Key Takeaways
America’s Internal Revenue Service (IRS) is bringing two seasoned professionals from the digital asset industry on board in a bid to expand its crypto understanding
This includes a notable hire from Binance’s US division.
The Internal Revenue Service has announced the addition of Sulolit “Raj” Mukherjee, formerly the global head of tax at ConsenSys and a past team member at Binance.US, as an adviser to the agency.
Alongside him, Seth Wilks , previously vice president of government relations and success at crypto tax software company TaxBit will assume a similar role.
Their appointments are part of the IRS’s strategic move to strengthen its cryptocurrency compliance and enforcement initiatives.
The IRS is in the process of finalizing regulations mandating crypto brokers and exchanges to provide comprehensive transaction details of their clients to the US government.
This comes at a time when the agency’s financial crimes unit experiences an uptick in investigations into crypto-related tax evasion.
The Internal Revenue Service (IRS) explicitly categorizes cryptocurrencies not as currency or legal tender. Instead, the taxman sees them as property for tax purposes. This distinction is crucial for taxpayers dealing in Bitcoin and other cryptocurrencies. This is because it means any gains or losses from transactions are treated similarly to those from property sales.
Specifically, selling cryptocurrencies at a higher value than the purchase price results in a capital gain. On the other hand, selling them at a loss leads to a capital deduction.
For those interested in Bitcoin but hesitant about direct ownership, Bitcoin ETFs offer an alternative investment route, similar to how one might invest in gold ETFs without holding physical gold.
The IRS treats transactions involving Bitcoin ETFs like any other property transaction, applying capital gains tax to profits derived from their sale. This approach underscores the IRS’s efforts to integrate cryptocurrency investments within the existing tax framework, ensuring that all property transactions, digital or otherwise, are consistently regulated.