TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, March 22, 2018

NY Times: Think Cryptocurrency Is Confusing? Try Paying Taxes On It

New York Times, Think Cryptocurrency Is Confusing? Try Paying Taxes on It:

The room was full of stressed-out cryptocurrency traders. And for once, they weren’t nervous about the price of Bitcoin, or the roller coaster swings of the virtual currency markets.

No, the subject of this gloomy affair was taxes. Specifically, how — and whether — to pay them.

With this year’s April 17 tax filing deadline fast approaching, many virtual currency traders are sweating over their tax returns. They’re confused by the complicated rules, many of them stemming from guidelines issued by the I.R.S. in 2014, governing the taxation of virtual currencies. They’re afraid that the windfall profits created by last year’s cryptocurrency boom, which sent currencies like Bitcoin and Ether skyrocketing and created a new class of crypto-millionaires, have left them with huge tax bills. And, of course, they’re worried about drawing the eye of the Internal Revenue Service.

“I’ve lost sleep over it,” said Shaun, a trader who said he was still figuring out how to properly account for last year’s cryptocurrency profits on his taxes. Shaun, who asked that his last name not be used because he has been audited in the past, said he was scared that increased scrutiny of the cryptocurrency market could lead the I.R.S. to pay special attention to cases like his.

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