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

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


Conducted on Wednesday, June 5, 2019

Recorded event now available

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Program Materials

This CLE/CPE webinar will provide tax counsel, accountants and other advisers with a critical first look at new IRS initiatives on taxpayer compliance and reporting obligations for cryptocurrency transactions. The panel will discuss the IRS position on cryptocurrency as property rather than cash, analyze IRS monitoring to increase compliance, consider criminal investigations and prosecutions for failing to report cryptocurrency transactions accurately, and define proper reporting and tax treatment for "mining" and exchanging cryptocurrency.

Description

The IRS announced concern over "massive" underreporting of such income and has dedicated considerable time and resources to investigating possible tax fraud by underreporting income from cryptocurrencies. Tax counsel, accountants and advisers for clients using cryptocurrency must understand the reporting requirements for exchange transactions and the IRS scrutiny that clients who engage in cryptocurrency 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 cryptocurrency (IR 2014-36), treated all virtual currency as property rather than currency for U.S. tax purposes. Treasury left several questions unanswered, including whether cryptocurrency is business property eligible for tax-free exchange under Section 1031 and whether cryptocurrency must be reported on Foreign Bank Account Reports (FBARs) or other foreign asset disclosure forms such as Form 8938. The 2017 tax reform impacts the analysis with its limitation on like-kind exchanges for non-real property transactions. Now, in furtherance of their initiatives, the IRS Large Business & International Division (LB&I) recently added virtual currency to its list of compliance campaigns.

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

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Outline

  1. Types of cryptocurrency
  2. Means of obtaining cryptocurrency
  3. Current IRS guidance
  4. Valuation issues
  5. Tax reporting requirements for cryptocurrency exchanges
  6. Disclosure requirements for cryptocurrency ownership
  7. Criminal investigations and prosecutions for failing to properly report cryptocurrency transactions

Benefits

The panel will review these and other key issues:

  • What are the limitations on loss recognition on cryptocurrency transactions and exchanges?
  • What are the income tax reporting requirements for cryptocurrency exchanges and valuations?
  • What position does IRS appear to be taking on whether cryptocurrency exchanges qualify for 1031 treatment as well as the impact of tax reform?
  • What are the disclosure requirements for cryptocurrency ownership?
  • How to use the IRS Voluntary Disclosure policy to get into compliance and the availability of "qualified amended returns" to avoid penalties?

Faculty

Stein, Michel
Michel R. Stein

Principal
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 Toscher

Principal
Hochman Salkin Toscher Perez

Mr. Toscher has been representing clients for more than 35 years before the IRS, the Tax Divisions of the U.S....  |  Read More

Other Formats
— Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. All formats include program handouts. To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video

$347

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CPE Not Available

$347