Unreported Crypto Income in Century City

Persons in Century City with unreported crypto income also can be subject to action by the Internal Revenue Service (“IRS”), such as tax audits, wage garnishments, bank levies, and asset forfeitures and seizures, and have to pay additional interest liability and additional penalty liability.

The issue of unreported crypto income arises because crypto income is taxable income and must be reported on your tax return.

If you purchase cryptocurrency for $100 and sell it for $200, you have $100 of crypto income and taxable income.

Cryptocurrency that is received in payment for goods or services can result in crypto income and taxable income.  If received for goods, the cryptocurrency is crypto income and taxable income when it is more than the tax basis in the goods; if received for services, the cryptocurrency is fully crypto income and taxable income as compensation.

In addition, cryptocurrency that is received from a company for its marketing or promotional purposes in an “airdrop” transaction, or that is received for working on the “blockchain ledger” in a “mining” transaction, is crypto income and taxable income.

It is also important to note that the IRS is paying more attention to unreported crypto income.

The IRS has created a dedicated unit of IRS criminal investigation and fraud enforcement workers, called “Operation Hidden Treasure”, to review cases of unreported crypto income.

The IRS also has hired TaxBit, the cryptocurrency tax service provider, to assist with cryptocurrency tax audits, including unreported crypto income tax audits.