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Cryptocurrency and Tax Law

It is important to keep all of your records if you invest in cryptocurrencies.  If you are audited by the IRS, they will check your documentation to make sure you correctly recorded the tax basis (tax basis is typically what you paid for the asset) and sales proceeds of each and every one of your trades.  For each trade, your capital gain or loss needs to be computed and any appropriate tax paid. 

You may also owe business or self-employment income if you earned cryptocurrencies by supporting blockchains through mining. 

In addition, if any of your digital assets are stored outside of the United States, there may be additional reporting requirements pursuant to international tax laws. 

If you have questions about this, and/or need assistance knowing what sort of documentation you need to keep, please reach out to Weed Law Group, PC at 925-644-7905. This article is not intended to be legal advice, and you should direct your questions to a tax lawyer.