Jeff Fawkes is a seasoned investment professional and a crypto analyst. He has a dual degree in Business Administration and Creative Writing and is passionate when it comes to how technology impacts our society.
After the many signs from the U.S. lawmakers, IRS have issued new rules for taxation of the citizens. Lykka offers easy way of tax accounting.
On the official website of Lukka, users can create personal taxation accounts, and import the history of deals. Exchanges often give users the possibility to export all the operations in a convenient XLS or JSON file. Importing the data to Lukka will allow the user to report directly to the IRS, with Lukka accountant’s brief support. Lukka has CPA.com as their partners.
Those guys are a separate entity working in the jurisdiction of the American Institute of Certified Public Accountants. They will offer consultations for large firms, allowing them to report the taxes most accurately. After the retail investor or a company enters the data to an online form, the taxation algorithm will calculate the exact deduction sum.
Per Lukka CEO, Jake Benson:
“It is a question that taxpayers cannot ignore anymore. …One of the first questions on the IRS’s tax form is whether you have crypto-assets”
The American taxation system is somewhat an example of many other countries. After the regulatory dust will settle, we can hope to see broad adoption of cryptocurrency taxation among the U.S. allies around the world.
Israel, South Korea, Japan, Australia, and some EU countries are considered friends of the United States (and enemies of Iran or North Korea.). However, All of the mentioned countries actively adopted cryptocurrency taxation a year or two ago, with many countries from Africa joining, and sometimes leading, the trend.
IRS Issued Renewed Crypto Taxpayer Guidance in October 2019
The IRS was presenting the first crypto guidance with details back in 2014. The tax agency seemed to forget about the cryptocurrency since then. Rumors whispered they have been watching the market, its growth and possible impact on the U.S. economy. The IRS was also collecting the information on more than 10,000 of the U.S. based crypto traders.
Issued in October 2019, the renewed guidance gives important clarifications. For instance, how to calculate cost basis? if you are a miner or an accountant it is important to know such stuff. So to calculate it, you simply sum up the expenses. This includes the intermediary and transaction fees that you’ve paid while receiving the coins, as well as other commissions.
The document also clarifies other issues such as buying something as big as a cup of coffee or a souvenir from a small store. It appears that you still need to pay taxes when you buy a PS4 for Bitcoin Cash or a new TV for Monero.
The only problem here is, the cryptocurrencies such as Monero, Grin or Beam do not keep the record of the transactions publicly. This may mean that, from the regulatory standpoint, if those transaction’s existence is not a fact that can be proved, then they have not existed. This is somewhat of a tough challenge for the taxpayer’s software developers. We hope they will find ways to account for the slowly disappearing Beam transactions.