For Century City, California taxpayers, tax returns are not only required for the government to collect revenue. In addition, tax returns are required for the government to gather information on certain taxpayer activities.
One such activity about which the government is trying to gather information on tax returns is cryptocurrency. Year 2020 tax returns include the question, “At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”
With more and more cryptocurrency transactions taking place, the Internal Revenue Service (the “IRS”) has focused more of its attention on how Century City taxpayers are treating cryptocurrency transactions for tax purposes. As a result of the IRS devoting more of its attention to cryptocurrency, there is a greater threat that Century City taxpayers who engage in cryptocurrency transactions will be subject to a tax audit (a “crypto tax audit”).
The IRS is evidencing its increased focus on cryptocurrency in other ways this year besides by just the above-described question on year 2020 tax returns.
First, the IRS has advised that it has formed “Operation Hidden Treasure” – a team of IRS personnel to examine criminal violations and fraud arising from cases of unreported cryptocurrency income.
Second,the IRS has contracted with cryptocurrency tax service provider TaxBit to provide the IRS with data analysis and support to assist with crypto tax audits.
Because the IRS feels that many taxpayers are improperly failing to include the income from cryptocurrency transactions on their tax returns, the IRS is commencing crypto tax audits in the Century City area.
There are many possible forms of cryptocurrency income.
If you buy cryptocurrency as an investment for $25 and sell it for $75, you have cryptocurrency income of $50.
If you reside or do business in Century City and receive cryptocurrency from a company for its marketing or promotional purposes (a cryptocurrency “air drop” transaction), you have cryptocurrency income.
If you reside or do business in Century City and receive cryptocurrency for working on the blockchain ledger (a cryptocurrency “mining” transaction), you have cryptocurrency income.
You also have cryptocurrency income if you reside or do business in Century City and receive payment for goods or services in cryptocurrency. If received as payment for goods, you have cryptocurrency income if the cryptocurrency is greater than your tax basis in the goods. If received as payment for services, you have cryptocurrency income as compensation.
Irrespective of the type of cryptocurrency income, cryptocurrency income is taxable income, which must be included on tax returns.
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Our experts will educate you in the mistakes made previously to help avoid getting into a similar mess in the future.
If you are notified that you have been selected for a crypto tax audit in the Century City area, you need to hire qualified tax professionals who can assist you in resolving your crypto tax audit in a favorable manner. You need to hire Leading Tax Group.
Leading Tax Group can successfully represent you in your crypto tax audit because it can combine its expansive knowledge of the ins and outs of cryptocurrency with its significant experience in dealing with the IRS in other tax audits of Century City taxpayers.
Leading Tax Group has the necessary knowledge about cryptocurrency and the necessary experience with tax audits to be the best choice for representation in a crypto tax audit in the Century City area.
Leading Tax Group has a Century City office that is conveniently located at 1801 Century Park East, 24th and 25th Floors.
If you live in the Century City area, and have been targeted for a crypto tax audit, you need the aggressive and experienced tax representation of Leading Tax Group. Contact Leading Tax Group now!
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