Moye White tax attorney Chris Levkulich recently spoke to the Colorado Bar Association’s Taxation Law Section on the taxation of cryptocurrency.
Levkulich discussed the current rules, IRS guidance, and recent court decisions on the taxation of cryptocurrencies. He also addressed events causing the realization of income, determining the character of gain and loss, reporting documents, making charitable contributions with cryptocurrency, and the impacts on trusts and estates.
“As its name suggests, cryptocurrency is secret or hidden money,” says Levkulich. “Therefore, the IRS is focused on enforcing tax compliance by requiring individuals and dealers to report transactions involving cryptocurrency.”
If you use cryptocurrency, you should know that:
1. In most cases, cryptocurrency is treated as a capital asset, and you will have a capital gain or loss when you sell cryptocurrency or use it to pay for goods or services.
2. Your costs basis in the cryptocurrency includes fees, commissions, and other acquisition costs.
3. A qualified appraisal is required if you make a charitable contribution of more than $5,000 of cryptocurrency.
Levkulich advises clients on the taxation of corporations and partnerships, entity formation, mergers and acquisitions, private equity investments, asset sales, operations, and real estate transactions. Levkulich also counsels individuals in estate planning and general income tax matters. He can be reached via email chris.levkulich@moyewhite.com and by phone 303-292-7936.