Cryptocurrency is becoming popular in Pasadena, California. As cryptocurrency transactions are occurring every day, the Internal Revenue Service (“IRS”) wants to be certain that taxpayers are properly reporting all of their cryptocurrency transactions on their tax returns. With the IRS paying more attention to cryptocurrency, Pasadena taxpayers who are involved with cryptocurrency have an increased threat of a tax audit (a “crypto tax audit”).
The increased focus of the IRS on cryptocurrency is exemplified in several ways.
First, earlier this year,the IRS announced “Operation Hidden Treasure”. “Operation Hidden Treasure” involves IRS criminal investigation and fraud enforcement personnel examining unreported cryptocurrency income cases.
Second, taxpayers, on the first page of their year 2020 tax returns, must answer the question – “At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”.
Third, last year, the IRS sought to hire outside contractors who are experts in cryptocurrency to provide consulting services to help with crypto tax audits.
The IRS is focusing on cryptocurrency and crypto tax audits in the Pasadena area because the IRS thinks taxpayers are not properly including cryptocurrency income on their tax returns.
Cryptocurrency income can be derived from many sources.
The gain that you realize on a cryptocurrency investment is cryptocurrency income.
The receipt of cryptocurrency from a cryptocurrency “mining” transaction (i.e., you receive cryptocurrency for doing work on the blockchain ledger) is cryptocurrency income.
The receipt of cryptocurrency from a cryptocurrency “airdrop” transaction (i.e., you receive cryptocurrency from a company for its marketing or promotional purposes) is cryptocurrency income.
You can also realize cryptocurrency income when you receive payment for goods or services in cryptocurrency. If received as payment for goods, the cryptocurrency is cryptocurrency income if it is more than your tax basis in the goods. If received as payment for services, the cryptocurrency is all cryptocurrency income as compensation.
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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.
The IRS characterizes cryptocurrency income, in any form, as taxable income that you must report on your tax return.
If you are the subject of a crypto tax audit in the Pasadena area, you need representation from tax professionals who have significant experience in handling crypto tax audits. You need to be represented by Leading Tax Group.
Leading Tax Group will provide you with successful representation based on two key points. First, the tax professionals at Leading Tax Group are very familiar with how cryptocurrency works. Second, the tax professionals at Leading Tax Group have had much success in representing other Pasadena taxpayers in their tax audit cases.
Leading Tax Group has an office in Pasadena at 225 S. Lake Avenue, 3rd Floor, for easy access for Pasadena taxpayers. 15233 Ventura Blvd Suite 1301, Sherman Oaks, CA 91403, Un
If you are involved in a crypto tax audit, and live in the Pasadena area, you need the aggressive and experienced tax representation of Leading Tax Group. Contact Leading Tax Group now!
read more Contact UsHeadquartered 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.
Leading Tax Group’s expert investment professionals are here to help you navigate all of your Bitcoin tax issues. Don’t wait any longer to get your assets protected, take advantage of Bitcoin without the risk that the IRS will come calling.
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