Thursday 25 July 2019

Received IRS Letter 6174-A Due to Crypto Trading. Not sure how to handle.


I bought about 50K worth of crypto in late 2017, and 2018, and mostly lost money. Currently have crypto totaling less than half of that. I never traded any of this crypto back into cash (at least not for more than a day or two). And I did several dozen trades between different altcoins and different exchanges (like Binance). Because I never totally sold back to cash or transferred cash back to my bank, I assumed there was no capital gains or losses to report. I think my CPA reported the purchases on my tax returns but no sales yet. (Based on what I told her. But perhaps I didn't give her the big picture).Today, I received IRS Letter 6174-A. After doing some research, I just discovered that based on new rules, every single trade between altcoins counts as a "sale". I found a very useful site called CryptoTrader.Tax which will connect to my Coinbase and Binance and generate the tax form for me. However, the Letter 6174-A is not specific. It does not say if they are referring to my 2018 returns, or 2017 too.My question is: Since I purchased most of these cryptos in late 2017 AND 2018 -- do I need to amend both years returns? Or am I safe with just amending the 2018 return with the CryptoTrader.Tax generated form?I will have my CPA do the amendment. Just not sure if I should amend both years or just 2018. If I ever make my money back in crypto, don't I need to have my 2017 return amended too since that year is when I purchased most of these initial coins ? via /r/Bitcoin http://bit.ly/2LHqmHv

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