Nuts and bolts of cryptocurrency taxation
An MNCPA Tax Conference preview
Shehan Chandrasekera, CPA | November 2021 Footnote
Editor's note: Updated October 29, 2021
Newsflash: Cryptocurrency is heading mainstream.
According to a recent study conducted by New York Digital Investment Group, there are 46 million bitcoin holders in the U.S. This constitutes roughly 17% of the adult population. Institutions have also shown increased interest in this space.
Publicly traded companies like Tesla, MicroStrategy and several other fintech giants have invested their corporate cash reserves in bitcoin. PayPal, Venmo and Robinhood have offered cryptocurrency services to millions of users. These factors have collectively pushed the market capitalization of cryptocurrency to more than $1 trillion and bitcoin to its all-time high value of $63,000 in 2021.
Introduction to Form 1040
The rising popularity of cryptocurrency and the inclusion of the virtual currency question on the front and center of Form 1040 have made cryptocurrency a subject that tax practitioners cannot afford to ignore anymore.
It’s imperative to understand the tax implications of common cryptocurrency-related transactions (trading, mining, spending, staking, etc.) and how to successfully serve clients affiliated with cryptocurrency by using smart tools designed in this arena.
Other vital developments of which to be aware include how to successfully navigate through tax notices like CP2000, Letter 6173, Letter 6174 and Letter 6174-A. I will walk through all these questions and more, including tax planning opportunities in the crypto space, such as tax loss harvesting without being subject to wash sale rules, tax lot ID optimization (FIFO, LIFO & HIFO), self-directed IRAs, etc., at the MNCPA Tax Conference. I look forward to seeing you.
Shehan Chandrasekera, CPA is recognized as a real-world operator and a subject matter expert on cryptocurrency taxation. He’s the head of tax strategy at CoinTracker, a Forbes tax contributor and a CPE instructor who has won multiple awards. You may reach him at firstname.lastname@example.org
Hear from Shehan Chandrasekera at TAX21
Shehan covers cryptocurrency taxation at Tax21. It’s your last chance to register. Visit www.mncpa.org/TaxConference to view the full schedule and register.
21CF-TAXX: MNCPA Tax Conference (TAX21) (Virtual)
Nov. 8–10 | 8 a.m.–5 p.m. | 24 CPE | 4 Ethics | 15 IRS CE
19.5 CLE (Standard) | 21.5 CFP