Overview
Tax Notes quoted Lisa Zarlenga's conversations at a March 2nd webcast in two articles published March 7, 2022 and March 9, 2022 titled, "New Voluntary Compliance Form Leaves Crypto Questions for Users" and "Cryptocurrency: What's Next for Regulation and Compliance?."
The March 7th piece overviews the reactions of tax lawyers and cryptocurrency holders to the IRS's updated voluntary disclosure form. "Practitioners generally appreciate the fact that virtual currencies are part of the voluntary disclosure program, and now there's specific questions to respond to that. I will say there is some confusion about how to respond to the question about whether the virtual currency is domestic or offshore," Zarlenga said. Zarlenga also noted some early reactions to the form expressed concern about processing delays while the IRS considers pre-clearance submissions.
The March 9th piece transcribes the webcast conversations. On the tax treatment of cryptocurrency, Zarlenga stated "Cryptocurrency is treated as property for tax purposes. This was part of the guidance in 2014, Notice 2014-21, which basically means that general tax principles that apply to property transactions apply to transactions using virtual currency." Zarlenga also discussed broker reporting for digital assets, which was added by the Infrastructure Investment and Jobs Act. Zarlenga noted, "the legislation also treats digital assets as covered securities, which basically means that they're also subject to basis and holding period reporting on the [Form] 1099-B."
The March 7th article can be read at Tax Notes. The March 9th article can be read at Tax Notes.
