An increasing number of people In Los Angeles, California are involved with cryptocurrency transactions. As more people become interested in cryptocurrency, the Internal Revenue Service (“IRS”) is becoming more interested in how taxpayers are reporting cryptocurrency transactions on their tax returns. With this increased scrutiny from the IRS, Los Angeles taxpayers who engage in cryptocurrency transactions have a greater potential of facing a tax audit (a “crypto tax audit”).
The following indicates that the IRS is becoming more interested in cryptocurrency transactions:
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Because the IRS is concerned that many taxpayers are not properly reporting the income from their cryptocurrency transactions, crypto tax audits are being commenced in the Los Angeles area.
The IRS treats cryptocurrency as property. If you purchase cryptocurrency as an investment and sell it for a profit, you must report such profit on your tax return as cryptocurrency income.
You realize cryptocurrency income when you receive payment for goods or services in cryptocurrency. If received as payment for goods, the cryptocurrency is cryptocurrency income if it exceeds your tax basis in the goods. If received as payment for services, the cryptocurrency is cryptocurrency income as compensation.
You also realize cryptocurrency income when you engage in a cryptocurrency “mining” transaction and receive cryptocurrency for doing work on the blockchain ledger. The receipt of such “mining” cryptocurrency is cryptocurrency income.
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In addition, you realize cryptocurrency income when you are party to a cryptocurrency “airdrop” transaction and receive cryptocurrency from a company for its marketing or promotional purposes. The receipt of such “airdrop” cryptocurrency is cryptocurrency income.
In whatever form, cryptocurrency income is taxable income and must be reported on your tax return.
If are notified that you have been selected for a crypto tax audit in the Los Angeles area, you need to be assisted by tax professionals who have substantial experience with crypto tax audits. You need to be assisted by Leading Tax Group.
When Leading Tax Group represents you, you can take advantage of both Leading Tax Group’s knowledge of cryptocurrency and Leading Tax Group’s extensive experience in helping Los Angeles taxpayers with their tax audits.
To assist Los Angeles taxpayers with their crypto tax audits, Leading Tax Group has an office at 5901 W. Century Boulevard, Suite 750, in Los Angeles. 1301, S
If you want to be successful with a crypto tax audit, and live in the Los Angeles area, you need the aggressive and experienced tax representation of Leading Tax Group. Contact Leading Tax Group now!
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