Cryptocurrency control is a very hot topic in the United States and around the world over the past several months. In this post, I will cover the recent cryptocurrency subjects around the USA, and finish up with a global conclusion to help establish where this type of “digital currency” may be heading in the near future.
The IRS & Cryptocurrencies
Before the usa tax holiday – the IRS released guidance on the tax management of computerized currencies The big announcement concluded the IRS identifies cryptocurrency item class as fund assets, not much of a money asset. What this means is when an exchange occurs between two parties, the transaction may be subject to income tax.
How will this effect my “crypto-purchase”?
For example..let’s say the market price of Bitcoin was $500 today. If you buy a flat screen TV for 1 Bitcoin – your taxes for that purchase would equal $10 (equal to the dollar amount you purchased that Bitcoin), that generates a tax event of $490 fund gain.
Other no–shocks from the buying and selling is that Bitcoins are subjected to investment capital gains; Bitcoin wages are subjected to self and income–job income taxes, as appropriate, and also the mining of cryptocurrencies are at the mercy of taxation.
For the more thorough assessment on how this works, please take a moment and visit the cryptocurrency blog to learn more.
Local State Regulations – Is It Junk?
Recently in Nevada, the state released an investor and consumer notice regarding online foreign currencies. The notice didn’t deal with regulation, but served as a warning letter to investors and consumers informing them of the following as it relates to Virtual Currencies.
Here’s a recap of what the notice stated regarding Cryptocurrencies:
- Extremely volatile
- Can be stolen or lost
- Connection to criminal activities
- May be taxable
- May be subject to regulation
The forewarning notice created an uproar among owners of digital currencies and prompted owners to visit internet sites that condone the actions listed above. It also notified current “crypto-owners” to due their research before making a purchase using this type of currency.
Federal Legislation Coming?
Recently, Dave Stockton (Texas Congressmen) announced his thoughts of introducing authoritative legislation that makes digital currencies legal tender in the USA. The odds of this bill making in to the floor are minimal. However, if such a plan is enacted it’s beneficial outcome would be evident regarding the options for digital currency.
In The End
It’s difficult to hide from the fact that cryptocurrency regulation is apparent at the Federal level to the individual states within the USA. It’s important to apply best judgement practices when dealing with this type of digital currency. If you conduct any type of transaction, it’s important to consult with proper legal and accounting advice when the time comes – in order to abide by new tax regulations.