"Many people treat bitcoins as cash or equal to [mobile payment service] Apple Pay, "said Morin." If they exchange it with another cryptocurrency or use it at, for example, Overstock.com, they should compare the fair market value of that day with respect to their cost basis. They do not always check this type of information. "
He said that when those bitcoin owners go to make their tax returns, they have no idea what their income or loss was, so they do not report it or try to put together information that could be 100% accurate.
"In my opinion, the IRS would prefer to see some compliance done with maximum effort instead of raising their hands and saying that it is too difficult," said Morin.
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For many investments, people generally receive a 1099 form that shows their taxable earnings. The form is also sent to the IRS, which offers the agency a way to identify any differences between brokers and payers.
Even if you do not receive any official notification of your taxable earnings, you must report them. And the IRS highlighted the encrypted world: at the start of this year, the popular Coinbase trading platform alerted 13,000 customers that it was up to a court order to provide to the IRS information on accounts worth at least $ 20,000 during 2013-2015.
"I think now is the time to try and overcome these problems, although it will be hard for many people to go back and figure out what their cost basis is," Morin said.
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