IRS won't be happy. Last year, the agency sent letters to more than 10,000 taxpayers with virtual currency transactions, telling them to pay back taxes and file amended returns. Failing to report income can carry hefty penalties and interest. In the worst case, you could go to prison and be fined up to $250,000.
Virtual currency transactions are taxable by law just like transactions in any other property. Taxpayers transacting in virtual currency may have to report those transactions on their tax returns.
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