- Sale, purchase, exchange or if any transaction is done in cryptocurrency, it is mandatory to mention in the form with only two options: yes or no
- Summons send to Coinbase and BitsTamp
People who are possessing cryptocurrency might have to deal with a bigger problem than a pandemic. The Internal Revenue Services (IRS) has tightened its grip to nail the fraudsters responsible for duping the crypto market and evading taxes. The IRS has asked the taxpayers to disclose their cryptocurrency transactions in the new tax form. This will in turn help the Federal government to find out the frauds and tax evasion.
IRS has released a form 1040 where it is mandatory to disclose any transactions done in cryptocurrency
The new tax form that has been introduced has some questions that deal with cryptocurrency assets. In the form, it is mandatory to mention the dealings in cryptocurrency. Whether you have sold, received, exchanged, or acquired any financial interest in any virtual currency, it is important to be mentioned in the new form. The form has been released in December and is only about two options: yes or no for the question mentioned.
The question of the disclosure of cryptocurrency is not new to the people. This question has been included in the tax form since 2014. It acts as a disclosure that should be treated as the property for tax purposes. If people are dealing in cryptocurrency then the sales and purchases in the crypto market are taxed as capital gain or loss, similarly to a stock or a bond. Anybody dealing in cryptocurrency has to pay a tax for the income generated through transactions.
The new form 1040 that has been introduced by the IRS this year includes the question on priority and comes first in the list. The details of the question have to be filled in just below the name and address of the taxpayer. This shows that the IRS is agile to hold on to the perpetrators.
The move that the IRS took to tighten its grip over cryptocurrency comes after Bitcoin recorded a steep high of $16,118 in November 2020. This record in bitcoin is witnessed only after 2018. This has made the IRS suspicious of the cryptocurrency. The IRS has started its investigation on cryptocurrency investments which are not reported in recent years.
They have also sent the summon to Coinbase and BitsTamp exchanges to disclose the identity of their traders and their activities so that they can find out the foul play in the investments in cryptocurrency that are not reported yet.
During the investigation, it is found that John McAfee, the software icon was accounted for fraud in October 2020 with alleged tax evasion using cryptocurrency.
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