Types of crypto currency
  2. Means of obtaining crypto currency
  3. Initial tax guidance issued in IR 2014-36
  4. Valuation Issues
  5. Tax reporting requirements for crypto currency exchanges
  6. Disclosure requirements for crypto-currency ownership
  7. Criminal investigations and prosecutions for failing to properly report crypto-currency transactions
  8. The use of the IRS Voluntary Disclosure policy to get into compliance and the availability of “qualified amended returns” to avoid penalties.


The panel will review these and other key issues:

  • What are the limitations on loss recognition on crypto currency transactions and exchanges?
  • What are the income tax-reporting requirements for crypto currency exchanges and valuations?
  • What position does IRS appear to be taking on whether crypto currency exchanges qualify for 1031 treatment, and the impact of the newly enacted Tax Cut and Jobs Act of 2017?
  • What is the likely impact of the recent enforcement of the IRS “John Doe” summons to Coinbase?
  • What are the disclosure requirements for crypto-currency ownership?
  • How to use the IRS Voluntary Disclosure policy to get into compliance and the availability of “qualified amended returns” to avoid penalties?


Stein, Michel
Michel R. Stein

Hochman Salkin Toscher Perez

Mr. Stein specializes in tax controversies, as well as tax planning for individuals, businesses and corporations. For...  |  Read More

Toscher, Steven
Steven (Steve) Toscher

Managing Principal
Hochman Salkin Toscher Perez

Mr. Toscher has been representing clients for more than 35 years before the Internal Revenue Service, the Tax Divisions...  |  Read More

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