The IRS has announced that it will soon publish new detailed guidance on how the cryptocurrencies should be treated for US tax purposes. The existing guidance has not been updated since 2014.
They have stated that they will be providing guidance for “acceptable methods for calculating cost basis, acceptable methods of cost basis assignment, and the tax treatment of forks [i.e. splits of currency]”.
This announcement follows the publication of detailed guidance by HMRC in December 2018 on the UK taxation of cryptocurrency (see earlier blog) and it is hoped that the IRS’ opinions will align with the HMRC position so as to allow a consistent treatment and potentially even foreign tax credits in the event a taxpayer is taxed on crypto gains in both the US and the UK.
Further comment will be provided when the IRS publish their guidance but if you want to understand the UK or US tax issues surrounding your cryptocurrencies, please contact us.