Cryptocurrency accounting presents a unique challenge for U.S. taxpayers who must deal with incomplete records, unique documentation standards, and limited IRS direction.
Crytpocurrency tax attorney Alex Kugelman joined the Crypto Craze TV show to explain why compliance with crypto tax laws is so difficult and what can be done to address the issues.
“The first issue is the accounting itself. Anyone involved in crypto trading knows it’s very easy to be on multiple exchanges as well as engage in hundreds of thousands of trades. Unwinding that into proper accounting to determine gains or losses is really difficult,” Kugelman said. “The second issue that I see is there is really limited guidance from the IRS and U.S. Treasury on correct reporting. Some basic concepts are settled but for the most part, a lot of these issues are still open questions.”
Delaying or avoiding filing crypto taxes is shortsighted and not a good long-term strategy, according to Kugelman.
“If the taxpayer doesn’t report them, the typical statutes of limitations for audits and other type of enforcements do not start running so they are just left open,” he said. “At the same time, the records that relate to these aren’t going anywhere so it’s just a matter of time before that information is shared with different reporting agencies.”
If you need guidance with your cryptocurrency accounting and tax requirements, please contact Kugelman Law today.