What is Cryptocurrency?

Cryptocurrency is a digital currency that serves as a medium exchange. It is not backed by any government and is distributed on blockchain ledger. Notable types of cryptocurrency include Bitcoin, Ethereum and Litecoin.

IRS Guidance for Reporting

Cryptocurrency poses a number of unique challenges for the individuals who distribute it, hold it on behalf of third parties and own it. Jed has provided regulatory guidance to businesses on their registration requirements including anti-money laundering (“AML”) due diligence requirements. Notably, Jed has advised several businesses on their obligation to file with FinCEN and/or state regulators. Jed also has advised individuals who hold cryptocurrency on their potential tax issues.

Specifically, Jed has provided guidance or spoken on the following:

  • The taxation of fungible cryptocurrency like Bitcoin and Ethereum
  • The taxation of non-fungible tokens(“NFTs”)

IRS guidance including analysis of IRS Bulletin 2014-16 and other guidance

Foreign bank account reporting requirements for cryptocurrency held in foreign private wallets

  • Availability of the Voluntary Disclosure program for unreported cryptocurrency transactions

Jed works closely with several accounting firms that can provide basis computations and other records for taxpayers who do not have complete records.

IRS cryptocurrency enforcement is on the upswing. Taxpayers who have unreported cryptocurrency transactions should contact Jed Silversmith about coming into compliance.

cryptocurrency reporting