Do you own Bitcoin? Here are some things you should know

Feb 27, 18 Do you own Bitcoin? Here are some things you should know

Posted by in Business Law

A few provisions in the new tax law republicans sent for the president’s signature contain some language that might have repercussions for US citizens that invested in Bitcoin and other cryptocurrencies. According to the new tax law, Bitcoin and other have a similar classification to real estate, and not as currency. That classification has a few ramifications: First of all, when the authorities classify something like Bitcoin as real estate, you automatically have capital gains liabilities. The language is not specific, which leaves some hope for leeway, but rates of 15%, 20%, and 25% of capital gains apply to Bitcoin over specific values. What’s even worse is that includes converting Bitcoin to any other token. You will need to pay capital gains on the initial gains on the currency each time you use an exchange to convert from one to another. The initial response to the news was a mass selloff of Bitcoin as people quickly liquidated the holdings. Unfortunately, the IRS got a hold of records from coinbase.com, the Bitcoin exchange, including all US customers. Some users on Reddit spoke about tax liabilities of as much as $50,000 for some of their holdings. Another important note for investors is to keep records on any losses, as you can use those to offset any gains on others. You will need records and proof of ownership. So far there is little detail but make sure you keep any records and speak to your CPA about potential...

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