The article titled What Is The New Crypto Tax Guidance All About?, posted on BitIRA.com by Robin Singh discusses the guidelines that the IRS has released and updated to deal with tax liabilities from hard/soft forks, taxable income gain/loss and recording of crypto income
In its revenue ruling, the IRS outlined the tax treatment of cryptocurrencies and what taxpayers should expect as a result of a hard fork or airdrop. Here the IRS addresses two questions:
1. Does a taxpayer have gross income under § 61 of the Internal Revenue Code (Code) as a result of a hard fork of a cryptocurrency the taxpayer owns if the taxpayer does not receive units of a new cryptocurrency?
2. Does a taxpayer have gross income under § 61 as a result of an airdrop of a new cryptocurrency following a hard fork if the taxpayer receives units of new cryptocurrency?
The Revenue ruling can be found here: https://www.irs.gov/newsroom/virtual-currency-irs-issues-additional-guidance-on-tax-treatment-and-reminds-taxpayers-of-reporting-obligation
The IRS is starting to put their framework around how cryptocurrencies should be treated from a taxable point of view. There still seems to be a lot of work for them to do to continue to make cryptocurrencies and digital assets treated like other assets and income sources, but this is a good start. The discussion around how to treat air dropped tokens and hard forks give some framework around the ambiguity of receiving digital assets in this manner. This will be important as digital assets become a more mainstream part of our everyday life and more users start to recognize the potential for returns and invest in larger numbers. Taxes will always need to be paid or deferred, so getting their arms around this subject will ultimately help with adoption and comfort in investing in digital assets.
So, will the IRS clarity provide an additional level of comfort to investors to start to feel more comfortable with investing in Cryptocurrency and Digital Assets?