Taxation

Ca. Tax Lawyer VOLUME 33, ISSUE 1, DECEMBER 2024

A CRITIQUE OF THE CRYPTIC RULES FOR TAXING CRYPTO

By James Creech, Dennis Leonard and Justin Miller1

In this article, the authors argue that the lack of formal guidance regarding digital currency has created a surplus of misinformation and suggest that the Internal Revenue Service (IRS) and U.S. Department of the Treasury (Treasury) offer more informal guidance and implement a new voluntary disclosure program for crypto assets to allow noncompliant taxpayers to become compliant with reduced penalties.

INTRODUCTION

Despite the exponential increase in the use of digital currency in recent years, the IRS and Treasury have issued little official guidance since 2019.2 Since then, the technology that underlies cryptocurrency has evolved and tested the limits of how the existing guidance can be applied.

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