What Is the Current IRS Guidance on the Tax Classification of Cryptocurrency?
The IRS classifies cryptocurrency as property, not currency, for US federal tax purposes. This means general tax principles applicable to property transactions apply.
When a taxpayer sells, exchanges, or uses cryptocurrency to pay for goods or services, it is treated as a taxable event, resulting in a capital gain or loss based on the fair market value at the time of the transaction.
Glossar
Tax Classification
Framework ⎊ Tax classification, within the context of cryptocurrency, options trading, and financial derivatives, necessitates a layered approach considering jurisdictional nuances and evolving regulatory landscapes.
Irs Guidance
Guidance ⎊ The Internal Revenue Service (IRS) Guidance pertaining to cryptocurrency, options trading, and financial derivatives represents a continually evolving framework designed to clarify the tax treatment of these complex assets and transactions.
Fair Market Value
Benchmark ⎊ This value represents the consensus price at which an asset or derivative contract would trade between two informed, willing, and uncoerced counterparties in an efficient market.
Current
Valuation ⎊ Current, within cryptocurrency derivatives, represents the instantaneous market price of an underlying asset or contract, crucial for pricing models and risk assessment.
IRS
Jurisdiction ⎊ The Internal Revenue Service (IRS), within the context of cryptocurrency, options trading, and financial derivatives, exerts authority primarily through its existing statutory powers, adapting them to novel asset classes and trading instruments.