Engaging in Transactions Involving Virtual Currency Invites Scrutiny12 / 07 / 2020
Schedule 1 to IRS Form 1040-
With the year 2020 winding down, one must assume that the IRS will continue to follow up on compliance issues involving virtual currency.
In 2018, the IRS started a compliance compaign through its LB&I division. Now, the issue is how gross proceeds from cryptocurrency transactions will be pursued.
Taxpayers are asked when completing their Form 1040, Schedule 1, a simple yes-no question. The taxpayer is asked if they have received, sold, sent, exchanged or otherwise acquired any financial interest in a virtual currency. It is expected that these type of transactions will attract more and more attention from law enforcement in 2021.
If you have any questions about virtual currency and the tax issues that can arise in these settings, please contact Mr. Tufts at 407-647-7887.