The Internal Revenue System in the US published its new guidelines regarding cryptocurrencies. According to the guidelines, the tax applicable to crypto investments would come under capital gains tax. Investment in crypto would be considered similar to investing in any other property. If a hard forks is followed by airdrop and a person receives new cryptocurrency, that would be considered taxable income.
The US Internal revenue system published its new guidelines regarding crypto taxation in five years. The new guidelines address tax liabilities and cryptocurrency forks. According to IRS, new cryptocurrencies created from a fork of an existing blockchain should be treated as taxable income when received. It adds that airdrops must be taxed completely in the same year.
CTO of CasaHodl, Jameson Loop tweeted that new IRS’s guidelines are a hot mess. IRS Commissioner Chuck Rettig said that new guidelines would help taxpayers better understand how longstanding tax principles apply in this rapidly changing environment. He added that the IRS wants to help taxpayers understand the reporting requirements and ensure fair enforcement of tax laws for those who don’t follow the rules.
The documents state that “Under $ 61, all gains or undeniable accessions to wealth, clearly realized, over which taxpayer has complete dominion, are included in gross income.” Many from the crypto community responded that the guidelines are quite unclear. Investors are also required to keep records of their investments, and the profit and loss account for a given year.