cryptocurrency Archives - Chicago IRS Tax Attorney

The SEC, IRS & US Government Do Not Like Crypto!

July 21, 2023 by admin

In recent years, cryptocurrencies like Bitcoin and Ethereum have gained immense popularity, leading to a surge in people buying and selling digital assets. However, with the rise of these digital currencies, the Internal Revenue Service (IRS) is taking a more serious approach to ensure tax compliance in the crypto space.

For tax purposes, the IRS treats digital assets as “property,” similar to stocks or real estate. To tackle the complexities of cryptocurrency taxation, the IRS launched “Operation Hidden Treasure” in 2021, targeting individuals who fail to report their cryptocurrency income on their tax returns. Furthermore, the Inflation Reduction Act of 2022 allocated substantial funds to the IRS, a portion of which is dedicated to monitoring and enforcing cryptocurrency tax regulations.

Looking ahead, the IRS has laid out its strategic plan from 2023 to 2031, signaling its commitment to enhancing enforcement actions concerning digital assets. Stricter reporting requirements are being imposed on cryptocurrency brokers, including exchanges, which will provide the IRS with more data to closely monitor taxpayers involved in virtual currency transactions.

Taxpayers should take heed of the evolving tax reporting requirements for digital assets. Recent federal income tax returns have included questions about “digital assets,” including Non-Fungible Tokens (NFTs), which represent unique digital or real-world items on the blockchain.

Though cryptocurrencies offer a degree of anonymity, the IRS has demonstrated its ability to trace digital assets. In a recent court case, the IRS successfully obtained the cryptocurrency account information of a Coinbase customer.

To navigate the ever-changing landscape of cryptocurrency taxation, it’s crucial for taxpayers engaging in digital currency activities to stay informed and seek professional tax advice. Reporting cryptocurrency activities accurately and honestly is vital to avoid potential penalties or legal troubles with the IRS. Remember, compliance is key to stay on the right side of the law while delving into the world of digital currencies.

Article in The Pittsburg Post Gazette

https://www.post-gazette.com/business/money/2023/07/17/irs-cryptocurrency-digital-money-mining-bitcoin-bitcoin-ethereum-tax-enforcement/stories/202307160033

Steven A. Leahy is a tax attorney in Illinois. He was the host of the long-running popular Radio Show “The IRS Radio Hour” heard every Sunday evening on AM 560 The Answer. Attorney Leahy is also the author of the book “Deal With Your IRS Problems Today!” You can get a FREE copy of this important book at FreeIRSBook.com. Or Call 24/7 (312)664-6649

Bitcoin Breaks $30,000

April 11, 2023 by admin

Crypto-Tuesday April 11, 2023 – Bitcoin, the world’s largest cryptocurrency by market capitalization, has broken through the $30,000 threshold for the first time since May 2021, marking a significant milestone in its volatile price history.
The digital currency has been on a rollercoaster ride in recent years, experiencing extreme fluctuations in value, but this latest surge is a positive sign for investors who have held onto their bitcoin through the ups and downs.

The price surge can be attributed to several factors, including increased institutional adoption of bitcoin, growing interest from retail investors, and a renewed focus on the potential use cases of cryptocurrencies. Some experts also point to the current economic climate, which has seen governments around the world pumping trillions of dollars into their economies to counter the effects of the COVID-19 pandemic, as a key driver of the bitcoin price surge.

Speculation is rampent. Will Bitcoin continue the surge. Some speculate to $1 Million. Or, will it crash and burn to zero. Only time will tell.

Attorney Steven A. Leahy looks at the latest Bitcoin news on Today’s Tax Talk.

https://coinflip.tech/markets

https://www.reuters.com/technology/bitcoin-pushes-past-30000-investors-eye-end-rate-rises-2023-04-11/

https://www.coindesk.com/business/2023/04/11/bitcoin-breaks-above-30k-for-first-time-since-june-2022/

Crypto Goes to Court

March 22, 2023 by admin

Crypto-Tuesday March 21, 2023 – The Supreme Court is set to hear arguments in its first case involving cryptocurrencies. The case involves Coinbase, one of the leading crypto exchanges, attempting to compel arbitration for a pair of class action lawsuits against it.

Abraham Bielski is suing Coinbase for $31,000 he lost after providing a scammer access to his account. Suski v. Coinbase concerns a million-dollar sweepstakes event hosted by Coinbase in 2021. In that case, plaintiffs allege they were misled.

The outcome of the case could have major implications for how Crypto companies can resolve disputes. As more class action lawsuits are filed against crypto ledgers, the Supreme Court’s decision in this case could have major ramifications.

Ripple vs SEC is also an important case reaching the end of litigation. We have covered this case in this space. The question before the court is whether XRP is a security, as the SEC alleges. If it is, Ripple violated the registration provisions of the Securities Act of 1933 and many other cryptocurrencies are also securities and subject to SEC regulation.

Attorney Steven A. Leahy reviews these cases on Today’s Tax Talk.

https://coinflip.tech/markets

https://www.washingtonexaminer.com/policy/courts/supreme-court-takes-up-first-cryptocurrency-case

https://www.irs.gov/newsroom/irs-issues-guidance-seeks-comments-on-nonfungible-tokens

https://fortune.com/crypto/2023/03/21/ripple-xrp-sec-landmark-court-case-digital-assets/

Crypto Come Back?

March 14, 2023 by admin

Crypto-Tuesday March 14, 2023 – Pi Day – Now that the Government has effectively guaranteed every deposit in every bank in America, Cryptocurrency prices have seen a sharp increase., Coinbase (COIN 5.88%) rose 11.9% on Tuesday and other cryptos such as Cardano, Ethereum and Bitcoin also saw double-digit gains.

The Consumer Price Index report released Tuesday morning showed that inflation cooled down mildly in February. There are expectations that the banking crisis will also have an effect on the Fed’s interest rate targets. This could prove a benefit for both the crypto market and digital currencies themselves.

The recent surge has brought some digital tokens back to levels last seen at various points throughout 2021, while others have seen double-digit gains over the past two days.

I think it is unrealistic to expect the economy to have a quick rebound. Did you notice the banks are failing?? That is never a sign of a strong economy.

There is lots of bullish talk out there. Again, did you notice the banks are failing?

Attorney Steven A. Leahy takes a look at the Crypto market on Today’s Tax Talk.

https://coinflip.tech/markets

https://www.fool.com/investing/2023/03/14/why-bitcoin-ethereum-cardano-coinbase-are-soaring/

https://blocklr.com/cryptocurrency/state-of-cryptocurrency-today/

https://www.cnbc.com/amp/2023/03/14/moodys-cuts-outlook-on-us-banking-system-to-negative-citing-rapidly-deteriorating-operating-environment.html

https://www.msn.com/en-us/money/companies/barney-franks-bank-tanks-government-is-just-the-word-for-the-businesses-we-shut-down-together/ar-AA18CNTz

Are Federal Agencies Killing Crypto In US?

March 8, 2023 by admin

Crypto-Tuesday March 7. 2023 – Cryptocurrency has emerged as a popular form of investment and a means of trade. The US government has been increasingly cracking down on the use of cryptocurrencies, with various agencies taking steps to curb their use.

Today we will explore how US agencies are killing cryptocurrency in the US and the impact it may have on the future of digital currencies.

One of the most significant moves against cryptocurrencies in the US was made by the Internal Revenue Service (IRS) in 2014. The IRS declared that cryptocurrencies should be treated as property for tax purposes, which meant that any gains from the sale of cryptocurrencies would be subject to capital gains tax.

This was a major blow to cryptocurrency investors, who had previously enjoyed tax-free gains from their investments. The decision by the IRS to tax cryptocurrencies has made it more difficult and costly for individuals to trade in digital currencies.

The Securities and Exchange Commission (SEC), under Chairman Gensler, has taken legal action against cryptocurrency companies. Going so far as to say that “everything but Bitcoin” should be considered a security and regulated as such.

The ongoing legal battle between the SEC and Ripple may decide the fate of the entire crypto industry and whether many cryptocurrencies survive. Ripple CEO Brad Garlinghouse has said Crypto companies have “already started moving outside” the US to avoid the heavy hand of the SEC.

More recently, the US Treasury Secretary, Janet Yellen, said it was “critical to put in place a strong regulatory framework.“ While she stopped short of calling for a ban on Cryptocurrencies, there have been very powerful forces stating that banning crypto should be an option.

And today, Federal Reserve Chairman Jerome Powell, restated his heavy warnings to banks that the Federal Reserve are watching their Cryptocurrency moves closely. Saying, “We see in crypto activity lots of things that suggest that regulated financial institutions should be quite cautious in doing things in the crypto space.”

Some experts believe that cryptocurrencies will continue to thrive despite the increased scrutiny, while others believe that they will struggle to gain widespread adoption if they are subject to onerous regulations. In any case, the US government’s increased scrutiny of cryptocurrencies has had a significant impact on the industry.

The tax treatment of cryptocurrencies, along with proposed regulations from a host of United States Government Regulatory Agencies, including, the IRS, the SEC, the Department of Treasury, the Federal Reserve Board, and others, have made it more difficult and costly for individuals to trade in digital currencies. While some argue that this regulatory crackdown is necessary to prevent illicit activities, others worry that it will stifle innovation and prevent the growth of this possibly freedom enhancing technology.

Attorney Steven A. Leahy looks at the regulatory landscape in this Crypto-Tuesday episode of Today’s Tax Talk.

https://coinflip.tech/markets

https://cointelegraph.com/news/u-s-treasury-janet-yellen-calls-for-strong-regulatory-framework-for-crypto-activities

https://www.coindesk.com/policy/2023/03/07/federal-reserves-powell-we-dont-want-to-strangle-crypto-innovation-but-sector-is-a-mess/

https://www.thestreet.com/crypto/news/ripple-ceo-crypto-will-go-overseas-due-to-sec-regulations

https://www.nasdaq.com/articles/secs-gensler-warns-crypto-investors-but-differentiates-bitcoin