People in Marina Del Rey, California are increasingly engaging in cryptocurrency transactions. With cryptocurrency becoming more commonly used, the Internal Revenue Service (“IRS”) is spending more time examining the tax reporting of cryptocurrency. This greater attention by the IRS on cryptocurrency means that Marina Del Rey taxpayers who are involved in cryptocurrency transactions face a greater risk that they may be subject to a tax audit (a “crypto tax audit”).
The increased interest of the IRS in cryptocurrency transactions was exemplified by the recent news from May 11, 2021that the IRS has contracted with cryptocurrency tax service provider TaxBit to aid with crypto tax audits.
Under the one-year contract, TaxBit is to provide the IRS with data analysis and support and calculations to help the IRS determine whether cryptocurrency transactions have been correctly reported for tax purposes.
As further evidence of the increased attention of the IRS on cryptocurrency, on the first page of year 2020 Form 1040 tax returns appears the question,“At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”.
In addition, in year 2021, the IRS announced “Operation Hidden Treasure”, consisting of dedicated IRS personnel to investigate criminal law violations and fraud by taxpayers with unreported cryptocurrency income.
The IRS is starting crypto tax audits in the Marina Del Rey area based on its belief that many taxpayers are improperly characterizing the income from their cryptocurrency transactions on their tax returns.
According to the IRS, cryptocurrency is property. If you buy cryptocurrency as an investment and sell it for a gain, such gain is cryptocurrency income.
You also have cryptocurrency income when you receive payment for services or goods in cryptocurrency. When received as payment for services, the cryptocurrency is cryptocurrency income as compensation. When received as payment for goods, the cryptocurrency is cryptocurrency income if it is more than your tax basis in the goods.
In addition, you have cryptocurrency income when you are involved in a cryptocurrency “airdrop” transaction and receive cryptocurrency from a company for its marketing or promotional purposes.
Moreover, you have cryptocurrency income when you engage in a cryptocurrency “mining” transaction and receive cryptocurrency for doing work on the blockchain ledger.
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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.
Headquartered in Encino, California with multiple local branch offices in your backyard to serve you at your convenience. Leading Tax Group can schedule a face to face consultation to represent your case with the IRS, FTB, EDD, as well as CDTFA Audits.
Regardless of the specific form that it takes, when you have cryptocurrency income, you have taxable income, which is reportable on your tax return.
If you are involved in a crypto tax audit in the Marina Del Rey area, whether derived from the work of TaxBit or otherwise, you need the services of tax professionals who know how to successfully handle crypto tax audits. You need the services of Leading Tax Group.
From its knowledge concerning cryptocurrency, Leading Tax Group understands how cryptocurrency works.In addition, from its experience in representing other Marina Del Rey taxpayers in their tax audits, Leading Tax Group understands how to deal with the IRS on tax audits.
Leading Tax Group has the necessary understanding of cryptocurrency and tax audits to best represent you in your crypto tax audit case.
For Marina Del Rey taxpayers, Leading Tax Group has an office at 475 Washington Boulevard, in Marina Del Rey. 1301, S
If you want excellent assistance with your crypto tax audit (whether derived from the work of TaxBit or otherwise),and live in the Marina Del Rey area, you need the aggressive and experienced tax representation of Leading Tax Group. Contact Leading Tax Group now!
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