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With more people rushing into the cryptocurrency market by the end of 2017 and the subsequent market of the coming years in 2018, accounting involves a series of claims for cryptocurrency and Bitcoin tax returns next year.
Record complaints in case of cryptocurrency taxes filing
In a press release of NODE40 – a cryptocurrency accounting company, the company expects that the US Internal Revenue Service (IRS) will receive a record number of cryptocurrency tax deposits. Commenting on this point, the company's co-founder, Perry Woodin, said:
It is clear that, with the huge falls in cryptocurrency markets in 2018, many people are considering whether this is a good opportunity to disclose losses. In doing so, they will try to take advantage of these losses to offset other tax liabilities.
However, Woodin said that such a strategy would mean revealing the cryptocurrency holdings hitherto held by the IRS. These individuals will now have to report on investments in virtual currency in subsequent tax records.
Bear market 2018
The prices of the cryptocurrency have increased sharply at the end of 2017, with many of them reaching historic highs. However, since the beginning of the year, the opposite has become the case where the market shrinks by over $ 600 billion.
During the height of the cryptocurrency run, many investors have undoubtedly acquired significant shares in the market. For this reason, it is not beyond the realms of the possibility of imagining cryptocurrency portfolios that have gone down by more than 80%.
Navigating Burden of Proof
For Sean Ryan, a co-founder of NODE40, the question is not as easy as reporting losses to the IRS. Highlighting some of the complexities involved, Ryan said:
There is a lot to consider for people when it comes to encrypted accounting and their tax returns. For example, the "hodlers" will have a completely different set of circumstances for traders, while those who receive crypto from the forks and then sell will also have a unique situation to deal with.
With the burden of proof for tax deposits directly on the individual, Ryan says that those who seek to present tax documentation related to encryption must perform due diligence. This includes historical trading data, the appropriate cost base, an updated audit trail, etc. Failure to do so could result in penalties between 20 and 40 percent.
Do you think the tax season on cryptocurrency 2019 will be chaotic? Let us know your thoughts in the comments section below.
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