ALERT - VIRTUAL CURRENCY

Dear client,

The IRS has reported that in 2015, only 800-900 taxpayers reported
gains on their virtual currency transactions. Coin-base reported 43
million users as of 12/31/20. As you can imagine, this has caused the
IRS some concern.

Congress and the IRS have both become aggressively involved in
monitoring the activities and the failure to correctly report crypto,
and on November 15th the President signed even stronger legislation
to track the activities. As an example, the penalty for failure to
report crypto activities can be 50% of the highest balance in the
account each year?

Failing to report crypto transactions is going to have results
similar to not reporting foreign financial assets. The IRS is taking
a harsh position on taxpayers who have not reported their sales,
trades, airdrop acquisitions and redemptions of virtual currency. The
IRS is not contemplating a Voluntary Disclosure Program in order to
mitigate the taxpayer's penalties or interest for late or
non-reporting of their virtual currency transactions. There is no
statute of limitation for income that is not reported on a taxpayer's
timely filed return.

Here are the 7 activities that require reporting:

 1.

    Selling (Converting) crypto to US Dollars

 2.

    Trading 1 crypto for another

 3.

    Spending crypto directly for goods or services

 4.

    Mining crypto from your own computers

 5.

    Staking or lending crypto and receiving payment in crypto or
    dollars

 6.

    Receiving Airdrop crypto

 7.

    Getting paid in crypto

 

As such, if you have ever sold, traded or transacted in any way with
virtual currency, we recommend that you immediately contact our
office to determine your exposure to penalty, interest and tax.

Sincerely,

______