FL - Tax relief provided for taxpayers affected by Hurricane Idalia
In response to Hurricane Idalia, eligible taxpayers that file Florida corporate income tax returns with original due dates or extended […]Read More
The American Institute of CPAs is calling on the Internal Revenue Service to issue guidance related to how digital asset losses affect tax obligations.
“With the complexities and recent bankruptcies involved with digitalasset exchanges, taxpayers and practitioners are facing many issues with the taxtreatment of losses of digitalassets and need guidance,” Eileen Sherr, AICPA Director for Tax Policy & Advocacy, said in a statement. “Taxpayers and their advisors need clear guidance to accurately calculate their losses and properly meet their tax obligations and we urge the IRS to adopt our recommendations and provide this guidance.”
In an April 14, 2023, letter to the agency, AICPA said it hopes the submission of the comments that the “IRS will provide additional guidance to clarify how digitalassetlosses are handled in various scenarios. Such guidance will provide greater certainty to taxpayers and their preparers in confidently and properly complying with their overall reporting requirements for digitalassets, and better ensure consistent application of the tax law among taxpayers.”
The organization offers a range of recommendations on a number of topics related to the tax treatment of digital asset losses, with a focus on losses incurred by an individual investor rather than a trade or business.
One scenario highlighted by the AICPA is the determination of worthlessness of a digital asset. The organization notes that Chief Counsel Advice (CAA) 20230211 “states that ‘a loss may be sustained…if the cryptocurrency becomes worthless resulting in an identifiable event that occurs during the tax year for purposes of section 165(a),”’ adding that the advice notes that cryptocurrency can be valued at less than one cent but still greater than zero because it can still be traded and “that could potentially create future value.”
AICPA wrote that if “the position of Treasury and the IRS s that a cryptocurrency is listed on an exchange and has liquidating value greater than absolute zero, we recommend that Treasury and IRS state this in binding guidance (published in the Internal Revenue Bulletin).”
Another topic covered by the comments was the question of when, if ever, might digital assets be securities for tax purposes.
“Authoritative guidance is needed on when, if ever, the section 156(g) worthless security capital losstreatment applies to cryptocurrency and other digitalassets,” AICPA wrote. “Binding guidance should also be provided on basis determination for digitalassets (currently the special options are only in non-binding FAQs), as this is a matter relevant to measuring gains and losses.”
AICPA also stated that guidance “is needed on the treatment of lending of virtual currency other digital asses under sections 162 such as if the taxpayer is in a business of ‘lending’ digitalassets), 165, 166, 469, 1001, and 1058, and possibly other provisions. This guidance should cover not only losses from ‘lending’ virtual currency and other digitalassets, but the categorization of the income generated (portfolio, business or other) and related expenses.”
Other topics covered by the comment letter include:
This and other tax policy and advocacy comment letters filed by the AICPA can be found here.
By Gregory Twachtman, Washington News Editor
As part of ensuring high income taxpayers pay what they owe, the IRS warned businesses and tax professionals to be alert to […]Read More
The 2023 interest rates to be used in computing the special use value of farm real property for which an election is made under Code Sec. 2032A were issued by the IRS. In the […]Read More
The IRS has reminded taxpayers about the IRS Identity Protection PIN opt in program to help protect people against tax-related identity theft. “The Identity Protection (IP) PIN is […]Read More
The IRS has reminded eligible contractors who build or substantially reconstruct qualified new energy efficient homes that they might qualify for a tax credit […]Read More
The IRS has reminded eligible educators that they will be able to deduct out of pocket classroom expenses upto $300 while filing their federal income tax returns next year. […]Read More
Guidance is provided regarding the Florida sales tax holiday on tools commonly used by skilled trade workers, which is held […]Read More
The Florida tourist development tax rate in Highlands County is increased from 4% to 5% effective August 1, 2023. Combined […]Read More
The IRS has reminded employers that the new lower threshold for required electronic filing of information returns applies to tax year 2023 Forms W-2, Wage and Tax Statement, because they […]Read More
The IRS has issued revised Publication 1457, Actuarial Valuations Version 4A, Publication 1458, Actuarial Valuations Version 4B, and Publication 1459, Actuarial Valuations Version 4C (Rev. June 2023). The publications provide examples for using actuarial factors for certain income, gift, or […]Read More