The IRS may further clarify digital currency tax guidelines (with report)

Two years ago, the U.S. Internal Revenue Service (IRS) determined that digital currencies were property for tax purposes, meaning that digital users had to report their profits and losses, even if they used the technology for daily payments. However, to this day, the tax agency has not provided clear guidance on digital currency taxation. Recently, the American Institute of Certified Public Accountants (AICPA) has submitted a guidance report to the IRS (full report download), encouraging the tax agency to provide additional clarity to Bitcoin and digital currency users on how to report the use of this technology.

The initiatives were submitted on June 10, 2016, with the AICPA stating that the tax treatment of virtual currencies has raised concerns among tax experts and detailing 10 areas.
Lewis, chair of the AICPA Tax Executive Committee, wrote:

“Taxpayers are required to identify the specific virtual currency used in each transaction in order to determine the gain or loss from that particular transaction. In many cases, it is not possible for taxpayers to track the virtual currency used in a particular transaction.”

(Photo: Lewis, Chairman of the AICPA Tax Executive Committee)

The guidance initiative further explores how digital currency users should assess the fair market value of a digital currency at the time of trading, and whether they should use data from a single exchange or take an average of multiple exchanges.

Among other things, Lewis said, consideration needs to be given to how merchants hold digital currencies.

The American Institute of Certified Public Accountants also tried to clarify whether digital currencies can be stored in retirement accounts and how such assets are valued abroad, as digital currencies do not have a precise positioning.