Warning from IRS on cryptocurrency

[Retread]

The Internal Revenue Service is warning more than 10,000 holders of cryptocurrency that they may be subject to penalties for skirting taxes on their virtual investments.

The IRS has begun sending letters to taxpayers who potentially failed to report income and pay taxes on cryptocurrency transactions, the agency said Friday. The IRS said it obtained the names of the taxpayers through “various ongoing IRS compliance efforts.”

The letters, which the agency began sending last week, represent one of the IRS’s broadest attempts to date to rein in tax avoidance on virtual currency transactions. The IRS has struggled to enforce tax laws on digital currencies in recent years as crypto investments have gained popularity and value.

[SaintLouieWoman]

If they're sending out tax letters, hopefully they'll start accepting losses. It's probably too late to catch those who got in at the right time and made those fortunes. It's just like the government to get in when they'll start getting hit with those good old tax losses. Serves them right.

When I was selling to the feds, I avoided them like the plague, just didn't make those sales calls to them. There are times when commissions just aren't worth it.

[Tecate]

Gold and silver can also become very sketchy with the IRS. How is your cost basis documented? I have receipts for all of it, but there may have been a terrible fire and a boating accident.

[DumbAss Tanker]

If they're sending out tax letters, hopefully they'll start accepting losses. It's probably too late to catch those who got in at the right time and made those fortunes. It's just like the government to get in when they'll start getting hit with those good old tax losses. Serves them right.

When I was selling to the feds, I avoided them like the plague, just didn't make those sales calls to them. There are times when commissions just aren't worth it.

There is a three year statute of limitations but it never starts to run until you declare the income, so once they have the poop on someone that made a profit but didn't declare it, they can go after him or her. As far as losses go, for anyone who isn't actually in the buying and selling/investing/brokering business officially but is just making personal investments, you can usually only take losses to the extent of gains in the same year, if your losses exceed your gains in that year, you don't get any benefit from the excess losses.

[SaintLouieWoman]

There is a three year statute of limitations but it never starts to run until you declare the income, so once they have the poop on someone that made a profit but didn't declare it, they can go after him or her. As far as losses go, for anyone who isn't actually in the buying and selling/investing/brokering business officially but is just making personal investments, you can usually only take losses to the extent of gains in the same year, if your losses exceed your gains in that year, you don't get any benefit from the excess losses.

But there's always carryover. I believe the losses also count toward the $3k a year you can take off in losses (unless that's changed with the new tax structures).

[DumbAss Tanker]

But there's always carryover. I believe the losses also count toward the $3k a year you can take off in losses (unless that's changed with the new tax structures).

There is a big difference if the gains and losses were short or long term as well, but the bottom line is that after three years you're probably going to be stuck with however the IRS wants to treat them since you lose most of your flexibility and wiggle room by having failed to declare the income in the first place.