Virtual Currency aka Crypto Currency

Virtual currency (VC) is the future for all economic transactions. Whether you are a consumer paying for groceries and every day transactions or a manufacturer, merchandiser, or service provider, now is the time to investigate the pro's and con's of available virtual currency. Currently, the Internal Revenue Service (IRS) defines virtual currency as "a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value"1. This definition means the IRS is serious about taxing any economic event involving crypto's.

If you find yourself receiving crypto, whether in the form of payment from an employer or client or inheritance and you then want to spend it, be cognizant as to your basis in the currency. Uncle Sam is treating virtual currency as equivalent to real currency (paper and coins). So using VC in any form of trading, exchanging, investing, or sale has a tax consequence! Depending on the circumstances of the transaction, short-term or long-term capital gain or loss might be incurred. Coupled with determining the type of gain/loss, your tax bracket (0%, 15%, 20%, or higher) will then determine the tax liability.

Examples of the most popular household names for virtual currencies are Bitcoin (BTC), Ethereum (ETH), Binance coin (BNB) or Litecoin (LTC), just to name a few.

Here are two websites that you can use to determine your tax liability: https://www.cryptotrader.tax and https://www.bitcoin.tax/

Here is another site for up to date values of various VC's: https://www.coindesk.com/price/litecoin/

(Note: I am not being paid nor am I receiving any form of compensation from these websites or their affiliates. The opinion and intellectual information are those of the author.)

I am available for Tax Consultation regarding tax liability for virtual currencies.

1-https://www.irs.gov/businesses/small-businesses-self-employed/virtual-currencies