maglib
Level 10

Business & farm

New guidance will probably come out in 2018 but for now:

Cryptocurrency, bitcoin, ethereum, etc is considered property by the IRS and every move (spending, exchanging, selling, income if paid to you for services, etc), within the tax year is a recordable transaction. Cryptocurrency held for investment has a gain/loss. Cryptocurrency for personal property is only gains, no losses (so for purchases of goods and services, there is only gains, no losses as they are personal). If paid to you for personal services, it is considered reportable income at the spot rate on date of receipt. It can be considered business, hobby, investment, or personal income property depending on your intent to make a profit to consider it a business.

To reports gains/losses allowed (NOT FOR MINERS, miners report as self-employed on schedule C using Turbotax Self Employed https://ttlc.intuit.com/replies/4944762 or as hobby income https://ttlc.intuit.com/replies/5675605 and the cryptoccy for them is as if they produced and sold inventory, they have expenses of producing for schedule C or as itemized deductions, then they have income for the receipt of the cryptoccy at spot rate on production, then they sell that inventory unless they held for investment purposes LT,decision for hobby vs. self employed https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses) . Non-miners to reports gains/losses to the extent allowed go to type "Investment Income" without the quotes in the search box, select "Investment Income, gains & Losses" and choose to JUMP TO,  It will ask if you sold any invesments, say yes, select NO to the 1099-B question, Choose "Personal Items" for crypto used for personal purposes, or Everything Else for crypto held for investment purposes. Record each transaction with the date you moved the coins, for how much, when you acquired them, and for what.  You can't take a loss on personal items (if you used cryptoccy to purchase goods and services) which you report those under personal items. Cryptocurrency for investment purposes is recorded as Everything Else. Make sure only personal use cryptocurrency is recorded in the personal Items section.

You can report transactions in summary for the year as investments LT vs ST and Personal LT vs. ST for 4 categories of reporting. You can use various for the date of purchase and 12/31/17 as date of sale.

 

https://www.irs.gov/pub/irs-pdf/p544.pdf and  https://www.irs.gov/pub/irs-pdf/i8949.pdf  are the IRS rules for property and reporting.  Personal property net losses are not deductible but investment property is....  follow the IRS guidelines for property.

IRS guidance on cryptocurrency as property:

https://www.irs.gov/newsroom/irs-virtual-currency-guidance 

https://www.irs.gov/pub/irs-drop/n-14-21.pdf 

If you have a large number of transactions, there are a few tax reporting softwares to help you out to get proper bottom line such as bitcoin.tax and TT does not support any of their accuracy. Do note that I understand that these softwares are treating it all as investment grade so they may not be completely accurate as personal use does not allow losses.

I hope this was helpful?

 

https://www.cnbc.com/2018/01/30/cryptocurrency-and-taxes-what-you-need-to-know.html


**I don't work for TT. Just trying to help. All the best.
***Say "Thanks" by marking as BEST ANSWER and clicking the thumb icon in a post and that I solved your question
**Mark the post that answers your question by clicking on "Mark as Best Answer"
I am NOT an expert and you should confirm with a tax expert.