Overview
CoinDesk quoted Lisa Zarlenga in a June 7 article titled "What to Expect When the IRS Alters Its Bitcoin Tax Policy." The articles discusses how coming guidance from the Internal Revenue Service (IRS) will address longstanding questions about the tax treatment of cryptocurrency. The crypto community is looking for clarity on a number of other matters including the tax implications of airdrops, staking and crypto stored at overseas exchanges. An even trickier task is determining the cost of each unit of cryptocurrency that was spent in a taxable transaction, such as a sale.
Zarlenga explains that when you sell cryptocurrency you should specifically identify the fraction you're selling to calculate a gain or loss. For other asset classes, there are established ways to do this. For example, in stock trading, taxpayers can apply the average cost basis or the "first in, first out" (FIFO) assumption: that they are selling the earliest acquired piece of stock, so the price is determined as the one registered at the time of the first purchase.
"But the simplified approach doesn't apply to other types of property, only to stock," Zarlenga says. "So one thing the IRS could do is extend it to cryptocurrency, which would be very helpful."
The full article can be read at CoinDesk.
