The US Internal Revenue Service (IRS) announced that it is issuing guidelines for ‘tax reporting regarding cryptocurrency airdrops and hard forks.’
On Oct. 9, an announcement was made by The Revenue Ruling 2019-24 addressing the most common issues and questions of taxpayers and practitioners.
Guidance on Crypto Taxation
Questions on crypto transmissions for investors as well as holding cryptos as a capital asset is also answered in the guidance.
“The new guidance will help taxpayers and tax professionals better understand how longstanding tax principles apply in this rapidly changing environment. We want to help taxpayers understand the reporting requirements as well as take steps to ensure fair enforcement of the tax laws for those who don’t follow the rules.”IRS Commissioner Chuck Rettig
Today’s new guidance adds to Notice 2014-21, which sets “general principles of tax law to determine that virtual currency is property for federal tax purposes.”
Distinguish Between Hard fork and Airdrop
Or Lokay Cohen, the vice president of the crypto tax calculation platform, Bittax says that not every hard fork should be treated as an airdrop. The guidance distinguishes between the two.
Cohen further stated that the recent guidance follows a congressional request to the IRS that sought clarity on tax reporting for cryptocurrencies.
On the other hand, report should be made to the IRS as gross income for those who receive new currency in a hard fork.
Source: Cointelegraph | Image: Stripes.com