In a May 30 letter to the IRS, the American Institute of CPAs (AICPA) asked for additional guidance on the tax treatment of virtual currency transactions.
The IRS first issued guidance on the topic in 2014 (Notice 2014-21), which explains the application of existing tax principles to the use of virtual currency. The explanations come in the form of answers to frequently asked questions (FAQs).
The AICPA is now asking the agency to provide supplemental guidance to Notice 2014-21. Specifically, the AICPA recommends that the agency address the following issues:
- Expenses of obtaining virtual currency
- Acceptable valuation and documentation
- Computation of gains and losses
- Need for a de minimis election
- Valuation for charitable contribution purposes
- Virtual currency events
- Virtual currency held and used by a dealer
- Traders and dealers of virtual currency
- Treatment under Internal Revenue Code (IRC) section 1031
- Treatment under IRC section 453
- Holding virtual currency in a retirement account
- Foreign reporting requirements for virtual currency