Tom Emmer from the House of representatives requested files from the IRS that provided guidance to individuals who performed digital transactions. Luckily for Emmer, the IRS has been working on such a guidance file since 2014.
IRS Commissioner Charles P. Rettig claims that the IRS has been working on tax treatment of “Forks”, as well as “acceptable methods of calculating cost basis”, which basically can be understood as calculations to properly tax money being spent on cryptocurrency transactions.
In the cryptocurrency community, we’ve experienced our fair share of forks but the question is, will legal action be taken on old forks or only the most recent? This wasn’t clarified in the small letter from Mr. Rettig, but it could be within the guidance files for crypto taxation.
One of the key takeaways from the letter is that cryptocurrencies are labeled as property. Mr. Rettig clearly said in the letter: “existing tax principles applicable to property transactions apply to virtual currency transactions.” If you think about it, we all view our digital assets as property but a tax on top of the fees for trading could hinder profit margins for many cryptocurrency traders.
Read the full letter here.