#16 | Cryptocurrency and Taxation

Practical Tax with Steve Moskowitz

Steve Moskowitz and managing attorney, Cliff Capdevielle discuss Cryptocurrency and U.S. Taxation as of Spring 2022. Discussion of taxable events, reporting requirements and federal policy updates. Listen to the full episode to learn more! Episode Transcript Intro: You're listening to the Practical Tax podcast with tax attorney Steve Moskowitz. The Practical Tax podcast is brought to you by Moskowitz LLP, a tax law firm. Steve Moskowitz: Hello everyone. And welcome to our presentation. Thank you for being here. And today we're gonna be talking about crypto and there's so much happening in crypto. There's even a country, that's now recognized that, as their national currency. And a lot of people are making money, or losing money in crypto. And one of the things that the IRS is doing is something called operation hidden treasure. Now that's sounds like something from an action invention movie, but the IRS has the belief that a lot of people are engaging in crypto, and forgetting to report their transactions or reporting them improperly. Another thing is there's different softwares, that report crypto. And different softwares come up with different answers. That's why in our firm, we're using the same software, that the IRS uses. We'll also talk to you about accounting methods for all these transactions, which is very important, and also determines how you figure something is a profit or a loss. And again, crypto is an area that's just burgeoning more and more people are getting involved in it. And a lot of people are making good solid earnings. But watch out, we don't wanna trip up on any tax problems. And that's where we come in. Now there's so much involved here, and I'd like to introduce my friend and colleague the head of our tax department, tax attorney and accountant, Cliff Capdevielle. And also, just so you'll know Cliff nickname is in the firm is crypto, and Cliff even gave me crypto cuff links. So the bottom line is, Cliff, take it away for us. Cliff Capdevielle: Thanks, Steve. So the big news this week , of course is Biden's executive order March 9th on digital assets. And, he has announced that we are as a country going to explore the idea of a U.S central bank, digital currency. What does that mean? Well, this is an attempt to create the benefits of digital assets like Bitcoin and Ethereum and the other digital assets. With the protection of the us federal government. So that is the goal. That is not the reality of course. And importantly, in addition to that, Biden has announced that the U.S federal government will make an attempt to protect consumers, investors and businesses from the rampant fraud associated with digital assets. And of course, part of this is to create additional security not just for individuals, not just for investors, but for the U.S government, and the United States leadership in this area, of course is important. And the Biden administration recognize the importance of digital assets. And this is an attempt an announcement that the Biden administration is going to make efforts to promote access and to promote security with regard to these digital assets. So that's the big news, obviously. Steve Moskowitz: And along with that, a lot of people trade in crypto and they think, oh, that's a secret. And the government doesn't know what they're doing. In reality, the opposite is the case. There's such good record keeping that the government has access to all this information. Cliff, you wanna explain that to us please? Cliff Capdevielle: Yeah. So as part of the government's attempt to regulate, and control the reporting of digital assets, there is starting next year, a requirement that the exchanges are going to have to track and report sales of digital assets essentially on 10 99. So they'll be reported in the way that the brokerage firms, the banks, are all required to do which is to report sales, and to track basis, to the extent possible.