AICPA Urges IRS to Issue Additional Guidance on Virtual Currency Transactions

June 23, 2016


The American Institute of CPAs (AICPA) has urged the Internal Revenue Service (IRS) to provide additional guidance about how existing tax principles apply to virtual currency transactions.

“Virtual currency transactions, in which taxpayers increasingly engage, add a new layer of complexity to the analysis of a client’s reporting requirements. The issuance of clear guidance in this area will not only reduce the confusion and burden for tax preparers but also allow taxpayers to accurately comply with IRS rules,” Troy K. Lewis, CPA, CGMA, chair of the AICPA Tax Executive Committee, wrote in the June 10 letter.

Lewis noted that the IRS worked “expeditiously” to release guidance to frequently asked questions in Notice 2014-21 about the tax treatment of virtual currency transactions.  However, he wrote that additional guidance is still needed on topics not addressed in the notice.  Lewis listed 10 areas in which guidance is requested:

  • Acceptable valuation and documentation;
  • Expenses of obtaining virtual currency;
  • Challenges with specific identification for computing gains and losses;
  • General guidance regarding property transaction rules;
  • Nature of virtual currency held by a merchant;
  • Charitable contributions;
  • Virtual currency as a “commodity;”
  • Need for a de minimis election;
  • Retirement accounts, and
  • Foreign reporting requirements for virtual currency.